`[Federal Register Volume 89, Number 241 (Monday, December 16, 2024)]
[Rules and Regulations]
[Pages 101694-101769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29245]



[[Page 101693]]

Vol. 89

Monday,

No. 241

December 16, 2024

Part II





Department of Commerce





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International Trade Administration





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19 CFR Part 351





Regulations Enhancing the Administration of the Antidumping and 
Countervailing Duty Trade Remedy Laws; Final Rule

  Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / 
Rules and Regulations  

[[Page 101694]]


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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 241206-0317]
RIN 0625-AB25


Regulations Enhancing the Administration of the Antidumping and 
Countervailing Duty Trade Remedy Laws

AGENCY: Enforcement and Compliance, International Trade Administration, 
Department of Commerce.

ACTION: Final rule.

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SUMMARY: Pursuant to Title VII of the Tariff Act of 1930, as amended 
(the Act), the U.S. Department of Commerce (Commerce) is amending its 
trade remedy regulations to enhance the administration of the 
antidumping duty (AD) and countervailing duty (CVD) laws. Specifically, 
Commerce is codifying existing procedures and methodologies and 
creating or revising regulatory provisions relating to several matters 
including the collection of cash deposits, indicators used in surrogate 
country selection, application of antidumping rates in nonmarket 
economy proceedings, calculation of an all-others' rate, selection of 
examined respondents, and attribution of subsidies received by cross-
owned input producers and utility providers to producers of subject 
merchandise.

DATES: These amendments are effective January 15, 2025.

FOR FURTHER INFORMATION CONTACT: Scott D. McBride, Associate Deputy 
Chief Counsel for Trade Enforcement and Compliance, at (202) 482-6292, 
Jesus Saenz, Senior Attorney, at (202) 482-1823, Ashlande Gelin, 
Attorney, at (202) 306-7302, or John Van Dyke, Import Policy Analyst, 
at [email protected].

SUPPLEMENTARY INFORMATION:

General Background

    On July 12, 2024, Commerce proposed amendments to its existing 
regulations, 19 CFR part 351, to enhance the administration of the AD 
and CVD trade remedy laws, in ``Regulations Enhancing the 
Administration of the Antidumping and Countervailing Duty Trade Remedy 
Laws,'' published at 89 FR 57286 (July 12, 2024) (Proposed Rule). This 
final rule concerns the AD/CVD statutory and regulatory provisions in 
general, as well as those provisions pertaining to filing requirements; 
the application of cash deposits; the determination of separate rates 
for nonmarket economy entities; the calculation of rates for unexamined 
exporters and producers, including the all others rate; the selection 
of voluntary respondents; the assessment of AD and CVD rates on a per-
unit basis; the submission of surrogate value, benchmark, and rebuttal 
information; the selection of facts otherwise available; the sharing 
with U.S. Customs and Border Protection (USCBP) of proprietary data for 
use in negligence and gross negligence investigations, in addition to 
investigations involving fraud; the collapsing of affiliated producers 
and non-producers, the application of the special rule for 
multinational corporations, the calculation of amounts for selling 
expenses and for profit for constructed value: and a series of CVD-
specific provisions, which Commerce summarizes below.
    Title VII of the Act vests Commerce with authority to administer 
the AD/CVD trade remedy laws. Section 731 of the Act directs Commerce 
to impose an AD order on merchandise entering the United States when it 
determines that a producer or exporter is selling a class or kind of 
foreign merchandise into the United States at less than fair value 
(i.e., dumping), and material injury or threat of material injury to 
that industry in the United States is found by the U.S. International 
Trade Commission (ITC).
    In addition, section 701 of the Act directs Commerce to impose a 
CVD order when it determines that a government of a country or any 
public entity within the territory of a country is providing, directly 
or indirectly, a countervailable subsidy with respect to the 
manufacture, production, or export of a class or kind of merchandise 
that is imported into the United States, and material injury or threat 
of material injury to that industry in the United States is found by 
the ITC.
    Section 771(5)(B) of the Act defines a countervailable subsidy as 
existing when ``a government or any public entity within the territory 
of a country provides a financial contribution; provides any form of 
income or price support; or makes a payment to a funding mechanism to 
provide a financial contribution, or entrusts or directs a private 
entity to make a financial contribution, if providing the contribution 
would normally be vested in the government and the practice does not 
differ in substance from practices normally followed by governments; 
and a benefit is thereby conferred.'' To be countervailable, a subsidy 
must be ``specific'' within the meaning of section 771(5A) of the Act.
    The Act provides numerous disciplines which Commerce must follow in 
conducting AD and CVD proceedings. For example, sections 703(d)(1)(B), 
705(d), 733(d)(1)(B), 735(c), and 751 of the Act direct Commerce to 
order USCBP to collect cash deposits as security pursuant to 
affirmative determinations in its proceedings until Commerce orders the 
assessment of AD or CVD duties. Likewise, sections 705(c)(1)(B), 
705(c)(5), 735(c)(1)(B)(i), and 735(c)(5) of the Act set forth the 
means by which Commerce determines the AD margin or countervailable 
subsidy rate to be applied to imported subject merchandise exported or 
produced by entities not selected in an investigation for individual 
examination. In addition, sections 777A(c)(2) and 777A(e)(2)(A) of the 
Act allow Commerce to limit the number of exporters or producers to be 
individually examined, while section 782(a) allows Commerce to select 
voluntary respondents.
    In accordance with these and other statutory provisions, this final 
rule codifies and enhances the procedures and practices applied by 
Commerce in administering and enforcing the AD and CVD laws.
    As Commerce explained throughout the preamble to the Proposed Rule, 
the purpose of these amendments is to help enhance and facilitate the 
administration of the AD and CVD regulations found at part 351.\1\ The 
codification of Commerce practice in this final rule, as well as 
updates to certain regulatory provisions to reflect modifications made 
by Congress to the Act in 2015, will provide greater clarity and 
transparency to Commerce's procedures and calculations. In addition, 
Commerce has revised its methodology in nonmarket economy 
investigations and reviews to more effectively address situations in 
which a state-owned entity has less than majority state ownership but 
the state continues to control an entity through veto power or ``golden 
shares.'' It has furthermore updated the means by

[[Page 101695]]

which it selects economically comparable countries for purposes of 
determining normal value in nonmarket economy proceedings. Furthermore, 
Commerce has updated many of its CVD regulations to provide both 
clarity and transparency to Commerce's CVD methodology and to codify 
long-standing CVD policies. Finally, for the first time, Commerce has 
promulgated CVD regulations to address the government purchase of goods 
for more than adequate remuneration (MTAR) and the provision of rebates 
or exemptions of indirect taxes and import charges to exporters that 
purchase capital goods and equipment.
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    \1\ This final rule codifies several distinct procedures and 
practices under various sections of the Act. As such, Commerce 
generally intends the rule's provisions to be severable and to 
operate independently from each other. Commerce's intent that the 
rule's provisions be severable is demonstrated by the number of 
distinct regulatory provisions addressed in this rulemaking and the 
structure of the preamble in addressing them independently and 
supporting each, respectively, with Commerce's statutory 
interpretation, agency practice, and court precedent. Accordingly, 
Commerce intends each portion of this rule to be severable from each 
other but has included all the proposed provisions in one rulemaking 
for purposes of enhancing Commerce's trade remedy regulations.
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Explanation of Modifications From the Proposed Rule to the Final Rule 
and Responses to Comments

    In the Proposed Rule, Commerce invited the public to submit 
comments.\2\ Commerce received 27 submissions from interested parties 
providing comments, including domestic producers, exporters, importers, 
foreign governments, and foreign entities. The majority of commenters 
supported Commerce's proposed regulations and indicated that the new 
and revised regulations would increase transparency and enhance and 
improve the administration and enforcement of the AD and CVD laws. Some 
of the comments provided suggestions to further improve the regulations 
at issue, and Commerce considered the merits of each submission and 
analyzed the legal and policy arguments considering both past practice 
and Commerce's mandate to enhance and improve the administration of our 
AD and CVD laws. Pursuant to that analysis, Commerce has made certain 
modifications to the Proposed Rule in response to those submissions.
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    \2\ See Proposed Rule, 89 FR at 57286.
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    The preamble to the Proposed Rule provided background, analysis, 
and explanations which are relevant to these regulations. With some 
modifications, as noted, this final rule would codify regulations 
proposed on July 12, 2024. Accordingly, to the extent that parties wish 
to have a greater understanding of these regulations, Commerce 
encourages not only consideration of the preamble of these final 
regulations but also a review of the analysis and explanation in the 
preamble to the Proposed Rule.
    In drafting this final rule, Commerce carefully considered each of 
the comments received and the following sections address the comments 
received. Each section contains a brief discussion of the regulatory 
provision(s), a summary of the comments Commerce received, and 
Commerce's response to those comments, including an explanation when 
Commerce modified its proposed regulations in response to those 
comments.

1. Commerce Has Made Small Modifications to Proposed Sec.  
351.104(a)(7), Which Addresses the Citation of Certain New Factual 
Information on the Record

    On March 25, 2024, Commerce issued a final rule which provided 
clarity and procedures for interested parties submitting documentation 
to the agency, explaining which documents from other segments and 
proceedings may be cited without placing such documents on the record 
and which documents must be placed on the record to be considered by 
Commerce in its analysis and determinations (RISE Final Rule).\3\ Those 
modifications added Sec.  351.104(a)(7), which states that interested 
parties citing public versions of documents issued by Commerce in other 
segments or proceedings before the implementation of Commerce's 
Antidumping Duty and Countervailing Duty Centralized Electronic Service 
System (ACCESS) (or that otherwise have no assigned ACCESS barcode 
number) must submit copies of those documents on the record.
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    \3\ See Regulations Improving and Strengthening the Enforcement 
of Trade Remedies Through the Administration of the Antidumping and 
Countervailing Duty Laws, Final Rule, 89 FR 20766, 20768-20773 
(March 25, 2024) (RISE Final Rule).
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    In the Proposed Rule, Commerce stated that it was reconsidering the 
scope of public documents to which Sec.  351.104(a)(7) applies and 
proposed that public preliminary and final issues and decision 
memoranda issued in investigations and administrative reviews pursuant 
to Sec. Sec.  351.205, 351.210, and 351.213 with no assigned ACCESS 
barcode number need not be subject to the requirements of that 
provision.\4\ Commerce explained that citations to these memoranda, 
like all such citations relied upon by interested parties in 
submissions to Commerce, would still be required to be cited in full 
(albeit without an ACCESS barcode number).\5\ Commerce also stated 
that, as set forth in Sec.  351.104(a)(6), if Commerce determined that 
a citation was not provided in full, Commerce could decline to consider 
and analyze the cited decision memoranda in its preliminary and final 
determinations.\6\
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    \4\ Id.
    \5\ Id.
    \6\ Id.
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    Commerce received five comments in response to the Proposed Rule. 
No commenter opposed allowing interested parties to cite preliminary 
and final issues and decision memoranda from other investigations and 
administrative reviews without ACCESS barcode numbers without also 
submitting those documents on the record of a segment of the 
proceeding. Accordingly, this final rule continues to allow parties to 
cite public documents that meet that description without submitting 
them on the record.
    Two commenters suggested that Commerce modify the proposed 
regulation language to clarify that the exception being proposed under 
Sec.  351.104(a)(7) applies to all investigation and administrative 
review preliminary and final issues and decision memoranda without an 
associated ACCESS barcode number and not just those which were issued 
``before the implementation of ACCESS.'' Those commenters noted an 
inconsistency between the first and second sentences of the paragraph 
as proposed in that regard.
    One commenter suggested that all investigation and administrative 
review preliminary and final determinations from other segments or 
proceedings are not ``new factual information,'' and therefore, the 
Secretary should state in the regulation that such memoranda are not 
subject to the timing and filing restrictions of the factual 
information regulation, Sec.  351.301. The commenter stated that just 
because an ACCESS barcode number is missing does not mean that it 
should be treated as new factual information under Sec.  351.301.
    Other commenters took issue, fundamentally, with both Sec.  
351.104(a)(6) and (7), stating that Commerce should expand the list of 
documents that need not be submitted on the record, or need not include 
an ACCESS barcode number, to be cited without submitting them on the 
record. They stated that Commerce's allowance of an exception for just 
preliminary and final decision memoranda in investigations and 
administrative reviews and not similar decision memoranda in other 
segments of a proceeding is arbitrary and that there is no reason for 
Commerce to treat investigation and administrative review documents 
differently. Furthermore, they stated that by requiring that certain 
public Commerce documents, but not others, be submitted onto 
administrative records, Commerce would be prejudicing interested 
parties by preventing them from citing relevant Commerce practice and 
policies, especially once the time for the submission of new factual 
information on the administrative record has passed. Therefore, they 
advocated that

[[Page 101696]]

Commerce should either allow all public documents originating with 
Commerce from other segments or other proceedings to be cited without 
submitting them on the record, or that Commerce at minimum expand the 
list of documents which may be cited without submitting them on the 
record in Sec.  351.104(a)(6).
    Finally, two commenters stated that if Commerce continues to 
require that public Commerce documents listed in Sec.  351.104(a)(6) or 
public Commerce documents without associated ACCESS barcode numbers be 
submitted on the record, Commerce should take into consideration that 
interested parties frequently wish to cite certain Commerce public 
documents from other segments or proceedings in response to Commerce's 
preliminary determinations, which are issued after the time for the 
submission of new factual information has passed. They stated that if 
the time for new factual information closes before Commerce issues its 
preliminary determination, there is no means by which those interested 
parties can adequately defend their interests by arguing in a brief or 
rebuttal brief that Commerce acted inconsistently in the preliminary 
determination from past cases. They stated that under that scenario, 
parties may not have been aware that a particular Commerce decision 
memorandum from another segment or proceeding was relevant until after 
the preliminary determination was issued. Those commenters, therefore, 
suggested that Commerce allow parties to submit documents listed in 
Sec.  351.104(a)(6) or those without associated ACCESS barcode numbers 
as attachments in an appendix to case briefs and rebuttal briefs.

Response

    Commerce has made two revisions to Sec.  351.104(a)(7), as 
proposed. First, for purposes of Sec.  351.104(a), when Commerce is 
describing documents issued by all agency employees, Commerce uses the 
general term ``the Department'' to describe the overall originator of 
those documents. This is true for Sec.  351.104(a)(3) through (6) and 
should equally be used in Sec.  351.104(a)(7). The term ``Commerce'' 
appeared in the proposed regulation language, but should say ``the 
Department,'' and Commerce has corrected for that error.
    The second revision is in response to those commenters who pointed 
out that Commerce's first and second sentences in the provision were 
inconsistent. Section 351.104(a)(7) applies to all documents 
originating with Commerce with no associated ACCESS barcode numbers and 
not just those issued before the implementation of ACCESS. Accordingly, 
Commerce has revised the second sentence to make that sentence 
consistent with the first sentence, as requested by those commenters.
    In response to the statements that Commerce's various decision 
memoranda are not factual information and should not be subject to the 
requirements of Sec.  351.301, Commerce addressed this claim in the 
RISE Final Rule,\7\ explaining that collapsing determinations under 
Sec.  351.401(f), for example, and calculation memoranda, are highly 
dependent on the case-specific facts that Commerce analyzes.\8\ 
Commerce explained that although it agreed that ``each collapsing and 
calculation memoranda is a legal analysis and decision by the agency, 
each of these memoranda also reflect conclusions based on the facts 
unique to the segment of the proceeding in which they were issued.'' 
\9\ Accordingly, each such document ``contains factual information 
being introduced on the record of the ongoing segment or proceeding for 
the first time.'' \10\ Thus, Commerce disagrees with the statement that 
Commerce should state that the filing requirements of Sec.  351.301 do 
not apply to Commerce-authored public decision memoranda from other 
segments or proceedings because such information is not allegedly new 
factual information on the record. In fact, such memoranda are 
unquestionably new factual information in the context of a separate 
segment or proceeding, and Commerce has not adopted that proposed 
change.
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    \7\ See RISE Final Rule, 89 FR at 20772.
    \8\ Id.
    \9\ Id.
    \10\ Id.
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    As Commerce also explained in the RISE Final Rule, ``the conduct of 
an administrative proceeding is a time-intensive, resource-intensive, 
and fact-intensive endeavor.'' \11\ Commerce implemented the ACCESS 
barcode requirement to make it easier, in part, for Commerce to 
retrieve the documents and consider them in reaching conclusions for 
preliminary and final determinations.\12\ Therefore, allowing parties 
to cite documents in their submissions without those ACCESS barcode 
numbers present defeats the purpose of the requirement.
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    \11\ Id.
    \12\ Id., 89 FR at 20771.
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    However, Commerce also recognizes that interested parties have 
cited preliminary and final issues and decision memoranda in 
investigations and administrative reviews without including ACCESS 
barcode numbers for many years, and those four types of documents are 
by far the public Commerce decision documents most frequently cited by 
interested parties in their case briefs and rebuttal briefs. In 
addition, those documents are relatively less difficult for Commerce to 
find in legal resource services than many other types of documents 
listed in Sec.  351.104(a)(6). Accordingly, Commerce has determined 
that despite the additional burden on the agency case teams to retrieve 
the cited documents, it is both fair and reasonable to allow interested 
parties to cite those four types of public documents from other 
segments or proceedings in submissions before the agency; especially 
those submissions issued when no ACCESS barcode was associated with 
those documents. Commerce has made no such determination with respect 
to other documents listed under Sec.  351.104(a)(6) and therefore has 
not codified such a filing exception for those additional Commerce-
authored documents.
    With respect to the suggestion that Commerce should permit parties 
to submit documents listed in Sec.  351.104(a)(6) for the first time on 
the record as appendices to case briefs and rebuttal briefs, for the 
reasons described below, Commerce does not agree that such a change to 
the agency's procedures and regulations is warranted or that failing to 
allow the submission of such documents late in a proceeding after the 
time for new factual information has passed unduly prejudices 
interested parties. These types of documents, such as collapsing 
memoranda and calculation memoranda, typically contain extensive case-
specific business proprietary information. In the public versions of 
such memoranda, the business proprietary information can be redacted 
such that the detailed basis of Commerce's decision resulting from the 
underlying business proprietary data may not even be publicly 
discernable. Furthermore, to the extent that Commerce's analysis is 
discernable in the public version of the memorandum, that same public 
analysis should be reflected in a second location--Commerce's 
preliminary and final issues and decision memoranda. Commerce normally 
includes a public summary of its collapsing and calculation 
methodologies, for example, in its preliminary decision memoranda 
accompanying preliminary determinations or preliminary results 
published in the Federal Register. In

[[Page 101697]]

those memoranda, Commerce publicly describes its collapsing 
determinations and other major calculation issues raised by interested 
parties in their case and rebuttal briefs in all final decision 
memoranda accompanying final determinations or final results. It is in 
these public issues and decision memoranda that Commerce's 
methodologies can be clearly discerned in a public manner, without 
relying on case-specific business proprietary information attached to 
briefs or rebuttal briefs for the first time on the record, long after 
the time for submitting new factual information on the record has 
expired.
    Under Sec.  351.104(a)(6) and (7) as modified in this final rule, 
because interested parties can cite these public issues and decision 
memoranda from other segments or proceedings, including such memoranda 
without an associated ACCESS barcode number, to support their arguments 
in their case and rebuttal briefs, Commerce disagrees that the 
regulations, as amended, unduly prejudice interested parties as claimed 
by certain commenters. Instead, Commerce finds that Sec.  351.104(a) 
reflects a reasonable balance that allows parties to defend their 
interests, while also allowing Commerce officials the ability to 
analyze and consider information on the record without forcing the 
officials to also assume the additional burden of (1) independently 
researching the records of other past segments and proceedings, (2) 
analyzing as part of that exercise the unique facts that were present 
in those segments or proceedings that resulted in the application of a 
particular methodology, analysis or calculation, and then (3) placing 
additional information derived from those segments or proceedings. on 
the record of the case before the agency. These regulations allow 
interested parties to cite many different documents and sources, 
including over 20 types of Commerce's public decision documents, 
without placing those documents on the record, but also make clear that 
interested parties have a responsibility to make certain that the 
public versions of the factual information which support their 
arguments from other segments or proceedings and not listed in the 
relevant provisions of the regulation must be timely submitted on the 
record to be considered by Commerce in making its determinations. 
Accordingly, Commerce has determined to make no further modifications 
to Sec.  351.104(a)(7), other than the changes explained above.

2. Commerce Has Modified Proposed Sec.  351.107 and Proposed Sec.  
351.212(b)(1), Which Cover Cash Deposits and Assessment of Duties, To 
Remove the Examples of Units Upon Which Cash Deposits and Assessment 
Rates May Be Applied

    Commerce significantly revised and updated its cash deposit 
regulation in proposed Sec.  351.107 to more accurately and 
holistically reflect Commerce's establishment and application of cash 
deposit rates.\13\ Specifically, the revised regulation: (1) explains 
that while Commerce normally calculates cash deposit rates on an ad 
valorem basis, Commerce may calculate cash deposit rates on a per-unit 
basis; (2) describes situations in which Commerce applies cash deposit 
rates in a producer/exporter combination and the process by which a 
producer/exporter combination may be excluded from provisional measures 
and an AD or CVD order as a result of a calculated de minimis cash 
deposit rate following an investigation; (3) sets forth an AD cash 
deposit hierarchy for imports from market economies, an AD cash deposit 
hierarchy for imports from nonmarket economies, and a CVD cash deposit 
hierarchy; and (4) describes the effective date for cash deposit rates 
following the correction of ministerial errors in investigations and 
administrative reviews.
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    \13\ See Proposed Rule, 89 FR at 57290-93.
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    In addition, Commerce also revised its assessment regulation 
covering AD determinations, Sec.  351.212(b)(1), by dividing it into 
two sections--one providing for the assessment of entries on an ad 
valorem basis and another providing that if the information normally 
used to calculate an ad valorem assessment rate is not available or the 
use of an ad valorem rate is otherwise not appropriate, Commerce may 
instruct USCBP to assess duties on a per-unit basis.\14\
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    \14\ Id., 89 FR at 57301.
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    Commerce received several comments supporting the proposed changes 
to Sec.  351.107. One commenter supported the proposed rule as a 
welcome clarification to Commerce's cash deposit procedures and 
recognition of its authority to establish and tailor cash deposit rates 
to properly effectuate the AD/CVD law. That commenter specifically 
identified Commerce's proposed regulation as effectively codifying its 
authority to use combination producer/exporter cash deposit rates to 
address circumstances such as middleman dumping.
    Another commenter specifically expressed support for proposed Sec.  
351.107(c)(1), which would codify an exception to Commerce's normal ad 
valorem practice where the calculation of cash deposits on a per-unit 
basis might be appropriate if the information normally used to 
calculate an ad valorem cash deposit rate is not available or the use 
of an ad valorem cash deposit rate is otherwise not appropriate. The 
commenter further noted that Commerce's practice of using such 
alternate methodologies to calculate cash deposit rates results in more 
accurate duty calculations and codifying that practice would provide 
clear notice of this practice to interested parties.
    A third commenter expressed support for the proposed regulation and 
suggested additional modifications to Sec.  351.107(c)(1) and Sec.  
351.107 generally. Regarding Sec.  351.107(c)(1), the commenter 
proposed that, given the often technical nature of the products subject 
to review, as well as scope and data issues related to the underlying 
calculations and entries, Commerce should clarify that draft 
instructions be accompanied by an explanation of (1) the basis for 
Commerce's conclusion that the relevant information to calculate an ad 
valorem rate is ``not available'' or the reason an ad valorem rate ``is 
otherwise not appropriate'' and (2) a detailed description as to how 
the per-unit basis is to be calculated, particularly in view of an AD/
CVD order's scope. The commenter noted that such an explanation would 
allow parties to comment on any errors and Commerce to make any 
appropriate modifications before final instructions are issued.
    Regarding the Sec.  351.107 cash deposit regulation generally, the 
commenter proposed that Commerce explicitly require draft Customs 
instructions concerning cash deposit and assessment rates be placed on 
the record for comment at or near the time of the publication of the 
preliminary results to allow parties an opportunity to comment on the 
proposed calculations and rates as part of their administrative case 
briefs or, where Commerce is unable to issue draft instructions 
sufficiently in advance of the deadline for case briefs, Commerce 
establish an alternative process for submitting such comments. The 
commenter emphasized that Commerce should require that draft 
instructions be placed on the record for comment sufficiently in 
advance of the final results so parties may comment on those 
instructions and Commerce may address or respond to such comments as 
part of the final issues and decision memorandum or notice of final 
results.

[[Page 101698]]

    One commenter expressed that while the proposed rule generally 
codifies Commerce's existing practice, Commerce should clarify its 
intent behind certain provisions. Regarding the proposed Sec.  
351.107(c)(4), which would provide that USCBP may, upon receiving 
instructions from Commerce, apply a cash deposit requirement that 
reflects the record information and effectuates the administration and 
purpose of a certification, the commenter noted that it appeared 
Commerce intended to codify only its current practice of instructing 
USCBP to collect cash deposits based on the implementation of a 
certification requirement pursuant to a circumvention determination and 
expressed that Commerce should confirm the scope of this provision.
    That commenter also requested clarification regarding proposed 
Sec.  351.107(d) and (e), which identify the hierarchies Commerce 
utilizes to determine the appropriate cash deposit rate for entries 
subject to AD/CVD investigations and orders. The commenter pointed out 
that the regulation states that Commerce may instruct USCBP to use an 
alternative methodology in applying cash deposit rates if Commerce 
determines that a cash deposit rate other than that resulting from the 
CVD cash deposit hierarchy should be applied based on the unique facts 
in the underlying proceeding. The commenter suggested that, if Commerce 
adopts the regulation as proposed, it should provide further 
information and examples of the types of unique circumstances that 
would warrant a different approach and the alternative approaches that 
could be used. The commenter further suggested that Commerce confirm 
that in such a circumstance, interested parties would be provided an 
opportunity to comment on any such instructions.
    Commerce received only one comment on the proposed modifications to 
Sec.  351.212(b)(1). The same commenter that proposed that Commerce 
should clarify that draft cash deposit instructions be accompanied by 
an explanation of: (1) the basis for Commerce's conclusion that the 
relevant information to calculate an ad valorem rate is ``not 
available'' or why an ad valorem rate ``is otherwise not appropriate''; 
and (2) a detailed description as to how the per-unit basis is to be 
calculated, particularly in view of an AD/CVD order's scope, made the 
same request for assessment instructions. The commenter noted that just 
as such an explanation would allow parties to comment on any errors in 
Commerce's cash deposit instructions, so too could parties comment on 
any errors in Commerce's draft assessment instructions and allow 
Commerce to make any appropriate modifications before the final 
assessment instructions are issued.

Response

    As noted above, all of the commenters on the revised Sec.  351.107 
approved of the significant modifications which Commerce made to the 
provision. Commerce agrees with the commenters that the new version of 
the regulation will provide substantially more guidance to the public 
on Commerce's application of cash deposit rates in the normal course of 
its proceedings.
    With respect to additional suggestions, one commenter suggested 
that Commerce place draft cash deposit instructions to USCBP on the 
record at or near the time of the publication of the preliminary 
results on the record to allow interested parties an opportunity to 
comment on those draft instructions. Commerce has determined not to 
place this additional requirement in the regulation. However, Commerce 
agrees that it is Commerce's normal practice to share draft Customs 
instructions with interested parties and provide an opportunity to 
comment on them in most cases. In accordance with that practice, when 
appropriate, Commerce places draft Customs instructions on the record 
prior to issuance of the final results of a given segment of a 
proceeding with sufficient time for the parties to have an opportunity 
to comment on those instructions. However, there is no statutory 
obligation for Commerce to place draft Customs instructions on the 
record immediately after a preliminary agency decision has been issued, 
and sometimes, based on the facts on the record, it is either 
unnecessary for Commerce to issue draft instructions, or Commerce may 
be unable to issue draft instructions for a month's time or more after 
the agency's preliminary decision has been issued. Accordingly, 
Commerce has determined not to codify the commenter's suggestion into 
the regulation.
    Nonetheless, Commerce acknowledges the importance of interested 
parties having the ability in most cases to consider draft Customs 
instructions and to identify any potential inaccuracies in a submission 
to Commerce before the final agency decision has been issued. Thus, 
Commerce recommends and encourages that if interested parties in a 
proceeding find that draft Customs instructions have not been placed on 
the record for a significant period of time after Commerce has issued 
its preliminary decision, those interested parties should request in 
writing that the agency place draft Customs instructions on the record 
while there is still sufficient time for parties to comment on them 
when they submit their case and rebuttal briefs on the record to 
Commerce in accordance with Sec.  351.309(c) and (d).
    Relatedly, with respect to the commenter's suggestion that Commerce 
provide an explanation and calculation when Commerce applies a cash 
deposit rate on a per-unit basis under proposed Sec.  351.107(c)(1), as 
well as that same commenter's suggestion that Commerce provide the same 
explanation and calculation when Commerce determines an assessment rate 
on a per-unit basis under proposed Sec.  351.212(b)(1)(ii), it is 
Commerce's practice to provide interested parties with an opportunity 
to comment on the calculation of cash deposit and assessment rates in 
disclosure packages uploaded to the record, and Commerce normally 
explains its cash deposit requirements in its Federal Register notices. 
However, the Act does not require that Commerce issue such a detailed 
disclosure in every case, and in fact there may be situations in which 
the issuance of such a disclosure is simply not necessary. Accordingly, 
Commerce has determined that it will not modify Sec.  351.107(c)(1) or 
Sec.  351.212(b)(1)(ii) to codify the issuance of disclosure packages 
regarding per-unit cash deposits in every case.
    Commerce has, however, determined to modify those provisions as set 
forth in the Proposed Rule to remove the examples of units ``to which a 
cash deposit rate may be applied'' and ``on which duties may be 
assessed.'' \15\ Commerce proposed those examples to provide greater 
clarity to the issue, but has determined that those examples may have 
instead been the source of some confusion. Accordingly, Commerce will 
continue to determine the appropriate units on which to apply cash 
deposits or assessment rates on a case-by-case basis and will forgo 
listing examples in the regulation.
---------------------------------------------------------------------------

    \15\ Id., 89 FR at 57323 and 57328.
---------------------------------------------------------------------------

    In response to the comment that Commerce provide further 
information and examples of the types of unique circumstances that 
would warrant a different approach and the alternative approaches that 
could be used under the AD and CVD cash deposit hierarchies set forth 
in Sec.  351.107(d) and (e), in the regulation, Commerce must emphasize 
that these exceptions to the cash deposit hierarchies will be highly 
dependent on the unique circumstances and facts of a

[[Page 101699]]

particular segment of a proceeding. Thus, it would be inappropriate for 
Commerce to provide examples in the regulation. However, if such a 
situation arises and Commerce is considering application of an 
alternative to the cash deposit hierarchy in a segment of the 
proceeding, consistent with its practice, Commerce anticipates that it 
would inform the interested parties of that possibility and provide 
interested parties with an opportunity to provide commentary on such an 
alternative approach.
    Finally, Commerce does not agree with the comment that Commerce 
intended for proposed Sec.  351.107(c)(4) to apply only to 
certifications issued pursuant to circumvention determinations under 
section 781 of the Act. Certifications issued under Sec.  351.228 may 
be applied pursuant to circumvention determinations, of course, but 
Commerce may also instruct USCBP to use certifications, for example, in 
enforcing certain scope rulings, under Sec.  351.225, and there are 
other situations in which Commerce may instruct USCBP to collect cash 
deposits in accordance with an importer or interested party 
certification. Accordingly, the language of proposed Sec.  
351.107(c)(4) is appropriately broad enough to cover all situations in 
which Commerce instructs USCBP to collect cash deposits in accordance 
with a certification issued under Sec.  351.228 to effectively 
administer and enforce the AD and CVD laws.

3. Commerce Has Revised Proposed Sec.  351.108, the Separate Rate 
Regulation, To Clarify Various Provisions and To Address Third Country 
Exporters of Subject Merchandise From Nonmarket Economies

    In the Proposed Rule, Commerce proposed to codify its longstanding 
practice of granting a separate rate to exporters of merchandise from 
nonmarket economies in new Sec.  351.108.\16\ Commerce explained that 
its practice was in accordance with section 771(18)(A) of the Act, 
which defines a nonmarket economy country as a foreign country which 
Commerce determines ``does not operate on market principles of cost or 
pricing structures, so that sales of merchandise in such country do not 
reflect the fair value of the merchandise.'' \17\ Accordingly, as 
Commerce explained in the Proposed Rule, for over three decades, in 
antidumping proceedings involving nonmarket economy countries, Commerce 
has repeatedly determined that legally distinct entities are in a 
sufficiently close relationship to the government to be considered part 
of a single entity (i.e., the government controlled entity). In this 
regard, current Sec.  351.107(d) explicitly provides that in an 
``antidumping proceeding involving imports from a nonmarket economy 
country, `rates' may consist of a single dumping margin applicable to 
all exporters and producers.''
---------------------------------------------------------------------------

    \16\ Id., 89 FR at 57293.
    \17\ Id.
---------------------------------------------------------------------------

    Commerce explained in the Proposed Rule that it applies a separate 
rate test in antidumping proceedings involving a nonmarket economy. 
Under this test, Commerce considers whether an entity can demonstrate 
that the foreign nonmarket economy government does not have either 
legal (de jure) control or control in fact (de facto) over the entity's 
export activities.\18\ Commerce explained that over the past decade, 
Commerce has modified its practice to conclude that when a government 
holds a majority ownership share, either directly or indirectly, in a 
respondent exporting entity located in a nonmarket economy, the 
majority holding in and of itself demonstrates that the government 
exercises, or has the potential to exercise, control over the entity's 
operations generally.\19\ Commerce further explained that it was also 
proposing to strengthen its separate rate practice to address 
additional real-world factors through which a foreign government can 
control or influence production decisions, pricing and sales decisions, 
and export behavior.\20\ Commerce's practice in this regard has been 
affirmed in multiple cases by the U.S. Court of Appeals for the Federal 
Circuit (Federal Circuit).\21\
---------------------------------------------------------------------------

    \18\ Id., 89 FR at 57293.
    \19\ Id.
    \20\ Id.
    \21\ See., e.g., Sigma Corp. v. United States, 117 F. 3d 1401, 
1405 (Fed. Cir. 1997) (Sigma v. United States); Transcom, Inc. v. 
United States, 182 F. 3d 876, 882 (Fed. Cir. 1999) (Transcom v. 
United States); Michaels Stores, Inc. v. United States, 776 F.3d 
1388, 1390 (Fed. Cir. 2014) (Michaels v. United States); and 
Changzhou Wujin Fine Chem. Factory Co. v. United States, 701 F.3d 
1367, 1370 (Fed. Cir. 2012) (Changzhou v. United States).
---------------------------------------------------------------------------

    Commerce received several comments on proposed Sec.  351.108. 
Numerous commenters indicated their approval for Commerce's separate 
rate practice and its codification of that practice in its regulations, 
including its modification of that practice to deny the application of 
a separate rate when a nonmarket economy government has less than a 
majority ownership in a company but other indicia exist in conjunction 
with that (minority) ownership to indicate that the government controls 
or can control relevant decisions of the company.
    Certain commenters identified concerns involving certain aspects of 
the proposed separate rate regulation. In particular, several 
commenters expressed concerns that the regulation did not address 
situations in which a company owned in whole or in part by the 
nonmarket economy government but located in a market economy other than 
the United States, exports merchandise from the non-market economy to 
the United States. One commenter stated that if the final regulations 
did not address situations in which a company incorporated in a market 
economy country exports merchandise from a nonmarket economy to the 
United States, the lack of such guidance could have a negative impact 
on U.S. import businesses seeking to comply with U.S. trade laws. That 
commenter stated that by remaining silent on those scenarios, 
Commerce's proposed regulations discourage the filing of separate rate 
applications in the first place by third-country exporters of 
merchandise from nonmarket economies. That commenter also suggested 
that Commerce should additionally consider addressing Commerce's 
practice when merchandise is substantially transformed in a third 
country before exportation to the United States, as well as other 
situations which might arise in a complex supply chain in the third 
country with regard to merchandise from the nonmarket economy.
    Another commenter recommended that Commerce clarify that the 
separate rate test applies to all exporters, whether the exporter is 
located in the nonmarket economy or a market economy other than the 
United States, because the focus of the statute is on the merchandise 
produced or exported from the nonmarket economy and not the geographic 
location of the exporter. That commenter stated that regardless of 
whether exporters are located in Hong Kong, Toronto, or Shanghai, if 
the merchandise is exported from a nonmarket economy to the United 
States, there is no reason to treat any of those exporters differently 
with regard to the application of the separate rate test, especially if 
the nonmarket economy government has any ownership interest in those 
exporters. That commenter stated that under Commerce's proposed 
regulation there is a significant risk that entities affiliated with 
the nonmarket economy government exporting merchandise from the 
nonmarket economy and sold to the United States could be treated 
differently solely because of whether the entities are physically 
located within or outside of the nonmarket economy.

[[Page 101700]]

    Another commenter acknowledged that governments of certain 
nonmarket economies, including the People's Republic of China (China), 
have recently established corporate footholds and export platforms in 
third country market economies, resulting in a significant increase in 
circumvention and evasion inquiries conducted by Commerce and USCBP. 
The commenter stated that Commerce's proposed regulation ``contains a 
significant loophole'' in not addressing exporters of nonmarket economy 
merchandise that are located in third countries and stated that 
Commerce ``should not voluntarily limit its ability to remedy control 
over a firm's export activities exercised by the government of a 
nonmarket economy solely based on geography.'' Citing a separate rates 
policy bulletin issued by Commerce in 2005, the commenter explained 
that if a company physically located in a market economy country is 
owned or otherwise controlled by the nonmarket economy government, then 
that government could still be in a position to control the export 
activities of the company, which it asserted is the precise ``situation 
that the separate rate test is intended to address.'' \22\
---------------------------------------------------------------------------

    \22\ Citing Policy Bulletin 05.1, Separate-Rates Practice and 
Application of Combination Rates in Antidumping Investigations 
Involving Non-Market Economy Countries (April 5, 2005), available on 
Commerce's ACCESS website at https://access.trade.gov/Resources/policy/bull04-1.html.
---------------------------------------------------------------------------

    In addition, a few commenters expressed concerns with Commerce's 
separate rate exception codified in proposed Sec.  351.108(c) for 
entities wholly owned by market economy entities and incorporated and 
headquartered in a market economy. One commenter stated that Commerce 
failed to take into consideration in the proposed regulation that a 
nonmarket economy government might exercise control through various 
ownership interests or other means. That commenter advocated removing 
the exception from the proposed regulations altogether.
    Similarly, another commenter identified concerns with the same 
language in proposed Sec.  351.108(c), suggesting that Commerce should 
include an ``ultimate ownership'' analysis in the regulation looking 
beyond ``one level of corporate control'' to upstream shareholders and 
corporate owners to determine if the nonmarket economy government, 
including through the use of state-owned enterprises, might be situated 
in such a way as to evade Commerce's separate rate analysis.
    A third commenter suggested that Commerce add language to the 
provision that would allow Commerce to deny the application of the 
exception if there was evidence on the record suggesting that the 
company is otherwise controlled by the nonmarket economy government.
    A fourth commenter expressed concerns that the exception might 
allow for ``indirect'' ownership of an exporter of nonmarket economy 
merchandise, which ``could be exploited by government-controlled'' 
nonmarket economy entities ``attempting to obscure their status by 
routing ownership through one or more foreign holding companies with 
some operations in a market economy country.'' Therefore, that 
commenter recommended that Commerce add the terms ``directly and 
indirectly'' before the descriptor ``wholly owned'' in Sec.  
351.108(c).
    Two commenters stated that they disagreed with Commerce's proposed 
requirement in Sec.  351.108(d)(1), (2), and (3) that separate rate 
applications and certifications be filed no later than 14 days 
following publication in the Federal Register of a notice of 
initiation, stating that Commerce's current practice of 30 days was 
preferrable. In the Proposed Rule, Commerce explained that ``the 
thirty-day deadline delays Commerce from selecting respondents in its 
nonmarket economy proceedings because Commerce cannot select 
respondents for individual examination in its nonmarket economy 
proceedings until it first determines the pool of exporters who have 
satisfied the separate rate analysis.'' \23\ One commenter stated that 
it disagreed with Commerce's conclusion, stating that the thirty-day 
requirement does not affect the selection of mandatory respondents 
because it claimed that Commerce's practice is to choose the largest 
exporters based on quantity and value questionnaires and that if a 
company is selected as a mandatory respondent, Commerce can gather the 
information it needs for a separate rate analysis from the mandatory 
respondent's section A questionnaire response. In addition, that 
commenter stated that gathering necessary information to complete a 
separate rate application, in particular, is a difficult task, because 
many exporters may have never participated in an antidumping proceeding 
before, many companies have intermediate shareholders who may be 
initially unwilling to report their ownership, and the proposed 
regulations suggest that new information might be requested of 
exporters in the future which might take even more time to collect, 
report, and support with documentation.
---------------------------------------------------------------------------

    \23\ See Proposed Rule, 89 FR at 57296.
---------------------------------------------------------------------------

    A second commenter that disagreed with the fourteen-day deadline 
focused on the hardship which that truncated deadline would have on 
United States small businesses and, in particular, importers. The 
commenter explained that many United States importers are caught by 
surprise in antidumping investigations and have less-sophisticated 
operations than larger importers, and it may take a lengthy amount of 
time after a petition in an investigation has been filed to identify 
smaller importers as interested parties. In addition, the commenter 
explained that once those smaller importers realize that they are 
interested parties, it can take some time for them to retain legal 
counsel, fully understand the impact of antidumping and countervailing 
duties on their business, identify relevant products covered by an 
investigation being imported, and identify their upstream producers and 
exporters that are ultimately responsible for completing the separate 
rate application. Even after they identify those producers and 
exporters, the commenter explained that communicating with those 
parties and inducing them to file a timely separate rate application 
also takes time. That commenter stated that this ``significant change'' 
would be ``likely to disproportionately and negatively impact small 
U.S. businesses.'' Therefore, considering the financial impact of such 
a change on U.S. importers and numerous steps which U.S. importers 
would have to take under the proposed fourteen-day deadline, that 
commenter stated that Commerce should retain the thirty-day deadline.
    One commenter indicated its support for the fourteen-day deadline, 
stating that it should not create any hardship for companies wishing to 
submit a separate rate application or certification. That commenter 
stated that the applications and certifications are available on 
Commerce's website, and all importers, producers, and exporters should 
be aware after the petition is filed in investigations, (before 
initiation of the investigation), or after a review request is filed in 
reviews, that they are subject to an antidumping proceeding. That 
commenter agreed with Commerce that the new deadline would help prevent 
delays in nonmarket economy investigations or reviews because it allows 
Commerce to select respondents for individual examination earlier in 
the proceeding.
    In addition, Commerce received several suggestions from commenters 
for smaller modifications to proposed

[[Page 101701]]

Sec.  351.108 to improve the regulations. One commenter recommended 
that Commerce make the following modifications: Remove the term ``the 
lack of'' in the header language for proposed Sec.  351.108(b)(3) 
because the criteria listed in that section actually indicate de facto 
control; remove the word ``no'' in proposed Sec.  351.108(b)(3)(vi) 
because, again, that provision speaks to evidence of de facto control 
or influence; remove the word ``must'' in Sec.  351.108(b)(3)(i) and 
add the term ``or must maintain'' because the described situation 
covers both existing and required maintenance of certain government 
representatives in positions of control; include the term ``or 
managers'' following the term ``officers'' throughout the regulation 
because both officers and managers can influence corporate decisions; 
and when addressing situations in which representative of the 
governments may, in fact, be placed in positions of leadership or power 
in a company, Commerce should include the term ``or their family 
members,'' because Commerce has a long-standing practice of recognizing 
that family members and family groupings may share a common business 
interest and authority.\24\
---------------------------------------------------------------------------

    \24\ That commenter cited Jinko Solar Co. v. United States, 279 
F. Supp. 3d 1253, 1260 (CIT 2017), and Echjay Forgings Priv. Ltd. v. 
United States, 475 F. Supp.3d 1350, 1366 (CIT 2020), for cases 
affirming Commerce's determinations that family members can share a 
common interest with a business.
---------------------------------------------------------------------------

    Another commenter suggested that Commerce revise the regulation to 
better clarify that the agency, and not the separate rate applicants or 
certifiers, must be satisfied that the applications or certifiers have 
shown that the degree of government control or influence is not 
significant and to emphasize that the applicants or certifiers have the 
sole responsibility to provide proof of lack of government control or 
influence. That commenter also suggested that Commerce include 
``government-appointed or controlled labor unions'' in the regulation 
as types of governing authorities through which the nonmarket economy 
government may exert control or influence, because Commerce has 
indicated in the past that such unions are under the ``control and 
direction of the All-China Federation of Trade Unions (ACFTU),'' which 
is affiliated with the Chinese government and an organ of the Communist 
Party of China.\25\
---------------------------------------------------------------------------

    \25\ That commenter cited a memorandum drafted by Commerce, 
``Memorandum on China's Status as a Non-Market Economy,'' dated 
October. 26, 2017, available at https://enforcement.trade.gov/download/prc-nme-status/prc-nme-review-final-103017.pdf.
---------------------------------------------------------------------------

    Finally, one commenter expressed concerns with proposed Sec.  
351.108(e), which states that entities that submit separate rate 
applications or certifications and are subsequently selected to be an 
examined respondent in an investigation or review must fully respond to 
Commerce's questionnaires to be eligible for separate rate status. That 
commenter stated that Commerce should not adopt the proposed provision 
and not ``automatically deem companies that failed to respond to all 
questionnaires as part'' of the nonmarket economy entity. The commenter 
stated that a failure to respond to all questionnaires would justify 
the application of adverse facts available, pursuant to section 776(a) 
and (b) of the Act, but would not necessarily justify the refusal of a 
grant of separate rate eligibility. That commenter stated that treating 
individually examined respondents differently from non-selected 
exporters in this manner would create an ``arbitrary distinction'' and 
would result in Commerce not considering ``the rate assigned'' to an 
examined respondent in ``calculating the separate rate'' if the 
examined respondent was ``deemed to be part'' of the nonmarket economy 
entity. The commenter stated that such a practice would create a 
``significant incentive for manipulation by exporters and permit 
separate rate companies to potentially benefit from lower rates, 
notwithstanding the selected respondent's deemed representativeness of 
the non-individually examined companies.'' The commenter explained that 
under this situation, parties with no intent to fully participate or 
that anticipate substantial dumping margins would be incentivized to 
submit a separate rate application or certification and, once selected 
as an examined respondent, could withdraw from participation as a means 
of manipulating the rate applied to the non-selected separate rate 
companies.

Response

    Commerce has made certain modifications to proposed Sec.  351.108 
in light of the comments it received on the proposed regulation. With 
respect to the concerns expressed by multiple commenters as to third 
country exporters, Commerce respectfully disagrees with the commenters 
who stated that there is no difference for purposes of Commerce's 
separate rate practice between exporters of subject merchandise owned, 
in whole or in part, by a nonmarket economy government located in the 
nonmarket economy and those exporters located in a third country.
    When an entity is physically located in a nonmarket economy, there 
are multiple means by which the nonmarket economy government may, 
directly or indirectly, influence and control the entity. In the Act, 
Congress instructed Commerce to take into account at least six factors 
in determining if a country is a nonmarket economy: (i) the extent to 
which the currency of the foreign country is convertible into the 
currency of other countries; (ii) the extent to which wage rates in the 
foreign country are determined by free bargaining between labor and 
management; (iii) the extent to which joint ventures or other 
investments by firms of other foreign countries are permitted in the 
foreign country; (iv) the extent of government ownership or control of 
the means of production; (v) the extent of government control over the 
allocation of resources and over the price and output decisions; and 
(vi) such other factors as the administering authority considers 
appropriate.\26\ Some of those factors are specific to the nonmarket 
economy government's ownership and control of the producers and 
exporters of the subject merchandise, but other factors reflect the 
nature of the nonmarket economy itself.\27\ As Commerce has explained, 
its practice is focused on ``the government's use of a variety of legal 
and administrative levers to exert influence and control (both direct 
and indirect) over the assembly of economic factors across the 
economy.'' \28\
---------------------------------------------------------------------------

    \26\ See section 771(18)(B) of the Act.
    \27\ In 1997, the Federal Circuit in Sigma v. United States 
recognized that the Act ``recognizes a close correlation between a 
nonmarket economy and government control of prices, output 
decisions, and the allocation of resources.'' Sigma v. United 
States, 117 F.3d at 1405-1406.
    \28\ See Crystalline Silicon Photovoltaic Cells, Whether or Not 
Assembled Into Modules, From the People's Republic of China: Final 
Results of Antidumping Duty Administrative Review and Final 
Determination of No Shipments; 2012-2013, 80 FR 40998 (July 14, 
2015), and accompanying Issues and Decision Memorandum at Comment 
42.
---------------------------------------------------------------------------

    As noted above, Commerce has recognized in multiple cases the 
ability of the nonmarket economy government to influence or control 
production decisions, commercial decisions, or export activities within 
the nonmarket economy, even when such influence or control is applied 
through multiple entities and organizational relationships, and the 
Federal Circuit has affirmed such findings.\29\ The nonmarket economy 
government might control one producer directly, through a government 
agency or a state-owned

[[Page 101702]]

enterprise, while indirectly influencing another producer through 
privately-owned companies over which the nonmarket economy has 
ownership interests or governing authority.
---------------------------------------------------------------------------

    \29\ See., e.g., Sigma v. United States 117 F.3d at 1405; 
Transcom v. United States, 182 F. 3d 876, 882; Michaels Stores v. 
United States, 776 F.3d 1388, 1390; and Changzhou v. United States, 
701 F.3d 1367, 1370.
---------------------------------------------------------------------------

    However, when an exporting entity is physically located outside of 
the nonmarket economy at issue, some of those conclusions may not 
equally apply. In other words, the nonmarket economy government's 
``legal and administrative levers'' in the nonmarket economy that 
impact certain activities may differ from that government's ``legal and 
administrative levers'' in a third country where that government is not 
the legal authority. At the same time, Commerce recognizes that a 
nonmarket economy government can, depending on the specific 
circumstances, continue to exert substantial influence over the export 
activities of state-owned firms incorporated in third countries. For 
example, direct ownership of an exporter by a nonmarket economy 
government or state-owned enterprise could imply control over the 
selection of management of the exporter under the governing corporate 
agreements or inform the extent to which that exporter retains the 
proceeds of its export sales or repatriates them to the nonmarket 
economy parent.
    Accordingly, whether the exporting entity is located in a market 
economy or a different nonmarket economy is a factor that can be 
relevant to the analysis of whether a third country exporter is owned 
or potentially controlled by the nonmarket economy government.
    The focus of the separate rate test is ``if a respondent can 
demonstrate the absence of both de jure and de facto government control 
over its export activities.'' \30\ The ultimate question under the 
separate rate test is whether the nonmarket economy government has 
influence or control over important decisions of the entity, like the 
``selection of management,'' which would be ``key'' in ``determining 
whether a company has sufficient independence in its export activities 
to merit a separate rate.'' \31\
---------------------------------------------------------------------------

    \30\ See Polyester Textured Yarn from the People's Republic of 
China, Preliminary Affirmative Determination of Sales at Less Than 
Fair Value, Postponement of Final Determination and Extension of 
Provisional Measures, 84 FR 31297 (July 1, 2019), and accompanying 
Preliminary Decision Memorandum at ``Separate Rates.''
    \31\ Id.
---------------------------------------------------------------------------

    In the case of an entity located in a third country that exports 
merchandise subject to an investigation or AD/CVD order and originating 
from the nonmarket economy, the subject merchandise might be exported 
directly to the United States from the nonmarket economy. 
Alternatively, the subject merchandise might be exported to a third 
country, either the one where the entity is located or another third 
country, where it is held in a warehouse, stored in inventory or 
otherwise retained for a period of time, before it is eventually 
exported to the United States at a later date. A third option might be 
that the subject merchandise undergoes some minor processing in a third 
country, like the painting or marking of a product, without changing 
the country of origin of the merchandise. In all of these potential 
situations, unless record evidence demonstrates that the company is 
wholly owned by a foreign entity and is incorporated and headquartered 
in a market economy, in accordance with Sec.  351.108(c), Commerce 
requires a separate rate application or certification from that 
entity.\32\ This is because it is Commerce's experience that entities 
in third countries that export merchandise from the nonmarket economy 
to the United States commonly are owned, in part or in whole, by the 
nonmarket economy government through the government's agencies or 
state-owned enterprises.\33\ Additionally, based on experience, there 
is a strong possibility that through that ownership relationship the 
nonmarket economy government might control or influence the entity's 
export activities and decisions with respect to the merchandise being 
exported from the nonmarket economy. Such control might arise, for 
example, through the appointment of officers, managers, and the board 
of directors, but could also manifest through veto power or the use of 
``golden shares'' and outsized voting rights within the company. Every 
company is unique, so a state-owned enterprise or other government-
controlled entity might equally be able to direct or influence export-
related decisions of a third country company based on the unique nature 
of its ownership share.
---------------------------------------------------------------------------

    \32\ See Commerce's Separate Rate Application at 3, available at 
https://access.trade.gov/Resources/nme/sep-rate-files/app-20190221/prc-sr-app-022119.pdf.
    \33\ See, e.g., Chinese Firms are expanding in South-Asia, The 
Economist, dated April 24, 2024, available at https://economist.com/asia/2024/04/25/chinese-firms-are-expanding-in-south-east-asia.
---------------------------------------------------------------------------

    On the other hand, because the nonmarket economy government may not 
have the same legal and administrative levers in the third country 
which it has in the subject country, the exercise of ownership and 
control of the entity in the third country by the nonmarket economy 
government may differ. Accordingly, after consideration of the 
comments, Commerce has modified paragraph (a) of Sec.  351.108 to add a 
paragraph (a)(3) which states that if a nonmarket economy government 
has direct ownership or control, in whole or in part, of an entity 
located in a third country market and that entity exports subject 
merchandise from the nonmarket economy to the United States, Commerce 
may determine on the basis of record information that such an entity is 
part of the government-controlled entity and assign that entity the 
nonmarket economy entity rate.
    Furthermore, Commerce has modified Sec.  351.108(b) and divided it 
into two provisions. Pursuant to paragraph (b)(1), Commerce will apply 
an updated separate rate test and analysis to entities located in 
nonmarket economies, as set forth in the Proposed Rule, and pursuant to 
paragraph (b)(2), Commerce may analyze an entity directly owned or 
controlled by a nonmarket economy government and located in a third 
country and determine based on record information if that third country 
exporter should be treated as part of the nonmarket economy entity and 
receive the nonmarket economy entity rate or if it should be granted a 
separate antidumping duty rate. This language is consistent with 
Commerce's historical analysis and treatment of entities located in 
nonmarket economies and allows for Commerce to consider the legal and 
administrative levers present in third countries that might allow for 
the control of an entity that exports subject merchandise to the United 
States and is owned, in part or in whole, by the nonmarket economy 
government.\34\
---------------------------------------------------------------------------

    \34\ See, De Facto Criteria for Establishing a Separate Rate in 
Antidumping Proceedings Involving Nonmarket Economy Countries, 78 FR 
40430, 40432 (July 5, 2013) (``We agree that there is a legitimate 
concern that NME producers under government control selling through 
affiliated third-country resellers may, in fact, control that 
reseller and, in such cases, the reseller's exporting activities 
would also be under government control'') and (``In circumstances 
when the record indicates there may be government control through 
the NME producer, we may require both the NME producer and the ME 
exporter to provide'' separate rate de jure and de facto 
information).
---------------------------------------------------------------------------

    In response to the comments on proposed Sec.  351.108(c), Commerce 
has clarified the language of the provision to explain that, in 
accordance with our current practice, if an entity claims that it is 
wholly owned by a foreign entity and headquartered and incorporated in 
a market economy, it must complete and submit relevant, designated 
sections of the separate rate application or

[[Page 101703]]

certification explaining as much and provide accompanying information 
on the record that supports such a claim.\35\ Furthermore, Commerce has 
modified the language of Sec.  351.108(d) to explain that all exporters 
of subject merchandise to the United States, even those claiming the 
``wholly owned'' exception applies, must submit a separate rate 
application or certification, with the only difference being those 
claiming that the ``wholly owned'' exception need only complete a 
section of the application or certification explicitly designated for 
that purpose by Commerce.
---------------------------------------------------------------------------

    \35\ See Commerce's Separate Rate Application at 3, available at 
https://access.trade.gov/Resources/nme/nme-separate.html.
---------------------------------------------------------------------------

    On the other hand, Commerce will not modify the regulations to 
require further analysis or investigation under the ``wholly owned'' 
exception into possible ``ultimate owners'' of the foreign owners 
themselves in every proceeding in which the issue arises, as suggested 
by certain commenters. The facts of each antidumping proceeding are 
unique, and the application of any such requirement to Commerce in 
every case in which this arises, whether the foreign-owned entity is 
located in the nonmarket economy or in a third country, would be 
unreasonable and fail to take into consideration the time, record 
constraints and overall difficulty which Commerce could be faced with 
in pursuing such lines of inquiry in a proceeding involving multiple 
parties or complicated facts. Commerce has an extensive history of 
applying the foreign-owned exception in its separate rate practice,\36\ 
and Commerce will continue to apply that exception and consider the 
evidence on the record in determining on a case-by-case basis whether 
the exception should apply to a given exporter. Furthermore, for the 
same reason, Commerce will not expand its normal analysis to mandate 
inquiry in the regulation into ``indirect'' means of ownership or 
control of foreign-owned entities by a nonmarket economy government 
through potential holding companies or shareholder deception in every 
case, as suggested by some commenters.
---------------------------------------------------------------------------

    \36\ Commerce has allowed an exception for wholly-foreign-owned 
exporters from the application of the separate rate analysis for 
three decades. See Notice of Final Determination of Sales at Less 
Than Fair Value: Bicycles From the People's Republic of China, 61 FR 
19026 (April 30, 1996) (explaining that ``Four of the responding 
exporters in this investigation are located outside the PRC . . . 
Further, there is no PRC ownership of any of these companies. 
Therefore, we determine that no separate rates analysis is required 
for these exporters because they are beyond the jurisdiction of the 
PRC government''); Certain Steel Threaded Rod from the People's 
Republic of China: Preliminary Results and Partial Rescission of the 
Antidumping Duty Administrative Review; 2014-2015, 81 FR 29843 (May 
13, 2016), and accompanying Issues and Decision Memorandum at 5, 
citing Final Results of Antidumping Administrative Review: Petroleum 
Wax Candles from the People's Republic of China, 72 FR 52355 
(September 13, 2011) (stating ``In its Section A response, the RMB/
IFI Group, reported that it is wholly-owned by individuals or 
companies located in a market economy (``ME'') country. Therefore, 
because it is wholly foreign-owned, and we have no evidence 
indicating that it is under the control of the PRC government, a 
separate rate analysis is not necessary to determine whether this 
company is independent from government control. Accordingly, we 
preliminarily grant a separate rate to the RMB/IFI Group''); and 
Wooden Bedroom Furniture From the People's Republic of China: 
Amended Final Results Pursuant to a Final Court Decision, 75 FR 
72788 (November 26, 2010) (stating ``Wanvog provided evidence that 
during the POR it was a wholly foreign-owned company. Therefore, 
consistent with the Department's practice, further analysis is not 
necessary to determine whether Wanvog's export activities are 
independent from government control, and we have preliminarily 
granted a separate rate to Wanvog'').
---------------------------------------------------------------------------

    With regard to the comments on proposed deadlines for the filing of 
separate rate applications and certifications under Sec.  351.108(d)(1) 
and (2), Commerce has reconsidered its proposed deadline of 14 days 
from publication of initiation in antidumping investigations in 
agreement with the commenters who noted that many importers or 
exporters who find themselves subject to an investigation might be 
unfamiliar with the antidumping laws and procedures and may need more 
than fourteen days after initiation to communicate with the appropriate 
lawyers, company representatives or government officials and gather 
information to submit necessary documentation with Commerce. Although 
one commenter is correct that Commerce normally determines the 
potential pool of respondents using Quantity and Value questionnaires 
in nonmarket economy procedures, Commerce disagrees that the receipt of 
those questionnaires, followed by the receipt of separate rate 
applications, does not delay the selection of respondents. As Commerce 
explained in the Proposed Rule, the longer Commerce must wait for 
questionnaires, applications, and certifications, the longer it takes 
for Commerce to select respondents and issue full questionnaires to 
respondents selected for examination.\37\ Investigations, 
administrative reviews and new shipper reviews are all conducted under 
statutory deadlines, and the Act does not provide for extensions of 
those deadlines due to response times of Quantity and Value 
questionnaires and separate rate applications and certifications.
---------------------------------------------------------------------------

    \37\ See Proposed Rule, 89 FR at 57296.
---------------------------------------------------------------------------

    Commerce, therefore, continues to find that 30 days from initiation 
of an investigation is still too lengthy of a period in which to wait 
for separate rate applications in an investigation, but also agrees 
with some of the commenters that in an investigation 14 days may be too 
short of a time for importers and exporters to communicate and gather 
the necessary data. Accordingly, Commerce has modified Sec.  
351.108(d)(1) to allow for a separate rate application to be filed an 
additional seven days from that proposed in the Proposed Rule. 
Specifically, in antidumping investigations, interested parties will be 
allowed to file separate rate applications no later than 21 days 
following publication of initiation of the investigation in the Federal 
Register. This means that from the time a petition is filed in an 
investigation, interested parties will have notice that an 
investigation might be conducted and start gathering necessary 
information, and from the time the investigation notice is published in 
the Federal Register, they will have 21 days to answer the questions in 
Commerce's separate rate application, located on Commerce's website, 
and file the application electronically with the agency. Commerce has 
determined that this modification to the proposed regulation 
appropriately takes into consideration the concerns raised by some of 
the commenters, while also helping Commerce to prevent delays of its 
procedures by a few days when conducting an AD investigation.
    However, with respect to administrative reviews and new shipper 
reviews, Commerce does not agree that the same issues exist as were 
raised by the commenters with respect to investigations. After an 
investigation is completed, an AD order is issued and published in the 
Federal Register.\38\ Administrative reviews and new shipper reviews 
are conducted pursuant to an existing AD order. U.S. importers and 
foreign exporters alike are on notice that when merchandise subject to 
an AD order is imported into the United States, cash deposits will be 
collected on that merchandise, and duties will be assessed on that 
merchandise at some point.\39\ Importers and exporters have an 
obligation to be aware of potential duties on the merchandise which 
they are importing or exporting, and ignorance of the existence of the 
AD order or of their fiduciary duties to pay the applicable trade 
remedies is not a

[[Page 101704]]

reasonable excuse. On the other hand, the fourteen-day deadline will 
allow Commerce the opportunity to avoid certain existing delays in its 
proceedings to the benefit of the participants who must answer 
questionnaires and to Commerce officials in analyzing and considering 
those parties' questionnaire responses and information. Accordingly, 
Commerce has not modified the fourteen-day deadline from the 
publication of initiation of an administrative review or new shipper 
review set forth in Sec.  351.108(d)(2).
---------------------------------------------------------------------------

    \38\ See section 736(a) of the Act.
    \39\ Id.
---------------------------------------------------------------------------

    Commerce agrees with other suggestions and has adopted them as 
follows: (1) Commerce has removed the term ``the lack of'' in the 
header language for proposed Sec.  351.108(b)(1)(iii) because the 
criteria listed in that section actually indicate de facto control; (2) 
Commerce has removed the word ``no'' in proposed Sec.  
351.108(b)(1)(iii) because, again, that provision speaks to evidence of 
de facto control or influence and the inclusion of the word ``no'' 
spoke to the opposite meaning; (3) Commerce has revised Sec.  
351.108(b)(1)(iii)(A) to read ``maintains or must maintain'' because 
the described situation covers both existing and required maintenance 
of certain government representatives in positions of control; (4) 
Commerce has included the term ``or managers'' following the term 
``officers'' throughout the regulation because both officers and 
managers can influence corporate decisions; (5) Commerce has included 
the term ``or their family members'' when addressing situations in 
which representatives of the governments may, in fact, be placed in 
positions of leadership or power in a company, in accordance with 
Commerce's practice of recognizing that family members and family 
groupings may share a common business interest and authority; and (6) 
Commerce has included ``government-appointed or controlled labor 
unions'' in the regulation as types of government authorities through 
which a nonmarket economy may exert control or influence. In addition 
to those modifications, Commerce has emphasized in Sec.  351.108(a)(2), 
that its analysis is based on record information, clarified language 
throughout the regulation when it was referring to a ``government'' 
that the government at issue is the ``nonmarket economy government,'' 
and removed the term ``or control'' from Sec.  351.108(b)(1)(i)(B)(2) 
because that language is superfluous, as that particular provision 
pertains to the veto power of the nonmarket economy government giving 
it control over the decisions of the entity. Furthermore, Commerce has 
also modified ``production and commercial'' decisions throughout the 
regulation to be ``production, commercial and export'' decisions 
because export decisions are always under consideration in Commerce's 
separate rate analysis.
    In addition, in response to a commenter's suggestion that Commerce 
revise the regulation to clarify that Commerce, not the separate rate 
applicants or certifiers, must be satisfied that the applications or 
certifiers have shown that the degree of government control or 
influence is not significant and that applicants or certifiers must 
provide proof of lack of government control or influence, Commerce has 
modified the text of Sec.  351.108(b) to indicate that Commerce must 
determine ``that the exporter has demonstrated that it operates certain 
activities sufficiently independent from nonmarket economy government 
control.'' Commerce has also provided further language in Sec.  
351.108(d) to explain that if no separate rate application or 
certification is timely submitted by an exporter of merchandise subject 
to an investigation or AD/CVD order, Commerce may apply the nonmarket 
economy rate to that exporter's merchandise. Also, Commerce modified 
the title language to the overall regulation to emphasize that 
Commerce's separate rate analysis applies to entities, whether in the 
nonmarket economy or in a third country, that export merchandise from 
the nonmarket economy to the United States.
    In response to the comment on proposed Sec.  351.108(e) that 
entities that submit separate rate applications or certifications and 
are subsequently selected to be an examined respondent in an 
investigation or review by Commerce must fully respond to Commerce's 
questionnaires in order to be eligible for separate rate status, 
Commerce has expanded that proposed paragraph to not only require full 
responses to questionnaires but also full participation in the 
proceeding, as explained below.
    With respect to Commerce's questionnaires, the full ``section A'' 
questionnaire asks more detailed questions specifically about corporate 
structure than the separate rate application or certification. It asks 
for an organizational chart on affiliation and has more comprehensive 
questions about manufacturing facilities, locations, legal structure, 
third parties, narrative history, capital verification reports, and 
other information in addition to ownership and affiliation. Further, 
the ``section C'' questionnaire requests information that supports 
claims that a respondent retained the proceeds of their export sales 
and made independent decisions regarding the disposition of profits or 
financing of losses. In addition to requesting more data about the 
company's corporate structure in the initial questionnaire, Commerce 
frequently will issue supplemental questionnaires to learn even more 
details about the affiliations and structure of the respondent being 
examined. Much of the ``section A'' questionnaire is akin to a more 
detailed request for information to supplement the separate rate 
application or certification and allows Commerce to confirm or clarify 
claims made in a separate rate certification or application.
    In addition, full participation in the proceeding overall is 
necessary to allow Commerce to be able to verify any information 
relevant to determining separate rate eligibility, and it is not 
unusual for Commerce to discover at verification that information 
believed to be complete on the record before conducting verification 
was, in fact, incomplete after consideration of an entity's complete 
books and record. Accordingly, if a respondent selected for individual 
examination fails to fully respond to Commerce's questionnaires or, 
where applicable, fails to allow Commerce to verify information 
submitted in response to Commerce's questionnaires, absent extenuating 
circumstances, Commerce shall determine that it also has failed to 
demonstrate its eligibility for a separate rate.
    The commenter on Sec.  351.108(e) did not seem to take issue with 
the provision itself, but instead indicated concerns with what Commerce 
does after it has made a determination that the exporter is part of the 
nonmarket economy entity. The commenter expressed concerns that non-
selected entities and examined respondents would collude in such a way 
that if an examined respondent realized that review of its entries 
could lead to a high dumping margin, which would in turn be used to 
help calculate the rate applied to the non-selected exporters, the 
examined respondent might choose not to answer questionnaires, thereby 
pulling it into the nonmarket economy entity and pulling it out of the 
non-selected exporters calculation, under Commerce's current practice 
for determining that non-selected exporter rate.
    Although Commerce appreciates the concerns expressed by the 
commenter on this issue, Commerce disagrees that treating an examined 
respondent differently for purposes of its separate

[[Page 101705]]

rate analysis from those exporters who only submit separate rate 
applications and certifications is ``arbitrary.'' The distinction is in 
no way arbitrary because examined respondents must provide a much 
greater amount of information to Commerce to analyze and determine an 
antidumping margin covering their merchandise. In addition, without 
full participation by the examined respondent, including a response to 
questionnaires, Commerce is unable to confirm, clarify, or verify 
claims made in a separate rate certification or application. 
Furthermore, although Commerce has codified its methodology for 
determining a rate to be applied to non-selected exporters in an 
antidumping proceeding covering a nonmarket economy in general at Sec.  
351.109(g), neither that provision nor Sec.  351.108(e) addresses the 
use, or nonuse, of the nonmarket economy entity rate in determining a 
rate to be applied to the non-selected exporters in an antidumping 
investigation or administrative review. The commenters' concerns seem 
to speak to that element of Commerce's calculation of a rate to apply 
to non-selected exporters, but because Commerce is not codifying that 
practice in this provision, Commerce has determined that this concern 
should be addressed on a case-specific basis. Accordingly, other than 
requiring full participation in the proceeding, Commerce has made no 
further modifications to Sec.  351.108(e).
    Finally, Commerce is not addressing in the new regulation or in the 
preamble to the final rule situations in which an entity located in a 
third country substantially transforms subject merchandise into a 
different product in the third country, completes or assembles the 
subject merchandise into a different product in the third country, or 
alters the subject merchandise in form or appearance in minor respects 
in the third country, as suggested by one of the commenters. All of 
those scenarios are already addressed in scope and circumvention 
proceedings by sections 781(b) and (c) of the Act and Sec. Sec.  
351.225(j) and 351.226(i) and (j) of Commerce's regulations.

4. Commerce Has Made a Small Modification to Proposed Sec.  
351.109(c)(2)(v), Which Applies to the Selection of Additional 
Respondents

    Proposed new Sec.  351.109 addresses Commerce's procedures for 
selecting respondents, calculating the all-others rate in 
investigations, calculating a rate for unexamined respondents in 
various proceedings, and the selection of voluntary respondents.\40\
---------------------------------------------------------------------------

    \40\ See Proposed Rule, 89 FR at 57296.
---------------------------------------------------------------------------

    Commerce received several generally supportive comments on the 
proposed new Sec.  351.109. With respect to the selection of additional 
respondents, one commenter stated that the language ``soon after filing 
questionnaire response'' and ``early in the segment of a proceeding'' 
in proposed Sec.  351.109(c)(2)(v) \41\ is open-ended and would likely 
lead to debate over what counts as ``soon'' or ``early.'' That 
commenter recommended that Commerce instead define the cutoff for 
adding new respondents by stating Commerce would select a respondent 
only after determining that there is sufficient time left before 
deadlines in the proceedings to complete all of its procedures without 
additional administrative burden. That commenter suggested that by 
adding language that addressed timing and other such considerations, 
Commerce would set realistic parameters for parties to understand when 
Commerce may select additional respondents.
---------------------------------------------------------------------------

    \41\ Id., 89 FR at 57296-57300.
---------------------------------------------------------------------------

    That commenter stated that this revised language would also 
establish a standard that is consistent with Commerce's approach 
elsewhere in its regulations. For example, Sec.  351.311(b) provides 
that Commerce ``will examine the practice, subsidy, or subsidy program 
{discovered in the course of an investigation or review{time}  if the 
Secretary concludes that sufficient time remains before the scheduled 
date for the final determination or final results of review.'' 
Similarly, Sec.  351.214(f)(2) states that Commerce may rescind a new 
shipper review where ``{a{time} n expansion of the normal period of 
review to include an entry and sale to an unaffiliated customer in the 
United States of subject merchandise would be likely to prevent the 
completion of the review within the time limits.''
    The second commenter stated that it generally concurred with 
Commerce's proposed rule but recommended that the regulation define the 
parameters on the timing for the selection of additional respondents 
under Sec.  351.109(c)(2)(v). For example, the proposed language does 
not define how soon after the filing of questionnaire responses a 
respondent could withdraw from participation and Commerce would 
consider reviewing another exporter or producer for examination, how 
early in the segment Commerce could determine that a selected exporter 
or producer is no longer participating in the investigation or 
administrative review and that there is sufficient time to pick another 
respondent, or when in the segment Commerce could determine that the 
exporter's or producer's sales of merchandise subject to an 
investigation or AD/CVD order are not bona fide but that there remains 
time to examine another respondent. Without a clear definition of what 
``early in the segment'' means, the commenter explained the uncertainty 
could result in the selection of additional respondents and the filing 
of new questionnaire responses very late in a proceeding, thereby 
providing insufficient time for domestic producers to provide 
meaningful comment or for Commerce to issue supplemental questionnaires 
prior to a preliminary determination or preliminary results. Therefore, 
the second commenter recommended that Commerce add language to state 
that Commerce will select additional respondents only if it is within 
90 days of initiation, consistent with the 90-day deadline for parties 
to withdraw requests for administrative reviews under Sec.  351.213(d).
    Two other commenters suggested that Commerce codify that a 
``reasonable number of respondents'' in an investigation or 
administrative review where individual examination of all known 
exporters or producers is not practicable must be more than one 
respondent, consistent with recent holdings of the Court of 
International Trade (CIT) and Federal Circuit.\42\
---------------------------------------------------------------------------

    \42\ See YC Rubber Co. (North America) LLC v. United States, No. 
2021-1489, 2022 WL 3711377 at 3 (Fed. Cir. 2022); see also 
Schaeffler Italia S.R.L. v. United States, 781 F. Supp. 2d 1358, 
1363 (CIT 2011).
---------------------------------------------------------------------------

    Those two commenters also recommended that Commerce modify its 
practice to enable more frequent use of sampling as a respondent 
selection methodology. They stated that in many cases, selection of the 
two largest producers or exporters results in selection of the same 
respondents in proceeding after proceeding and allows those respondents 
to tailor their operations or reporting in a manner that avoids 
antidumping or countervailing duties without being representative of 
the foreign industry.
    The commenters also expressed concern with Commerce's rejection of 
the use of sampling in most cases. In a 2013 notice, the agency stated 
that it would not rely on sampling unless it ``has the resources to 
examine individually at least three companies for the segment.'' \43\ 
One commenter stated

[[Page 101706]]

that Commerce rarely selects more than two respondents, particularly in 
administrative reviews, and claims that Commerce has not conducted a 
single proceeding since the issuance of the 2013 policy announcement in 
which it used sampling to select respondents. One commenter also stated 
that a system in which most foreign exporters will be excluded from 
individual examination and thus able to ``free ride'' off the largest 
respondents' margins creates a significant barrier to leveling the 
playing field in the U.S. market.
---------------------------------------------------------------------------

    \43\ See Antidumping Proceedings, 78 FR 65963, 65965 (November 
4, 2013) (announcement of change in Commerce practice for respondent 
selection in AD proceedings and conditional review of the nonmarket 
economy entity in AD proceedings).
---------------------------------------------------------------------------

    Another concern raised by one commenter was Commerce's normal 
reliance on USCBP data to select respondents. That commenter stated 
that while USCBP data is generally an appropriate starting point for 
respondent selection, these data can also be highly problematic for the 
purpose of respondent selection. For example, it is possible for 
quantities to be reported in different units that are not easily 
converted into a uniform unit of measurement. That commenter also 
suggested that USCBP data may also contain errors or appear to be 
incomplete, which can be evident on the face of the data or revealed 
only in light of information submitted by interested parties. 
Therefore, one commenter recommended that Commerce clarify in its 
regulations that, when such problems with USCBP data are evident or 
revealed by information placed on the record, Commerce will rely on 
additional information for the purpose of respondent selection. That 
commenter suggested that Commerce consider requiring all exporters 
requesting an administrative review to provide with their request the 
quantity and value of their shipments of subject merchandise during the 
period of review in order to have a second set of reliable data on the 
record from which to select respondents.
    Lastly, one commenter expressed concerns regarding Commerce's 
proposed regulation for calculating the all-others and non-selected 
rates. That commenter referenced several past cases where Commerce used 
either quantity or value in calculating the dumping margin assigned to 
exporters and producers who were not individually reviewed and stated 
that Commerce's calculations had been inconsistent. That commenter 
stated that Commerce should clarify in the regulations the 
circumstances in which it will rely on a weighted average of publicly 
ranged U.S. sales values or the circumstances in which Commerce would 
rely on a weighted average of sales quantities for calculating the all-
others rate and the non-selected respondents' rate.

Response

    Commerce agrees with the commenter that suggested Commerce should 
focus on the time remaining and actions which need to be taken in a 
segment of a proceeding before selecting a new respondent. Accordingly, 
in the last sentence of Sec.  351.109(c)(2)(v) Commerce has added 
language to say that the Secretary may select the next respondent based 
on the next largest volume or value ``if the Secretary determines that 
such a selection will not inhibit or impede the timely completion of 
that segment of the proceeding.''
    On the other hand, Commerce does not agree with a commenter's 
suggestion that Commerce should codify a hard deadline before which it 
can select additional respondents. There is nothing in the Act which 
would suggest such a restriction, and imposing such a deadline in the 
regulation may curtail Commerce's ability to select respondents when 
issues arise during a proceeding. As mentioned in the Proposed Rule, 
considerable time and resources are necessary for issuing 
questionnaires and analyzing data for purposes of respondent 
selection.\44\ If Commerce were to codify a deadline as suggested and 
then a respondent decided not to participate or to withdraw its request 
for administrative review, or Commerce determined that the U.S. sales 
reported by a selected respondent were not bona fide sales of subject 
merchandise after that deadline, yet Commerce also determined that 
there remained sufficient enough time for Commerce to select another 
respondent, then such a deadline would be a hindrance to the agency. 
Commerce should be able to select another respondent for examination in 
any of those scenarios. Accordingly, Commerce does not believe the 
codification of a hard deadline is advisable.
---------------------------------------------------------------------------

    \44\ See Proposed Rule, 89 FR at 57297.
---------------------------------------------------------------------------

    Section 777A(c)(1) and (e)(1) of the Act direct Commerce to 
determine an individual weighted-average dumping margin or 
countervailable subsidy rate for each known exporter and producer of 
the subject merchandise. If Commerce codified a hard deadline and for 
whatever reason one or more respondents dropped out after that 
deadline, Commerce might find itself with no ability to select 
additional exporters or producers, despite the statutory preference to 
review more exporters and producers and the fact that Commerce has 
determined that it has the time and resources to examine another 
exporter or producer. Such a restriction is illogical and would only 
provide Commerce with fewer opportunities to exercise its statutory 
authority to examine a reasonable number of respondents.\45\ 
Accordingly, Commerce has not adopted that recommendation in the final 
rule.
---------------------------------------------------------------------------

    \45\ See Viet I-Mei Frozen Foods Co. v. United States, 83 F. 
Supp. 3d 1345, 1362 (CIT 2015), aff'd, 839 F.3d 1099 (Fed. Cir. 
2016) (``{T{time} o the prevention of abuse where Commerce expends 
resources to initiate an individual examination--and the respondent 
seeks to withdraw its participation when it changes its mind about 
the benefit of such examination and prefers the `all others' rate 
instead--is a reasonable basis on which Commerce may decline to 
abort its examination.'').
---------------------------------------------------------------------------

    As mentioned in the Proposed Rule, the primary focus of respondent 
selection is whether Commerce can effectively examine a reasonable 
number of producers and exporters, as Congress intended, to calculate 
an accurate dumping margin or countervailable subsidy rate.\46\ Certain 
commenters requested that Commerce codify that when limiting individual 
examination to the largest producers/exporters, Commerce will select 
more than one respondent in every case. However, Commerce saw no need 
to codify any such requirement in its Proposed Rule and continues to 
see no benefit in codifying such a requirement into the regulation. 
Accordingly, Commerce has not placed such a restriction in the 
regulation.
---------------------------------------------------------------------------

    \46\ See Proposed Rule, 89 FR at 57297.
---------------------------------------------------------------------------

    With respect to the comments on sampling, section 777A(c) of the 
Act states that if it is ``not practicable to make individual weighted 
average dumping margin determinations'' because of ``the large number 
of exporters or producers involved'' in an investigation or review, 
Commerce may ``determine the weighted average dumping margins for a 
reasonable number of exporters or producers by limiting its examination 
to (A) a sample of exporters, producers or types of products that is 
statistically valid based on the information available'' to Commerce at 
the time of selection or (B) the exporters and producers accounting for 
the ``largest volume of the subject merchandise from the exporting 
country that can be reasonably examined.'' The Statement of 
Administrative Action (SAA) states that ``the authority to select 
samples rests exclusively with Commerce, but, to the greatest extent 
possible, Commerce will consult with

[[Page 101707]]

exporters and producers regarding the method to be used.'' \47\
---------------------------------------------------------------------------

    \47\ See Statement of Administrative Action Accompanying the 
Uruguay Rounds Agreement Act, H. Doc. 316, Vol. 1, 103d Cong. (1994) 
(SAA) at 872.
---------------------------------------------------------------------------

    In its 2013 Change in Practice Notice, Commerce explained that it 
will normally rely on sampling for respondent selection purposes in AD 
administrative reviews when (1) there is a request by an interested 
party for the use of sampling to select respondents, (2) Commerce has 
the resources to examine individually at least three companies for the 
segment, (3) the ``largest'' three companies (or more if Commerce 
intends to select more than three respondents) by import volume of the 
subject merchandise under review account for normally no more than 50 
percent of total volume, and (4) information obtained by or provided to 
Commerce provides a reasonable basis to believe or suspect that the 
average export prices and/or dumping margins for the largest exporters 
differ from such information that would be associated with the 
remaining exporters.\48\ In the rare cases where Commerce relies on 
sampling to select respondents, it is typically when there are 
multiple, and often numerous, prior reviews to draw upon for evidence 
of margin differentials attributable to size.
---------------------------------------------------------------------------

    \48\ See Antidumping Proceedings: Announcement of Change in 
Department Practice for Respondent Selection in Antidumping Duty 
Proceedings and Conditional Review of the Nonmarket Economy Entity 
in NME Antidumping Duty Proceedings, 78 FR 65963, 65964 (November 4, 
2013) (2013 Change in Practice Notice).
---------------------------------------------------------------------------

    An important part of any methodology using sampling to select 
respondents is that the sampling must be ``statistically valid'' under 
section 777A(c)(A) of the Act. The commenters who expressed concerns 
with Commerce's respondent selection sampling methodology did not 
explain why that methodology is not statistically valid, or, in the 
alternative, provide an alternative methodology that would meet this 
statutory requirement.\49\ Therefore, Commerce will continue to rely on 
the criterion specified in the 2013 Change in Practice Notice and 
consider sampling when Commerce can select a minimum of three 
respondents to examine individually in light of resource constraints. 
Despite statements by the commenters to the contrary, Commerce has in 
fact completed a statistically valid sampling request since the 
issuance of the 2013 Change in Practice Notice,\50\ and statistically 
valid sampling for purposes of respondent selection remains a viable 
option for parties to request and consider.
---------------------------------------------------------------------------

    \49\ See SAA at 873 (``Commerce will employ a sampling 
methodology designed to give representative results based on the 
facts known at the time the sampling method is designed'').
    \50\ See, e.g., Commerce's Memorandum, ``Antidumping Duty 
Administrative Review of Steel Nails from the People's Republic of 
China: Sampling Pool for Selection of Respondents and Selection 
Methodology,'' dated April 1, 2019 (``In light of the particularly 
large number of exporters that are under review in this segment, as 
well as the history of margins in the prior segments of this 
proceeding, discussed above, we find that using a sampling 
methodology in this review addresses this enforcement concern'').
---------------------------------------------------------------------------

    In the Proposed Rule, Commerce stated that it would normally base 
respondent selection on information derived from USCBP.\51\ While one 
commenter expressed concerns regarding Commerce's preference for USCBP 
data, suggesting that USCBP data are susceptible to errors, no database 
is perfect. Although the Act does not limit Commerce to relying only on 
USCBP data in its reviews, Commerce weighs USCBP data more heavily 
because they contain the actual entry documentation for the shipments, 
including the CBP 7501 entry summary form (or its electronic 
equivalent), invoice, and bill of lading.\52\ USCBP data are based on 
information required by, and provided to, the U.S. government authority 
responsible for permitting goods to enter into the United States.\53\ 
Moreover, significant penalties can be imposed on parties that report 
entry information inaccurately.\54\ Furthermore, Commerce prefers USCBP 
data because they are ``a primary source, as opposed to a secondary 
source, which may be prone to errors in the data collection and 
aggregation process.'' \55\ Given the aforementioned reasons, 
Commerce's treatment of USCBP data will remain unchanged when selecting 
that as a data source to determine the largest exporters or producers 
of subject merchandise.
---------------------------------------------------------------------------

    \51\ See Proposed Rule, 89 FR at 57297.
    \52\ See, e.g., Certain Frozen Fish Fillets From the Socialist 
Republic of Vietnam: Final Results of Antidumping Duty 
Administrative Review; Final Determination of No Shipments; 2020-
2021, 87 FR 55996 (September 13, 2022) (Fish Fillets from Vietnam), 
and accompanying Issues and Decision Memorandum (``Although the 
petitioners assert that ship manifest data it placed on the record 
`raises questions' regarding the CBP data, it is well-established 
that mere speculation does not constitute substantial evidence, 
which is the standard for Commerce to make a finding.'').
    \53\ See, e.g., Certain Frozen Warmwater Shrimp from India: 
Final Results and Partial Rescission of Antidumping Duty 
Administrative Review, 74 FR 33409 (July 13, 2009), and accompanying 
Issues and Decision Memorandum, at Comment 2.
    \54\ See Fish Fillets from Vietnam Issues and Decision 
Memorandum at Comment: Commerce Should Ensure that All Subject 
Merchandise Is Subject to the Appropriate Duties.
    \55\ See, e.g., Certain Cut-to-Length Carbon Steel Plate from 
the People's Republic of China: Preliminary Results of Antidumping 
Administrative Review and Preliminary Determination of No Shipments, 
77 FR 47593 (August 9, 2012).
---------------------------------------------------------------------------

    In addition, Commerce will not include in the regulation a 
requirement that respondents that request an administrative review file 
a quantity and value questionnaire response when making a review 
request, as suggested by a domestic industry commenter. Such further 
information submissions from foreign exporters would be unnecessary and 
create an additional burden on Commerce to consider and analyze such 
submissions, regardless of whether such additional information on the 
record actually adds value to the case at hand.
    Commerce agrees that for some imported products, problems arise in 
relying on certain USCBP volume data because different importers will 
report their entries in quantities that are denominated in different 
units of measure (UOMs). For example, in the 2023 CVD administrative 
review of softwood lumber from Canada, Commerce acknowledged that 
certain importers reported their imports based on cubic meters, others 
on square meters, others on kilograms, and still others based on number 
of pieces.\56\ Commerce also explained that ``in addition to missing 
volumes, the various UOMs are problematic because, for example, 
measurements of weight (e.g., kilograms) cannot be converted to 
measurements of volume (e.g., cubic meters) without making certain 
assumptions, and `number of pieces' simply cannot be converted to a 
measurement of volume.'' \57\ On the other hand, the USCBP data in that 
review did contain ``value amounts for all entries of subject 
merchandise in the same unit of currency.'' \58\ Therefore, as it had 
in prior review periods, Commerce determined to rely ``on the value 
data as a proxy for quantity and selecting respondents accounting for 
the largest value.'' \59\ Commerce explained that using value as a 
proxy for quantity when there are issues with reported UOMs for entry 
quantities ``is transparent and consistent with Commerce's approach in 
other proceedings as well as the prior administrative reviews of this 
order.'' \60\ For this reason, Sec.  351.109(c)(2)(ii) specifically 
provides that if Commerce determines that ``volume data are

[[Page 101708]]

unreliable or inconsistent, depending on the product at issue,'' 
Commerce ``may instead select the largest exporter of subject 
merchandise based on the value of the imported products instead of the 
volume of the imported products.'' The value data, however, will still 
normally originate from the USCBP. Thus, on this basis as well, 
Commerce sees no reason to second-guess its normal preference of using 
data derived from USCBP if possible.
---------------------------------------------------------------------------

    \56\ See Memorandum, ``Administrative Review of the 
Countervailing Duty Order on Certain Softwood Lumber Products from 
Canada; 2023: Respondent Selection,'' dated April 19, 2024 (ACCESS 
Barcode: 4546196-01).
    \57\ Id.
    \58\ Id.
    \59\ Id.
    \60\ Id.
---------------------------------------------------------------------------

    Lastly, one commenter claimed that Commerce has been inconsistent 
on whether it relies on a weighted-average using publicly ranged U.S. 
sales values or on a weighted-average using U.S. sales quantities in 
calculating all-others and non-selected rates. That commenter requested 
that Commerce set a clear test in the regulation as to the 
circumstances in which Commerce will base its calculations on sales 
values and when it will base its calculations on sales quantities.
    Upon consideration of this comment, Commerce has determined not to 
adopt this proposed addition to its regulations but clarifies here that 
the agency's practice is to calculate the all-others and non-selected 
rates using a weighted-average based on publicly ranged U.S. sales 
values. To the extent that Commerce chooses to use, instead, a weighted 
average using U.S. sales quantities in determining the all-others rate 
or a rate to apply to respondents who are not individually examined, 
such an application is an exception to Commerce's practice and would be 
case-specific and based on the unique facts to the record before the 
agency. If Commerce determines to calculate the all-others rate or rate 
for respondents who are not individually examined based on U.S. 
quantities instead of U.S. sales-values, Commerce will provide an 
explanation in its determination.

5. Commerce Has Made No Modifications to the Proposed Change to Sec.  
351.214, Which Covers Expedited CVD Reviews

    In the Proposed Rule, Commerce proposed modifying the heading of 
Sec.  351.214, which currently reads ``New shipper reviews under 
section 751(a)(2)(B) of the Act,'' by adding the phrase ``and expedited 
reviews in countervailing duty proceedings.'' \61\ Commerce proposed 
such a change because section 751(a)(2)(B) of the Act provides Commerce 
the authority to determine dumping margins and CVD rates for exporters 
and producers that did not export subject merchandise to the United 
States during the period of investigation, referred to as ``new shipper 
reviews.'' However, paragraph (l) of Sec.  351.214 does not relate to 
new shipper reviews but instead provides procedures for conducting 
expedited reviews of exporters not selected for individual examination 
in CVD investigations. Instead, the Federal Circuit in Comm. Overseeing 
Action for Lumber Int'l Trade Investigations v. United States, 66 F.4th 
968, 977 (Fed. Cir. 2023) (COALITION v. U.S.) held that the 
``individualized-determination provisions'' of section 777A(e) of the 
Act, along with the ``regulatory-implementation authority'' of section 
103(a) of the URAA,\62\ explicitly provide Commerce with the authority 
to promulgate Sec.  351.214(l).\63\ Therefore, Commerce proposed 
modifying the heading to Sec.  351.214 to make it consistent with the 
holding in COALITION v. U.S.
---------------------------------------------------------------------------

    \61\ See Proposed Rule, 89 FR at 57302.
    \62\ See Uruguay Round Agreements Act, Public Law 103-465, 108 
Stat. 4809 (1994) (URAA).
    \63\ See COALITION v. U.S., 66 F.4th at 977.
---------------------------------------------------------------------------

    One party commented on this change, stating that the Federal 
Circuit in COALITION v. U.S. held that expedited CVD administrative 
reviews are not prescribed by the Act. Accordingly, that commenter 
stated that Commerce should remove Sec.  351.214(l) entirely from the 
regulation to conserve agency resources, instead of modifying the 
heading to Sec.  351.214 as proposed.

Response

    Commerce proposed to only revise the heading to Sec.  351.214 and 
not to remove an entire provision pursuant to which Commerce has 
conducted expedited CVD administrative reviews. As the Federal Circuit 
held in COALITION v. U.S., that provision was added consistent with 
language in the WTO Agreement on Subsidies and Countervailing Measures 
(the SCM Agreement),\64\ and Commerce does not believe it would be 
reasonable to remove that language in this final rule. Accordingly, 
Commerce will not modify the regulation as suggested by the commenter 
and will modify the heading of Sec.  351.214 as set forth in the 
Proposed Rule.
---------------------------------------------------------------------------

    \64\ See Agreement on Subsidies and Countervailing Measures (SCM 
Agreement); 19 U.S.C. 3511 (Approval and entry into force of Uruguay 
Round Agreements'') (December 9, 1994).
---------------------------------------------------------------------------

6. Commerce Has Made Certain Small Modifications to Proposed Sec.  
351.301(b)(2), Covering the Submission of Rebuttal Information

    Commerce proposed a modification to one of its reporting 
regulations, Sec.  351.301(b)(2), to require greater detail from 
interested parties filing factual information to rebut, clarify, or 
correct factual information on the record.\65\ The existing regulatory 
language does not require the submitter of such information to explain 
what information on the record the alleged rebuttal/clarification/
correction information actually rebuts, clarifies, or corrects, and the 
lack of such an explanation has created a burden on both Commerce and 
interested parties to understand why the information being provided 
under this paragraph is being submitted and how it is particularly 
responsive to the information already on the record.\66\ Accordingly, 
Commerce proposed adding a sentence to the regulation that stated that 
the submitter ``must also provide a narrative summary explaining how 
the factual information provided under this paragraph rebuts, 
clarifies, or corrects the factual information already on the record.'' 
\67\
---------------------------------------------------------------------------

    \65\ See Proposed Rule, 89 FR at 57302.
    \66\ Id.
    \67\ Id.
---------------------------------------------------------------------------

    Two commenters expressed concerns with this proposed modification 
to the regulation, stating that the proposed additional requirement 
would hinder the submission of relevant information and delay 
proceedings because frequently parties that initially submit factual 
information in response to Commerce's questionnaires do not provide the 
detailed explanation required by the proposed language. They stated 
that the difference between what is required of those submitting 
initial factual information on the record and what would be required of 
those submitting rebuttal factual information would be inherently 
unfair. Furthermore, the commenters stated that to require submitters 
rebutting that information to prepare a detailed narrative before the 
record is complete would require parties to also prematurely disclose 
arguments in an ongoing segment of the proceeding, basically 
emboldening parties to ``litigate their arguments'' early in a segment 
of the proceeding in the guise of objections to the scope of rebuttal 
factual information. They stated that those submitting factual 
information on the record for the first time often may not provide a 
specific explanation for how the submitted factual information supports 
their questionnaire responses. Thus, those filing rebuttal information 
are often forced to submit information that they think might be 
responsive, but they may not learn until the time for filing new 
factual information has passed the specific capacity for which the 
initial facts on the record were actually submitted in the first place.

[[Page 101709]]

    The commenters also stated that such a requirement would push those 
submitting rebuttal information to request extensions from Commerce to 
prepare a detailed narrative. The commenters stated that placing such a 
requirement in the regulation would create a burden for Commerce with 
no real benefit, and, as such, they requested that Commerce reject the 
proposed modification to its regulations, or at minimum, have the 
required explanation only address how the information is ``relevant'' 
to the factual information already on the record.

Response

    Commerce retains the view that the failure to identify the 
information being rebutted creates a burden on Commerce or other 
interested parties. Under the current regulatory language parties may 
submit information with no explanation as to what it rebuts, clarifies 
or corrects, thereby permitting the submission of information that does 
not meet those requirements despite the restrictions of the regulation. 
Having information on the record without an explanation of how it ties 
to the initial facts on record complicates Commerce's ability to 
analyze and enforce the limitations of submitting factual information 
under Sec.  351.301. Accordingly, Commerce will continue to include 
language addressing this concern in the regulation.
    With respect to the perceived unfairness of the reporting 
requirements of those submitting information in the first instance on 
the record in response to questionnaires, Commerce emphasizes two 
points. First, normally, when a respondent submits information on the 
record in response to a specific Commerce question, the reason that the 
information was submitted on the record in the first place is evident. 
That may not be the case, however, with rebuttal information submitted 
on the record with no explanation. Therefore, by their nature these two 
types of factual information submissions are different, and Commerce 
requires specific explanation from those submitting rebuttal 
information to identify the information already on the record that is 
being rebutted (or clarified or corrected).
    Second, if an interested party reviewing the record does not 
believe that factual information submitted on the record in the first 
instance by another interested party supports or is relevant to the 
question asked by Commerce, the interested party has the ability to 
bring that concern to Commerce's attention in a timely fashion. 
Commerce may reject new factual information submitted on the record in 
the first instance if Commerce determines that it is not relevant to 
the questions or information request made of the respondent. In short, 
the record should be clear as to the reasons new factual information is 
being submitted, either through a response to an agency questionnaire, 
or in a rebuttal, clarification, or correction explanation. Commerce 
has determined, therefore, that the regulation should reflect that 
understanding of new factual information and the administrative record.
    Commerce has made certain small changes, however, to the language 
set forth in the Proposed Rule. The opening paragraph of Sec.  
351.301(b) requires those submitting factual information in the first 
instance to provide a ``written explanation identifying the subsection 
of 351.102(b)(21) under which the information is being submitted.'' 
Commerce has revised the new language in Sec.  351.301(b)(2) to state 
that the submitter of rebuttal, clarifying or correction factual 
information must ``provide a written explanation describing how the 
factual information'' rebuts, clarifies, or corrects the factual 
information already on the record. This language provides greater 
symmetry in the parties' obligations in the regulation while 
emphasizing the type of information Commerce is seeking from those 
submitting rebuttal factual information--not a long narrative 
submission, but rather a concise and complete explanation describing 
specifically what factual information on the record the new factual 
information rebuts, clarifies or corrects.

7. Commerce Has Made No Changes to the New Deadlines in Proposed Sec.  
351.301(c)(3), Covering the Submission of Benchmark and Surrogate Value 
Data, But Has Added Language Permitting Commerce To Issue a Schedule 
With New Deadlines in Unique Circumstances

    Commerce proposed a revision to Sec.  351.301(c)(3) to update 
deadlines for filing certain information on the record.\68\ Current 
Sec.  351.301(c)(3)(i) and (ii) establish a thirty-day time limit 
before the scheduled dates of preliminary determinations and results of 
review for interested parties to submit factual information to value 
factors of production under Sec.  351.408(c) or to measure the adequacy 
of remuneration under Sec.  351.511(a)(2) in AD and CVD investigations, 
administrative reviews, new shipper reviews, and changed circumstances 
reviews.
---------------------------------------------------------------------------

    \68\ See Proposed Rule, 89 FR at 57302-57303.
---------------------------------------------------------------------------

    The Proposed Rule explained that those submissions sometimes 
contain hundreds, if not thousands, of pages of information that 
Commerce must analyze in a short amount of time prior to issuing a 
preliminary determination or preliminary results.\69\ Because the 
volume of information often contained in these submissions can be so 
large, it makes it difficult for Commerce to meet its statutory 
deadlines to determine the appropriate surrogate values or benchmarks 
in the preliminary determination or preliminary results.\70\ Commerce 
also explained that since the 30-day deadlines were codified, Commerce 
has experienced a large increase in AD and CVD proceedings and orders 
which it must administer.\71\ Accordingly, to effectively administer 
and enforce the AD and CVD laws, Commerce proposed modifying these time 
limits to allow Commerce additional time to more fully analyze these 
voluminous submissions for purposes of its preliminary decisions.\72\ 
Specifically, Commerce proposed revising Sec.  351.301(c)(3)(i) to 
create both a paragraph (c)(3)(i)(A) and (B) covering investigations. 
Under the proposal, the time limit for parties to submit factual 
information to value factors of production under Sec.  351.408(c) in AD 
investigations under Sec.  351.301(c)(3)(i)(A) would be no later than 
60 days before the scheduled date of the preliminary determination, and 
the time limit for parties to submit factual information to measure the 
adequacy of remuneration under Sec.  351.511(a)(2) in CVD 
investigations would be no later than 45 days before the scheduled date 
of the preliminary determination in proposed Sec.  
351.301(c)(3)(i)(B).\73\
---------------------------------------------------------------------------

    \69\ Id.
    \70\ Id.
    \71\ Id.
    \72\ Id.
    \73\ Id.
---------------------------------------------------------------------------

    Furthermore, for administrative reviews, new shipper reviews, and 
changed circumstances reviews, proposed Sec.  351.301(c)(3)(ii) would 
require parties to submit factual information to value factors of 
production under Sec.  351.408(c) or to measure the adequacy of 
remuneration under Sec.  351.511(a)(2) no later than 60 days before the 
scheduled date of the preliminary results of review.\74\
---------------------------------------------------------------------------

    \74\ Id.
---------------------------------------------------------------------------

    Commerce received several comments on the proposed change in 
deadlines. One party supported the change, stating that the 
modifications would enhance Commerce's ability to enforce trade laws in 
a timely and efficient manner and

[[Page 101710]]

would provide interested parties with a more complete preliminary 
determination, as the agency would have more time to consider and 
analyze its benchmark and surrogate value determinations for purposes 
of the preliminary agency decision. That commenter agreed with Commerce 
that the agency does not currently have sufficient time to review the 
benchmark and surrogate value data provided in either submissions or 
rebuttal submissions, and therefore, Commerce frequently cannot address 
those submissions in part or in whole in the preliminary determination 
or results, to the disservice of the interested parties. That commenter 
stated that it disagrees with the claim that the revisions will unduly 
affect the ability of interested parties to gather and submit necessary 
factual information on the record and emphasized that if Commerce's 
preliminary determinations contain more analysis and information as a 
result of this change in the deadlines, it will provide interested 
parties with an opportunity to submit fulsome, better comments in 
anticipation of a final determination or results of review.
    The other commenters indicated that they were opposed to the change 
in deadlines for submitting benchmark and surrogate value data, and 
instead advocated for Commerce to retain its current thirty-day 
deadlines. There were essentially four concerns or suggestions which 
they expressed pursuant to the proposed change. First, if Commerce 
needs an additional 15 days for CVD investigations and an additional 30 
days for surrogate values and CVD administrative reviews, that is 15 
days and 30 days, respectively, which interested parties will no longer 
have to gather benchmarks and surrogate value information and then 
submit it to Commerce. Domestic industries stated that Commerce's 
proposal was biased against them because respondents are already 
familiar with their factors of production in an AD case and would be 
able to consider possible surrogate values even before they have filed 
their questionnaire responses and supplemental questionnaire responses, 
creating a disadvantage for domestic industries with a shorter period 
of time to gather information in AD proceedings. Likewise, domestic 
industries said they were also disadvantaged in CVD cases because 
respondents would have time to consider benchmarks while answering 
Commerce's questionnaires. With respect to both types of proceedings, 
domestic industries expressed concerns that respondents would have an 
incentive to request extensions and thereby run out the clock, making 
it impossible for domestic industries to find and submit appropriate 
benchmarks and surrogate values based on the questionnaire responses.
    On the other hand, a foreign government stated that respondents are 
at a disadvantage in CVD investigations with a shorter period of time 
to gather potential benchmark data because domestic industries that 
file a petition have already had an opportunity to consider benchmarks 
for a less than adequate remuneration (LTAR) allegation, and in both 
CVD investigations and reviews, petitioners have time before they make 
new subsidy allegations to gather potential benchmark information. 
Further, another commenter stated that the shortened deadlines would be 
unfair for respondents that spend extensive amounts of time answering 
questions and gathering data. That commenter stated that that providing 
such a short period in which to file benchmark and surrogate value data 
would add unreasonably to respondents' burden and impact the quality of 
their responses.
    In both AD and CVD cases, the commenters stated that the ultimate 
submissions would be of lesser quality and accuracy because the time 
period in which to gather sufficient data would be too short, thereby 
impeding Commerce's ability to issue supplemental questionnaires and 
the domestic industry's ability to identify deficiencies in the 
respondents' questionnaire responses. They also expressed concerns that 
it would be more difficult to analyze foreign government responses to 
Commerce's questionnaires and determine if a tier-one or tier-two 
benchmark under Sec.  351.511 would be appropriate, and if supplemental 
questionnaires were issued to respondents with respect to their 
reported factors of production in an AD case, there may be little to no 
time for domestic parties to consider potential surrogate values so 
late in the proceeding within the proposed deadlines.
    Some commenters noted that Commerce sometimes sets an earlier 
deadline for surrogate value submissions and then allows further 
submissions subsequently within the 30-day deadline. This proposed 
change, they stated, would make that entire process more difficult, 
therefore reducing the potential surrogate value information on the 
administrative record. The commenters, therefore, stated that the 
proposed shorter deadlines would result in less complete administrative 
records, less accurate preliminary determinations and results of 
administrative reviews, and more extension requests from parties to 
submit necessary information, with no clear benefit to Commerce.
    The second expressed concern involved the postponement or extension 
of preliminary determinations or results of administrative reviews. The 
commenters stated that 60 days and 45 days before a preliminary 
determination or results of administrative review is issued, 
petitioners may not have yet requested postponement or, in 
administrative reviews, Commerce may not have yet decided to extend the 
preliminary results. If the preliminary determination or results were 
extended, so too would be the benchmark and surrogate value submission 
deadlines. They stated that the result might be that interested parties 
work quickly to find proposed benchmarks or surrogate values, submit 
them on time, and then discover that the preliminary determination or 
results or review have been extended. Had the interested parties known 
that an extension was forthcoming, the commenters stated that parties 
could have used the additional time to find potentially better quality 
and more accurate information. They noted that with respect to the 
extension of preliminary results of reviews in administrative reviews, 
Commerce normally issues an extension 30 days before the preliminary 
results are set to be issued, which would result in the described 
situation if that practice was retained. They stated that adding this 
amount of uncertainty to Commerce's procedures is unnecessary and 
should be avoided. Accordingly, the commenters requested that if 
Commerce retains the proposed changes, it should modify the dates upon 
which extensions to preliminary determinations or results would be 
granted so that parties would be aware if the benchmark and surrogate 
value deadlines had been extended as well.
    The third comment on this proposed change to deadlines was a 
suggestion for Commerce to instead tie deadlines for submitting 
surrogate value information or market benchmarks to other points in the 
proceedings, including supplemental responses, which would allow the 
record regarding factors of production specifications and subsidy 
programs to be fully developed by the deadline. The commenter providing 
this suggestion stated that it would both achieve the stated goal of 
giving Commerce more time to analyze submissions and would avoid 
creating delays or a lack of adequate surrogate

[[Page 101711]]

value or benchmark information on the record.
    The final group of suggestions Commerce received on this issue was 
that if Commerce insisted on maintaining the changes in deadlines, it 
should make certain other changes to its regulations and practice, such 
as allowing for rebuttal benchmark and surrogate value submissions to 
be submitted on the record after those regulatory deadlines have passed 
if subsidy program information or factors of production end up being 
placed on the record on or after those deadlines. In addition, the same 
commenter suggested that Commerce also consider limiting extension 
deadlines for questionnaire responses so that late filings do not chip 
away at the opportunity for the domestic industry to file adequate 
responsive benchmark or surrogate value submissions.

Response

    Although Commerce recognizes the concerns expressed by the 
commenters, it continues to find that setting the deadline to submit 
surrogate value comments and information 60 days prior to the scheduled 
due date of the preliminary determination and preliminary results in AD 
nonmarket economy proceedings is reasonable, as is setting the deadline 
for the submission of benchmark comments and information 45 days before 
the scheduled date of the preliminary determination in a CVD 
investigation, and 60 days prior to the scheduled preliminary results 
in a CVD administrative review.
    Commerce's determinations are based on the facts on the 
administrative record and they are frequently challenged before the 
CIT, Federal Circuit, and various World Trade Organization (WTO) and 
United States-Mexico-Canada Agreement (USMCA) dispute panels. 
Accordingly, Commerce must have sufficient time to consider and analyze 
the facts on the record when it issues preliminary or final 
determinations or results, to be certain that its decisions are 
accurate and based on the substantial evidence on the record. In short, 
Commerce needs the additional 15 and 30 days which it has proposed 
adding to Sec.  351.301(c)(3).
    While interested parties will have less time to gather and submit 
benchmark data and surrogate value information, both the domestic 
industry and respondents to the agency's proceedings produce the 
domestic like product/subject merchandise and therefore have an acute 
understanding of the inputs that are required to produce subject 
merchandise in a nonmarket economy AD or similar proceeding.
    With respect to surrogate value submissions specifically, Commerce 
disagrees that the 60-day deadline will result in parties having to 
submit surrogate values and comments prior to the submission of a 
section D questionnaire response, specific to nonmarket economy cases, 
containing workable factors of production information. In the vast 
majority of cases, parties have sufficient time to prepare and submit 
surrogate value comments and information well after a section D 
questionnaire response is submitted to the respondent. However, if 
there is a timing concern, parties should request in writing that the 
agency extend the deadline for the submission of surrogate value 
comments and information.
    With respect to the deadlines for benchmarks in CVD investigations, 
most of the alleged subsidy programs at issue in a CVD investigation 
are known on the date the petition is filed, and Commerce indicates the 
alleged subsidy programs that it has determined to investigate in the 
initiation checklist, issued concurrently with the date Commerce signs 
the initiation notice. Further, in Commerce's experience a domestic 
industry's allegation that a product has been sold for LTAR includes 
information regarding an appropriate benchmark.
    Additionally, in CVD investigations where a LTAR subsidy is 
alleged, Commerce's initial questionnaire solicits information as to 
whether market conditions in the subject country permit the use of 
certain benchmarks. Thus, parties should be on notice at the early 
stages of the investigation that they may need to submit comments and 
information regarding certain benchmark information.
    Likewise, with respect to administrative reviews, Commerce finds 
that requiring parties to submit benchmark and surrogate value 
information 60 days prior to the scheduled due date of the preliminary 
results is reasonable given that the timeline for CVD and AD reviews is 
substantially longer than the timeline for CVD and AD investigations. 
Under section 751(a)(3)(A) of the Act, Commerce has 245 days to issue 
its un-extended CVD and AD preliminary results of review and 365 days 
to issue fully extended CVD and AD preliminary results of review. These 
schedules provide ample time for Commerce to solicit, and respondents 
to provide, information on benchmarks and surrogate values, thereby 
permitting parties to meaningfully comment on such information by the 
revised 60-day deadline.
    Notwithstanding the above, Commerce agrees that it will have to 
make adjustments to its practice as a result of these changes in some 
instances, as raised by one of the commenters. For example, as some of 
the commenters noted, there may be instances in AD nonmarket economy 
proceedings in which the initial section D questionnaire response has 
not been submitted by the 60-day deadline. In such situations, Commerce 
will adjust the comment schedule to allow for parties to have 
sufficient time to submit surrogate value comments and information. 
Likewise, in certain CVD investigations, it is possible that a 
respondent or foreign government may submit its initial response 
regarding a LTAR subsidy allegation on a date that occurs on or after 
the proposed 45-day deadline. In such instances, again, Commerce may 
need to adjust the comment schedule to allow for parties to have 
sufficient time to submit benchmark information for that alleged LTAR 
program.
    Furthermore, with respect to new subsidy allegations, under Sec.  
351.301(c)(2)(iv)(A), domestic industries must make new subsidy 
allegations in CVD investigations no later than 40 days before the 
scheduled date of the preliminary determination. This results in a 
second potential situation in which Commerce's proposal to require 
benchmark information to be submitted no later than 45 days prior to 
the scheduled date of the preliminary determination will not be 
feasible. Accordingly, if the new deadlines for benchmark submissions 
found in Sec.  351.301(c)(3) have already passed or are imminent, 
Commerce will determine that they do not apply in that case to new 
subsidy LTAR allegations filed near or on the due date specified under 
Sec.  351.301(c)(2)(iv)(A). In addition, if the domestic industry files 
new subsidy allegations at an earlier stage of an initiated CVD 
investigation, it may occur that Commerce's initiation, issuance of the 
new subsidy allegation questionnaire, and receipt of the respondents' 
responses to the new subsidy allegation questionnaire are not completed 
in time for interested parties to submit benchmark information by the 
forty-five-day deadline. In both of those instances, Commerce agrees 
that it would likely need to establish a separate schedule for the 
interested parties to provide them with sufficient time to submit 
benchmark information.
    Accordingly, in the final rule, Commerce has added Sec.  
351.301(c)(3)(i)(C) which states that if

[[Page 101712]]

Commerce determines that interested parties will not have sufficient 
time to submit factual information in investigations under the 
deadlines set forth in paragraph (c)(3)(i)(A) or (B) because of 
circumstances unique to the segment of the proceeding, Commerce may 
issue a schedule with alternative deadlines for parties to submit 
factual information on the record.
    With respect to administrative reviews, Commerce acknowledges that 
there may be cases in which it will also have to issue a separate 
schedule for interested parties to have sufficient time to submit new 
factual information in this regard. For example, in AD nonmarket 
economy administrative reviews, if the initial section D questionnaire 
response is submitted on or after the revised sixty-day deadline, 
Commerce may need to issue a separate schedule for the interested 
parties to submit surrogate value comments and information. Likewise, 
in CVD administrative reviews, Commerce may also need to issue a 
separate schedule for parties to submit benchmark comments and 
information when the domestic industry alleges a LTAR subsidy and 
Commerce has yet to issue an initiation decision memorandum or 
questionnaire responses concerning such an allegation were not 
submitted until a date on or after the revised sixty-day deadline.
    Accordingly, Commerce has also divided Sec.  351.301(c)(3)(ii) into 
two paragraphs, with Sec.  351.301(c)(3)(ii)(A) reflecting the 
previously proposed language and Sec.  351.301(c)(3)(ii)(B) to add new 
language similar to that of Sec.  351.301(c)(3)(i)(C), stating that if 
Commerce determines that interested parties will not have sufficient 
time to submit factual information in administrative reviews, new 
shipper reviews, and changed circumstances reviews under the deadlines 
set forth in paragraph (c)(3)(i)(A) because of circumstances unique to 
the segment of the proceeding, Commerce may issue a schedule with 
alternative deadlines for parties to submit factual information on the 
record.
    Commerce disagrees, however, with the concern that these new 
deadlines will disadvantage interested parties because it is Commerce's 
practice to grant postponement or extensions of preliminary 
determinations or results of administrative review 30 days before the 
preliminary determination or results, which would fall after benchmarks 
and surrogate values are due. The scenario that commenters describe 
already occurs under the current 30-day comment deadline, and thus, 
Commerce does not find this argument to be a valid basis to refrain 
from the 45- and 60-day benchmark and surrogate value deadlines in CVD 
and AD nonmarket economy investigations. However, Commerce acknowledges 
that the scenario described by parties has the potential to occur more 
frequently in the context of CVD and AD nonmarket economy 
administrative reviews. Therefore, in CVD and AD nonmarket economy 
administrative reviews in which the 60-day deadline to submit benchmark 
and surrogate values information is approaching, and Commerce has yet 
to extend the due date of the preliminary results, parties may file a 
request for Commerce to extend the deadline to file benchmark and 
surrogate value information.
    Commerce also disagrees that basing the deadline for parties to 
submit benchmark comments and information in CVD investigations on the 
receipt of the last questionnaire response pertaining to the LTAR 
subsidy and surrogate value comments, and information in AD nonmarket 
economy investigations on the last section D questionnaire response 
would be preferable to deadlines for submissions being tied to the 
issuance of preliminary determination or results. Commerce finds that 
such an approach would be impractical, as it would require Commerce and 
parties to track different benchmark and surrogate value comment 
deadlines across cases. Such an approach also assumes that Commerce 
would be able to easily determine the point in CVD and AD nonmarket 
economy investigations when the ``last'' such questionnaire responses 
were submitted, as an insightful deficiency submission from a party 
could lead to Commerce determining that that yet another supplemental 
questionnaire is needed.
    Such an approach could also lead to outcomes where different 
respondents have a different number of days between the date when 
benchmark and surrogate value comments are submitted and the 
preliminary determination due date, which means that interested parties 
would not have the same number of days across cases to prepare comments 
for consideration in the preliminary determination or results that 
parties often submit, and which often address benchmark and surrogate 
value issues.
    Furthermore, Commerce disagrees with the suggestion that if it 
proceeds with the revised benchmark and surrogate value deadlines, then 
it should allow rebuttal benchmark and surrogate value submissions to 
be submitted on the record after those regulatory deadlines have passed 
if factors of production or subsidy program information is submitted on 
the record on or after those deadlines. As noted above, based on the 
agency's experience with AD nonmarket economy investigations and 
reviews, Commerce believes that in most cases it will be able to 
solicit section D questionnaire information from respondents such that 
parties will have sufficient time with the initial section D 
questionnaire response, first section D supplemental questionnaire 
supplemental response, and any additional supplemental section D 
questionnaire response to submit surrogate value information by the 
revised deadlines. Further, as discussed above, because the nature of 
the good alleged to have been provided for LTAR and the potential need 
for tier-one, tier-two, and tier-three benchmarks is known at the 
outset of CVD investigations and reviews, Commerce expects interested 
parties will normally be able to submit their LTAR benchmark 
information by the revised deadlines.
    However, as explained above, should a respondent submit a 
supplemental questionnaire response containing new factual information 
regarding factors of production information or LTAR benchmarks on or 
after the revised deadlines, then pursuant to Sec.  351.301(c)(1)(v) 
Commerce will normally allow other interested parties a sufficient 
amount of time to submit rebuttal, clarifying, or corrected factual 
information on the record pertaining to the benchmark and the factors 
of production information contained in those supplemental submissions.
    Finally, the same commenter also suggested that Commerce consider 
limiting extension deadlines for questionnaire responses in the 
regulation so that late filings do not reduce the opportunity for the 
domestic industry to file adequate responsive benchmark or surrogate 
value submissions. It is Commerce's practice to respond to respondents' 
extension requests with consideration of the deadlines that Commerce 
and parties face in CVD investigations and reviews and AD nonmarket 
economy investigations and reviews, and the agency will continue to do 
so under the current regulations. Therefore, Commerce has elected not 
to adopt additional language in the regulation to limit extension 
deadlines for questionnaire responses as suggested.
    Accordingly, for the reasons described above, Commerce determines 
that requiring benchmark and surrogate value comments and information 
to be submitted 45 days and 60 days prior to the scheduled due date of 
preliminary determinations and administrative

[[Page 101713]]

review results to be a practical and necessary modification to the 
regulation to allow Commerce to accurately and sufficiently consider 
the information and make its determination on these issues.

8. Commerce Has Made No Modifications to Proposed Sec.  351.306(a)(3), 
Which Covers the Sharing of Data With U.S. Customs and Border 
Protection

    As amended in 2015, section 777(b)(1)(A)(ii) of the Act states that 
Commerce may disclose proprietary information ``to an officer or 
employee of the United States Customs Service who is directly involved 
in conducting an investigation regarding negligence, gross negligence 
or fraud under this title.'' Current Sec.  351.306(a)(3) states that 
Commerce may disclose business proprietary information to ``an employee 
of U.S. Customs and Border Protection'' involved in conducting ``a 
fraud investigation.'' However, the Act now includes ``negligence'' and 
``gross negligence'' investigations. Thus, Commerce proposed amending 
Sec.  351.306(a)(3) to expand the covered investigations to negligence 
and gross negligence investigations as well as fraud 
investigations.\75\
---------------------------------------------------------------------------

    \75\ See Proposed Rule, 89 FR at 57303.
---------------------------------------------------------------------------

    One commenter suggested that Commerce add further language to the 
regulation and include the phrase ``or any other action specifically 
contemplated in section 777(b)(1)(A)(ii) of the Act'' to, in the words 
of the commenter, ``eliminate the need for similar updates in the 
future should the Act be further amended.'' However, if the Act is 
modified in the future, Commerce will be able to revise its regulations 
at that time in accordance with any new statutory language and 
obligations.

9. Commerce Has Made Small Revisions to Proposed Sec.  351.308(i), 
Which Covers the Application of Facts Available in AD and CVD 
Proceedings

    In the Proposed Rule Commerce updated Sec.  351.308(g) to reflect 
its practice of applying either partial facts available or total facts 
available and added Sec.  351.308(h) and (i) to reflect changes to 
section 776 of the Act by Congress in 2015.\76\ Two parties commented 
on this regulation, with one expressing its full support as written, 
and the other, although indicating its support for the changes, 
providing suggested edits to revise one possible inconsistency and to 
prevent redundancy. Specifically, proposed Sec.  351.308(i)(2) states 
that Commerce ``may'' use the highest CVD rate available if it 
determines that such an application is warranted, whereas Sec.  
351.308(j) states that Commerce ``will normally select the highest 
program rate available using a hierarchical analysis.'' Second, the 
commenter recommended various revisions to Sec.  351.308(i)(2) to avoid 
certain perceived redundancies.
---------------------------------------------------------------------------

    \76\ See Trade Preferences Extension Act (TPEA) of 2015, Public 
Law 114-27, 129 Stat. 362, 384 (2015), section 502, codified at 19 
U.S.C.1677(e) and Proposed Rule, 89 FR at 57303-04.
---------------------------------------------------------------------------

Response

    After consideration of the comments on this provision, Commerce 
agreed that certain small changes to Sec.  351.308(i)(2) were 
warranted. First, Commerce has replaced the phrase ``The Secretary may 
use the highest countervailing duty rate available'' with ``The 
Secretary will normally apply the highest calculated above-de minimis 
countervailing duty rate available'' to be in accordance with the 
language of the CVD adverse facts available hierarchy, found at Sec.  
351.308(j). In addition, Commerce has moved the phrase ``in accordance 
with the hierarchy set forth in paragraph (j) of this section'' from 
the second sentence in the paragraph to the first sentence of the 
paragraph, because the entire paragraph relates to Commerce's CVD 
adverse facts available hierarchy, and not just the second sentence.

10. Commerce Has Modified Proposed Sec.  351.401(f) To Reflect That It 
Is Concerned About the Significant Potential for Manipulation of 
Prices, Production, or Export Decisions, and That It Will Not Normally 
Collapse Certain Affiliated Input Suppliers and Home Market Resellers 
of the Domestic Like Product

    When affiliated producers share ownership or management or have 
intertwined operations, there is a significant potential for the 
manipulation of the prices or production of the subject merchandise. 
Commerce has a longstanding and court-affirmed practice of 
``collapsing'' certain affiliated entities and treating them as a 
single entity for purposes of its AD calculations.\77\ As currently 
written, Sec.  351.401(f)(1) codifies Commerce's practice of collapsing 
affiliated producers who ``have production facilities for similar or 
identical products that would not require substantial retooling of 
either facility in order to restructure manufacturing priorities'' 
where ``there is a significant potential for the manipulation of price 
or production.'' Section 351.401(f)(2) identifies the factors Commerce 
may consider in determining whether there is significant potential for 
the manipulation of price or production.
---------------------------------------------------------------------------

    \77\ See Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Frozen and Canned Warmwater Shrimp from Brazil, 
69 FR 76910 (December 23, 2004) (Shrimp from Brazil), and 
accompanying Issues and Decision Memorandum at Comment 5; see also 
Rebar Trade Action Coalition v. United States, 398 F. Supp. 3d 1359, 
1366-1371 (CIT 2019) (Rebar Trade Action Coalition); Queen's Flowers 
de Colombia v. United States, 981 F. Supp. 617, 622 (CIT 1997) 
(Queen's Flowers); and Viraj Group. v. United States, 476 F.3d 1349, 
1355-58 (Fed. Cir. 2007).
---------------------------------------------------------------------------

    By collapsing affiliated producers and calculating a single 
weighted-average dumping margin for the combined entity, the current 
regulation discourages producers subject to antidumping duties from 
shifting their production or sales to affiliated producers to evade 
those duties.\78\
---------------------------------------------------------------------------

    \78\ See Rebar Trade Action Coalition, 475 F. Supp. at 1368.
---------------------------------------------------------------------------

    However, as Commerce explained in the Proposed Rule, affiliated 
non-producers such as exporters and processors can also manipulate and 
influence prices and production through their mutual relationships.\79\ 
Accordingly, to prevent manipulation of prices and production, and the 
evasion of duties, Commerce has in several AD proceedings collapsed 
non-producers with both producers and non-producers, and the CIT has 
affirmed Commerce's authority to do so.\80\ Although the Act does not 
expressly address collapsing, the CIT has held that Commerce's 
collapsing practice, as applied to both affiliated producers and non-
producers, effectuates the basic purpose of the Act: to calculate 
accurate dumping margins and to prevent the evasion of duties.\81\
---------------------------------------------------------------------------

    \79\ See Proposed Rule, 89 FR at 57305 (citing, as an example, 
Shrimp from Brazil Issues and Decision Memorandum at Comment 5).
    \80\ See NACCO Materials Handling Group, Inc. v. United States, 
971 F. Supp. 586, 591-92 (CIT 1997) (NAACO Materials); Queen's 
Flowers, 981 F. Supp. at 617-622; and Echjay Forgings, 475 F. Supp. 
3d. at 1360 (CIT 2020) (citing Hontex Enterprises Inc. d/b/a 
Louisiana Packing Company v. United States of America, 248 F. Supp. 
2d. 1323 (CIT 2003) (Hontex)).
    \81\ See Queen's Flowers, 981 F. Supp. at 622.
---------------------------------------------------------------------------

    Commerce, therefore, proposed revising Sec.  351.401(f) to 
explicitly address the ability of the agency to collapse producers and 
non-producers when it determines that there is significant potential 
for the manipulation of prices or production between two or more 
affiliated parties.\82\
---------------------------------------------------------------------------

    \82\ See Proposed Rule, 89 FR at 57305 (citing United States 
Steel Corp. v. United States, 179 F. Supp. 3d 1114, 1135 (CIT 
2016)).
---------------------------------------------------------------------------

    Commerce received three comments on proposed Sec.  351.401(f). Two 
commenters agreed with the decision to modify Sec.  351.401(f) to 
address Commerce's ability to collapse

[[Page 101714]]

producers and non-producers but suggested certain additional 
modifications to Commerce's proposed rule. Another commenter expressed 
concerns that Commerce's decision to modify Sec.  351.401(f) may 
undermine Commerce's ability to apply its transactions disregarded rule 
or major input rule, pursuant to sections 773(f)(2) and (3) of the Act.
    The first commenter suggested a change to Sec.  351.401(f)(3) to 
expand Commerce's ability to consider the extent of necessary retooling 
in its analysis of affiliated parties' production facilities that are 
used for similar or identical products. The commenter proposed that 
Commerce clarify that its analysis will go beyond evaluating 
``manufacturing priorities'' to also consider the possibility of a 
shift in production among affiliated facilities or any other commercial 
activities related to production. As an example, it referred to an 
administrative review where Commerce found that the respondent had the 
potential to rearrange selling and producing roles between affiliated 
producers and non-producers.\83\
---------------------------------------------------------------------------

    \83\ See, e.g., Shrimp from Brazil Issues and Decision 
Memorandum at Comment 5.
---------------------------------------------------------------------------

    A second commenter agreed that the proposed modification reflected 
Commerce's current practice and authorities but expressed concerns that 
the expansion of Commerce's practice of collapsing entities to include 
non-producers could unintentionally result in less accurate dumping 
margins. Specifically, under section 773(f)(2) and (3) of the Act, 
Commerce may disregard direct or indirect transactions between 
affiliated parties that do not fairly represent the market costs and 
the full costs of production in such transactions. These are commonly 
called the ``transactions disregarded'' and ``major input'' rules. They 
are frequently applied in consideration of transactions between 
affiliated input suppliers and producers of subject merchandise. The 
current regulation addresses only affiliated entities that both might 
produce the subject merchandise, while the proposed revision to the 
regulation would allow for the collapsing of affiliated input suppliers 
and producers of subject merchandise. Accordingly, the commenter 
expressed concerns that Commerce might elect to collapse such 
affiliated entities rather than apply the transactions disregarded or 
major input rules, thereby allowing the respondent to manipulate 
Commerce's calculations, with the result being a less accurate dumping 
margin.\84\ The commenter stated that such an application of the 
collapsing regulation would expand the number of non-market prices and 
below-cost affiliated-entity transactions that Commerce would not 
disregard, with resulting calculations that include more transactions 
between affiliated entities at values not reflective of the market 
prices producers would pay for the same transaction with a non-
affiliated entity. It cautioned that this proposal could create a 
situation wherein the exception could swallow the rule, contrary to 
sections 773(f)(2) and (3) of the Act, and therefore suggested that 
Commerce not codify its current collapsing practice with respect to 
non-producers and producers.
---------------------------------------------------------------------------

    \84\ See AK Steel Corp. v. United States, 226 F.3d 1361, 1375-76 
(Fed. Cir. 2000) (``once Commerce has decided to treat the companies 
as one `person' for purposes of the anti-dumping analysis, it is not 
statutorily required to apply the provisions'').
---------------------------------------------------------------------------

    A third commenter praised the proposed modification to Sec.  
351.401(f) and stated that the new language would permit Commerce to 
address the evasion and manipulation of duties by affiliated parties. 
That commenter, however, also expressed concerns that the proposed 
language could result in the manipulation of Commerce's calculation of 
dumping margins for the same reason as the second commenter. That 
commenter stressed that the purpose of Sec.  351.401(f) is to prevent 
the manipulation of dumping margins, and thus Commerce should add 
language in the regulation to the effect that if record evidence 
suggested collapsing would result in the manipulation of Commerce's 
calculations, Commerce could decline to collapse the affiliated 
entities. Furthermore, the commenter recommended that Commerce include 
a non-exhaustive list of entity relationships that might result in a 
collapsing decision.

Response

    After consideration of the comments on the regulation, Commerce is 
adding a new paragraph to Sec.  351.401(f) to address exceptions to 
Commerce's collapsing practice and making certain other minor edits. 
Specifically, Commerce is amending proposed Sec.  351.401 to add a 
paragraph (f)(4), titled ``Exceptions.'' Commerce has a practice of not 
collapsing affiliated input suppliers with other affiliated parties if 
the input suppliers do not produce similar or identical products to the 
subject merchandise or export subject merchandise to the United 
States.\85\ Likewise, Commerce also has a practice of not collapsing 
affiliated sellers of the foreign like product in the home market with 
other affiliated parties, if those sellers (including resellers) of the 
foreign like product in the home market do not produce similar or 
identical products to the subject merchandise or export subject 
merchandise to the United States.\86\ Commerce has therefore codified 
both exceptions to its collapsing practice in the regulation as Sec.  
351.401(f)(4)(i) and (ii). To be clear, although Commerce will normally 
not collapse such entities, Commerce might still apply the transactions 
disregarded rule or the major input rule, in accordance with sections 
773(f)(2) and (3) of the Act, if such an application is warranted.
---------------------------------------------------------------------------

    \85\ See, e.g., Light-Walled Rectangular Pipe and Tube from 
Turkey: Notice of Final Determination of Sales at Less Than Fair 
Value, 69 FR 53675 (September 2, 2004), and accompanying Issues and 
Decision Memorandum at Comment 5; Certain Fabricated Structural 
Steel from Canada: Final Determination of Sales at Less Than Fair 
Value, 85 FR 5373 (January 30, 2020), and accompanying Issues and 
Decision Memorandum at Comment 6: and Notice of Final Determination 
of Sales at Less Than Fair Value: Live Swine from Canada, 70 FR 
12181 (March 11, 2005), and accompanying Issues and Decision 
Memorandum at Comment 41.
    \86\ See Steel Concrete Reinforcing Bar from Mexico: Final 
Results of Antidumping Duty Administrative Review; 2021-2022, 89 FR 
40467 (May 10, 2024), and accompanying Issues and Decision 
Memorandum at Comment 5.
---------------------------------------------------------------------------

    In addition, pursuant to the concerns of possible evasion or 
manipulation, Commerce has decided to include a third ``catch-all'' 
provision at Sec.  351.401(f)(4)(iii), which states that if Commerce 
determines that treating certain affiliated entities as a single entity 
would otherwise be inappropriate based on record information, Commerce 
may decide not to collapse those affiliated entities. Collapsing 
determinations are case-specific, and frequently Commerce makes its 
determinations based on proprietary information that reflects complex 
and unique relationships between affiliated entities. Commerce agrees 
with the commenters that the overarching purpose of Sec.  351.401(f) is 
to prevent manipulation of prices, production, or export decisions 
among affiliated entities. Further, the factors listed in Sec.  
351.401(f)(2) are non-exhaustive and Commerce may consider additional 
factors as evidence that there is significant potential for 
manipulation, or even determine that not all of the factors listed are 
identified to find evidence of significant potential for 
manipulation.\87\ In examining the factors that pertain to significant 
potential for manipulation, Commerce considers both actual manipulation 
in

[[Page 101715]]

the past and the possibility of future manipulation.\88\ As Commerce 
stated in the preamble to the regulation when it was issued in 1997, 
the standard in looking at potential manipulation is focused ``on what 
may transpire in the future;'' thus Commerce may consider the record in 
total, covering past, present and future potential manipulation of 
prices, production or other commercial activities.\89\ Given the wide 
array of possible affiliations between producers, exporters, and other 
entities in various channels of trade, the concerns expressed by the 
commenters, and Commerce's intention to prevent potential manipulation, 
whether it be through collapsing or, in some cases, not collapsing 
affiliated entities, the regulation now includes a collapsing-exception 
provision that covers any situation in which the collapsing of entities 
would be ``otherwise inappropriate based on record information.''
---------------------------------------------------------------------------

    \87\ See Antidumping Duties: Countervailing Duties; Final Rule, 
62 FR 27296, 27346 (May 19, 1997).
    \88\ Id. at 27345-45.
    \89\ Id.
---------------------------------------------------------------------------

    In addition to that change, Commerce is correcting a typographical 
error that resulted in publishing Sec.  351.401(f)(2)(iii) as a second 
Sec.  351.401(f)(2)(ii).\90\
---------------------------------------------------------------------------

    \90\ See Proposed Rule, 89 FR 57329.
---------------------------------------------------------------------------

    Finally, Commerce proposed to modify the phrase ``potential 
manipulation of price or production'' in Sec.  351.401(f)(1) and (2) to 
encompass ``potential manipulation of prices, production or other 
commercial activities.'' The reason for this change was to address the 
collapsing of non-producing affiliated exporters that, given the nature 
of their affiliations, might not lead to the manipulation of prices or 
production but might lead to the manipulation of various export 
decisions.\91\ Upon further reflection, Commerce has determined that 
the term ``other commercial activities'' is too broad a term to 
describe that scenario and might lead to confusion. Accordingly, 
Commerce is modifying Sec.  351.401(f)(1) and (2) to apply to the 
``potential manipulation of prices, production, or export decisions.'' 
Commerce has determined that such language more accurately reflects the 
concerns that led to the proposed revision.
---------------------------------------------------------------------------

    \91\ See, e.g., Hontex, 248 F. Supp. 2d 1323, 1345-1350.
---------------------------------------------------------------------------

    With respect to the suggestion that Commerce clarify that it can 
make a determination based on more than just a restructuring of 
``manufacturing priorities,'' including a focus on the shifting of 
production among facilities of affiliated entities or a restructuring 
of commercial activities among affiliated parties related to 
production, Commerce disagrees that such a change is necessary. The 
term ``restructure manufacturing priorities'' has been in the 
regulation since it was initially proposed in 1996.\92\ In the decades 
that followed, as the commenter explained, Commerce has found the term 
``restructure manufacturing priorities'' to cover various factual 
scenarios, including the shifting of production between affiliated 
producers and the restructuring of commercial activities among 
affiliated parties related to production. ``Manufacturing priorities'' 
is not a defined term, and may cover both production and non-production 
actions, if those potential actions might lead to the manipulation of 
prices, production, or other commercial activities among affiliated 
entities. Accordingly, Commerce has not adopted this proposed 
modification to Sec.  351.401(f).
---------------------------------------------------------------------------

    \92\ See Antidumping Duties; Countervailing Duties; Proposed 
Rule, 61 FR 7308, 7381 (February 27, 1996).
---------------------------------------------------------------------------

    In addition, Commerce will not include a non-exhaustive list of 
entity relationships that might result in a collapsing decision as 
suggested by one of the commenters. As explained above, there are many 
ways by which entities might be affiliated, and likewise there are many 
unique entity relationships that can lead to the potential manipulation 
of prices, production or export decisions. Collapsing decisions are 
best left analyzed on a case-by-case basis and frequently can be far 
more complex than can be summarized in a simple list of examples. 
Accordingly, Commerce has determined that a non-exhaustive list of 
examples in the regulation would likely lead to greater confusion than 
provide clarity, and it has therefore not included such a list in the 
final rule.

11. Commerce Has Made Small Adjustments to Proposed Sec.  
351.404(g)(2), Which Applies to the Determination of Normal Value and 
Certain Multinational Corporations

    Section 773(d) of the Act provides a special rule for certain 
multinational corporations when Commerce is determining the appropriate 
normal value to use in its antidumping calculations. The Act states 
that if, in the course of an investigation, Commerce determines that 
three criteria exist, Commerce ``shall determine the normal value of 
the subject merchandise by reference to the normal value at which the 
foreign like product is sold in substantial quantities outside the 
exporting country.''
    Those three criteria are: (1) subject merchandise exported to the 
United States is being produced in facilities which are owned or 
controlled, directly or indirectly, by a person, firm, or corporation 
which also owns or controls, directly or indirectly, other facilities 
for the production of the foreign like product which are located in 
another country or countries; (2) the foreign like product is not sold 
(or offered for sale) for consumption in the exporting country or is 
sold in the exporting country for insufficient amounts to allow for a 
proper comparison with the United States, and, therefore, Commerce 
should look to third country sales to determine normal value (or a 
sales-based particular market situation exists); and (3) the normal 
value of the foreign like product produced in one or more of the 
facilities outside the exporting country is higher than the normal 
value of the foreign like product produced in the facilities located in 
the exporting country.\93\
---------------------------------------------------------------------------

    \93\ See section 773(d) of the Act; see also section 
773(a)(1)(C) of the Act.
---------------------------------------------------------------------------

    Section 773(d) of the Act requires that Commerce make adjustments 
for the differences in the costs of production between the exporting 
country and the third country where the merchandise is also produced. 
It states that for ``purposes of this subsection, in determining the 
normal value of the foreign like product produced in a country outside 
the exporting country,'' Commerce shall determine its price ``at the 
time of exportation from the exporting country'' and make any 
adjustments ``required by subsection (a) for the cost of all containers 
and coverings and all other costs, charges and expenses incident to 
placing the merchandise in condition packed ready for shipment to the 
United States by reference to such costs in the exporting country.'' 
\94\
---------------------------------------------------------------------------

    \94\ See section 773(d) of the Act.
---------------------------------------------------------------------------

    Although Commerce has applied the special rule for certain 
multinational corporations (``MNC provision'') in determining normal 
value for many years, none of Commerce's regulations address the MNC 
provision. Commerce proposed the addition of Sec.  351.404(g) to 
address the filing requirements for those alleging the applicability of 
the MNC provision and to clarify that the MNC provision is only 
applicable when the non-exporting country is a market economy and not a 
nonmarket economy.\95\
---------------------------------------------------------------------------

    \95\ See Proposed Rule, 89 FR at 57305-06.
---------------------------------------------------------------------------

    Specifically, Commerce proposed codifying its practice directing 
parties alleging that the MNC provision should

[[Page 101716]]

apply to submit their allegations in accordance with the filing 
requirements set forth in Sec.  351.301(c)(2)(i). Moreover, Commerce 
explained that the provision does not apply when the non-exporting 
country at issue is a nonmarket economy country because, in accordance 
with Sec.  351.408, when the non-exporting country is a nonmarket 
economy, Commerce will apply the factors of production methodology 
described in section 773(c) of the Act.\96\
---------------------------------------------------------------------------

    \96\ Id.
---------------------------------------------------------------------------

    Two parties submitted comments regarding the proposed addition of 
Sec.  351.404(g). The first commenter requested not that Commerce 
modify Sec.  351.404(g), but rather modify Sec.  351.301(c)(2)(i), 
which provides that in general, market viability allegations, and 
through Sec.  351.404(g)(1), allegations that the MNC provision 
applies, should be due ``10 days after the respondent interested party 
files the response to the relevant section of the questionnaire, unless 
the Secretary alters this time limit.'' The commenter maintained that 
requiring parties to review questionnaire responses, research 
independent factual information, and prepare allegations within 10 days 
creates a significant burden. Accordingly, that commenter requested 
that Commerce increase the dates for market viability and MNC provision 
allegations from 10 days to 30 days in Sec.  351.301(c)(2)(i).
    The second commenter requested that Commerce revisit its practice 
of not applying the MNC provision to AD proceedings in which the non-
exporting country would be a nonmarket economy. The commenter 
acknowledged that the Federal Circuit in Ad Hoc Shrimp Trade Action 
Committee v. United States, 596 F. 3d 1365, 1370 (Fed. Cir. 2010) (Ad 
Hoc) affirmed Commerce's interpretation of the Act to apply to market 
economies only as permissible, but the commenter noted that the dissent 
in that case disagreed that Commerce's interpretation was consistent 
with the Act, reasoning that if the Congress had intended for the 
provision to not apply to nonmarket economy non-exporters, Congress 
would have clearly stated as such in the Act.\97\ The commenter stated 
that Commerce's practice, as reflected in proposed Sec.  351.404(g)(2), 
unduly and unnecessarily limits Commerce's ability to apply the MNC 
provision when the non-exporter is located in a nonmarket economy to 
the disservice of domestic industries seeking trade remedy relief from 
the dumping of merchandise produced and exported by a multinational 
corporation. Accordingly, the commenter requested that Commerce revise 
Sec.  351.404(g)(2) to apply the MNC provision equally to multinational 
corporations and their affiliates located in market and nonmarket 
economies.
---------------------------------------------------------------------------

    \97\ See Ad Hoc, 596 F.3d at 1373 (J. Prost dissenting). The 
commenter pointed out that in 1996, Commerce had a different 
interpretation of the Act, stating in Melamine Institutional 
Dinnerware Products from the People's Republic of China, 61 FR 
43337, 43340 (August 22, 1996), Commerce determined that the Act was 
silent and therefore to both market economy and nonmarket economy 
cases.
---------------------------------------------------------------------------

Response

    With respect to the first commenter's request, Commerce has 
determined not to modify the ten-day deadline set forth in Sec.  
351.301(c)(2)(i). Investigations and administrative reviews are 
extremely fact intensive and restricted by statutory deadlines. Adding 
20 days to that deadline would take away from the time Commerce needs 
to analyze and consider the allegation. Notably, Sec.  351.301(c)(2)(i) 
states that Commerce may ``alter this time limit.'' Accordingly, if a 
party wishing to allege that the MNC provision should be applied in a 
case believes that it needs more time to submit an allegation, before 
the 10 days have passed that party may request an extension from 
Commerce to do so. In requesting an extension, the party should provide 
Commerce with the reason it needs additional time to file an allegation 
and specify the actions it will take in the extended time to ensure 
that its MNC provision allegation is complete when it is submitted to 
the agency.
    In response to the second commenter, the MNC provision includes 
citations to section 773(a) of the Act, which covers a determination of 
normal value based on third country sales and makes no reference to 
section 773(c) of the Act, which applies to nonmarket economies.\98\ 
Further, the provision explicitly includes adjustments for costs of 
production, but the statutory nonmarket economy analysis, which 
incorporates surrogate values and factors of production, does not 
involve costs of production. For that reason, Commerce has concluded 
that the MNC provision, by its very terms, cannot apply if the non-
exporting country is a nonmarket economy. As the commenter notes, the 
Federal Circuit affirmed that determination in Ad Hoc.\99\
---------------------------------------------------------------------------

    \98\ See section 773(c) of the Act (``Nonmarket Economy 
Countries'').
    \99\ See Ad Hoc, 596 F. 3d at 1370.
---------------------------------------------------------------------------

    Specifically, the Federal Circuit reasoned that the MNC provision 
was ``silent regarding nonmarket economies,'' but the Act ``instructs 
Commerce to determine the normal value of the subject merchandise by 
reference to the normal value at which the foreign like product is 
`sold in substantial quantities' and its `price at the time of 
exportation from the exporting country,' '' and that ``sold'' and 
``price'' are terms ``not used to describe calculating the normal value 
in a nonmarket economy.'' \100\ The majority also referred approvingly 
to Commerce's reasoning that because the case before the Court involved 
a market economy (Thailand), to use a nonmarket economy as the 
alternative producer would be the same as ``treating a market economy 
country as a nonmarket economy and would, therefore, circumvent'' the 
Act which only provides for a nonmarket economy analysis when the 
country at issue is a nonmarket economy.\101\
---------------------------------------------------------------------------

    \100\ Id.
    \101\ Id. at 1371. The Federal Circuit also affirmed Commerce's 
interpretation of the legislative history of the provision that 
``Congress was concerned with the practice of discriminatory pricing 
where a home market was not viable and yet a respondent's low-priced 
exports to the United States market were supported by higher priced 
sales of its affiliates in a third country market.'' (citing Senate 
Committee on Finance Report on Trade Reform Act of 1974, S. Rep. No. 
93-1298, at 175 (November 16, 1974)). The Court agreed with Commerce 
that ``Congress was addressing the problem of discriminatory pricing 
practices of multinational corporations, but pricing practices are 
generally irrelevant in nonmarket economies.''
---------------------------------------------------------------------------

    As Commerce has stated before in analyzing the MNC provision, it is 
of no consequence whether some of a respondent's affiliated parties are 
located in nonmarket economy countries and some are located in market 
economy countries, or whether all of a respondent's affiliated parties 
are located in a nonmarket economy country.\102\ The Act, as 
interpreted in relevant case law, requires that the MNC provision be 
applied in cases where prices and costs are disregarded in favor of the 
factors of production methodology. If Congress had intended for the MNC 
provision to apply equally to nonmarket economy and market economy 
countries, it could have included language in the MNC provision that 
applied to nonmarket economies, but it did not do so.\103\ Accordingly, 
Commerce will not modify its interpretation of the MNC provision in 
proposed Sec.  351.404(g)(2) or change its practice in this regard.
---------------------------------------------------------------------------

    \102\ See Utility Scale Wind Towers from Malaysia: Final Results 
of Antidumping Duty Administrative Review; 2021-2022, 89 FR 56735 
(July 10, 2024), as amended 89 FR 65848, at accompanying Issues and 
Decision Memoranda at Comment 8.
    \103\ Id.
---------------------------------------------------------------------------

    Commerce has, however, made certain small changes to the language 
to provide further clarity that if the

[[Page 101717]]

Secretary determines that the non-exporting country is a nonmarket 
economy and that normal value would be determined using a factors of 
production methodology if the MNC provision was applied, Commerce will 
not apply the MNC provision in that situation.

12. Commerce Has Revised Certain Language in Proposed Sec.  
351.405(b)(3), Which Covers the Calculation of Constructed Value Profit

    As set forth in proposed Sec.  351.405(a), pursuant to section 
773(e) and (f) of the Act, in certain circumstances Commerce may 
determine normal value by constructing a value based on the cost of 
manufacturing; selling, general and administrative expenses; and 
profit. In constructing such a value, the Act provides that Commerce 
use the ``actual amounts incurred and realized by the specific exporter 
or producer being examined in the investigation or review for selling, 
general, and administrative expenses, and for profits, in connection 
with the production and sale of a foreign like product, in the ordinary 
course of trade, for consumption in the foreign country.'' \104\ 
However, there are times when the ``actual data are not available with 
respect'' to those production and sale amounts, and in those 
circumstances, section 773(e)(2)(B) of the Act establishes three 
alternative methods for calculating amounts for selling, general, and 
administrative expenses, and profit, in connection with the production 
and sale of a foreign like product, in those instances.\105\ The Act 
provides Commerce with the discretion to select from any of the three 
alternative methods, depending on the information available on the 
record.\106\
---------------------------------------------------------------------------

    \104\ See section 773(e)(2)(A) of the Act.
    \105\ See SAA at 840 (``At the outset, it should be emphasized, 
consistent with the Antidumping Agreement, new section 773(e)(2)(B) 
does not establish a hierarchy or preference among these alternative 
methods. Further, no one approach is necessarily appropriate for use 
in all cases'').
    \106\ See Certain Steel Nails from the Republic of Korea: Final 
Determination of Sales at Less Than Fair Value, 80 FR 28955 (May 20, 
2015) (Certain Steel Nails from Korea), and accompanying Issues and 
Decision Memorandum at Comment 4.
---------------------------------------------------------------------------

    One of those three options, described in section 773(e)(2)(B)(iii) 
of the Act, allows Commerce to use amounts incurred and realized for 
selling, general, and administrative expenses and for profit based on 
``any other reasonable method'' with one exception. The Act provides 
that ``the amount allowed for profit may not exceed the amount normally 
realized by exporters or producers'' other than the individually 
examined exporter or producer ``in connection with the sale, for 
consumption in the foreign country, of merchandise that is in the same 
general category of productions as the subject merchandise.'' This 
limitation on profit used in constructed value is frequently called the 
``profit cap.''
    The SAA states that in applying ``any other reasonable method'' 
under the Act, ``Commerce will develop this alternative through 
practice,'' \107\ and as Commerce explained in the Proposed Rule, it 
has done just that for many years.\108\ It has been Commerce's practice 
to consider four criteria in selecting sources for selling, general, 
and administrative expenses, as well as for profits, under ``any other 
reasonable method.'' In the Proposed Rule, Commerce determined to 
codify that criteria in proposed Sec.  351.405(b)(3).\109\ Accordingly, 
under the proposed regulation, Commerce will ``normally consider'': (A) 
the similarity of the potential surrogate companies' business 
operations and products to the examined producer's or exporter's 
business operations and products; (B) the extent to which the financial 
data of the surrogate company reflects sales in the home market and 
does not reflect sales to the United States; (C) the contemporaneity of 
the surrogate company's data to the period of investigation or review; 
and (D) the extent of similarity between the customer base of the 
surrogate company and the customer base of the examined producer or 
exporter in selecting such sources.
---------------------------------------------------------------------------

    \107\ See SAA at 841.
    \108\ See Proposed Rule, 89 FR at 57306.
    \109\ Id., 89 FR at 57306-07.
---------------------------------------------------------------------------

    Upon review of the Proposed Rule, however, Commerce has concluded 
that its preamble language may have confused two different aspects of 
its analysis under the Act. In the Proposed Rule, Commerce described 
these criteria as relating not only to the sources for ``any other 
reasonable method'' for selecting selling, general, and administrative 
expenses, as well as profit, but also pertaining to ``the amount 
normally realized by exporters or producers'' other than the 
individually examined exporter or producer ``in connection with the 
sale, for consumption in the foreign country, of merchandise that is in 
the same general category of productions as the subject merchandise.'' 
\110\ In other words, Commerce correctly referred to the use of these 
criteria in determining what sources to use when relying on ``any 
reasonable method,'' but incorrectly also referred to the use of this 
criteria in selecting a ``profit cap.'' \111\ That mischaracterization 
also was reflected in proposed Sec.  351.405(b)(3). Commerce is 
therefore modifying the regulation to remove that ``profit cap'' 
language and to clarify that the four criteria pertain to the selection 
of sources for determining amounts for selling expenses and for profit 
under section 773(e)(2)(B)(iii) of the Act.
---------------------------------------------------------------------------

    \110\ See Proposed Rule, 89 FR at 57288 and 57306.
    \111\ See SAA at 841 (addressing the ``any other reasonable 
method'' statutory option, as well as the profit cap: ``The 
Administration also recognizes that where, due to the absence of 
data, Commerce cannot determine amounts for profit under 
alternatives (1) and (2) or a ``profit cap'' under alternative (3), 
it might have to apply alternative (3) on the basis of `facts 
available.' This ensures that Commerce can use the alternative (3) 
when it cannot calculate the profit normally realized by other 
companies on sales of the same general category of products'').
---------------------------------------------------------------------------

    Two commenters expressed their support for the new regulation, 
finding it to be timely and useful in achieving Commerce's stated goal 
of enhancing the administration of the AD and CVD laws. One of those 
commenters provided a suggestion that Commerce state that the list of 
criteria is not exhaustive in the regulation, or in the alternative add 
a fifth criteria that states that Commerce might also consider other 
factors and information as appropriate in selecting sources for 
selling, general and administrative expenses and profit as ``any other 
reasonable method'' under the Act.

Response

    Other than the modifications Commerce has made to proposed Sec.  
351.405(b)(3) described above, Commerce has made no further changes to 
the provision. The language states that Commerce will ``normally 
consider the following criteria,'' and thus, by its terms the 
regulation is already clear that the list is not exhaustive. Likewise, 
because the list of criteria is not exhaustive, it is unnecessary to 
add a fifth ``catch-all'' criterion to the regulatory list. Normally, 
as the regulation states, and consistent with Commerce's long-standing 
practice, Commerce will consider the four listed criteria in selecting 
a profit amount for its constructed value calculations, but if Commerce 
determines that there is some additional information on the record that 
might be relevant to its analysis, the regulation does not prevent or 
prohibit Commerce from considering that information as well in its 
analysis.

[[Page 101718]]

13. Commerce Has Revised Proposed Sec.  351.408(b) To Describe the 
Methodology for Selecting Surrogate Countries and the Use of Gross 
Domestic Product To Determine Economic Comparability

    In the Proposed Rule, Commerce indicated that it was modifying 
Sec.  351.408(b) to reflect that Commerce may consider either per 
capita gross national income (GNI) or per capita gross domestic product 
(GDP) in selecting potential surrogate countries for purposes of 
antidumping investigations and administrative reviews of nonmarket 
economies.\112\ Currently, Sec.  351.408(b) states that in determining 
whether a country is at a level of economic development comparable to 
the nonmarket economy under sections 773(c)(2)(B) and 773(c)(4)(A) of 
the Act, Commerce will ``place primary emphasis on per capita GDP as 
the measure of economic comparability.'' However, Commerce's general 
practice has been to use per capita GNI instead of per capita GDP as 
the measure of economic comparability.\113\ Commerce's use of GNI has 
been recognized and affirmed as reasonable by the U.S. Court of 
International Trade as a measure to determine economic comparability in 
multiple holdings.\114\ Per capita GNI measures the total income earned 
by the residents of a country, whether from domestic or foreign 
sources, divided by the average population of that country.\115\ Per 
capita GDP, on the other hand, measures the total value of goods and 
services produced within a country per person in a given year.\116\ The 
Proposed Rule explained either per capita GNI or per capita GDP can be 
reasonably used to determine comparable economies, depending on the 
facts before the agency.\117\ Proposed Sec.  351.408(b) also provided 
that Commerce could consider additional factors in selecting comparable 
economies and explained that consideration of these factors would 
assist it in avoiding distortive economic comparisons.\118\
---------------------------------------------------------------------------

    \112\ See Proposed Rule, 89 FR at 57330.
    \113\ See Antidumping Methodologies in Proceedings Involving 
Nonmarket Economy Countries: Surrogate Country Selection and 
Separate Rates; Request for Comment, 72 FR 13246, 13246 n.2 (March 
21, 2007).
    \114\ See, e.g., Clearon Corp v. United States, 38 CIT 1122, 
1137-1140 (July 24, 2014); see also Tri Union Frozen Prods. v. 
United States, 163 F. Supp. 3d. 1255, 1268, n. 8 (CIT 2016); and 
Tianjin Wanhua Co. v. United States, 253 F. Supp. 3d. 1318, 1322 
(CIT 2017).
    \115\ See World Bank. (2024). GNI per capita (current US$), 
available at https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 
(see ``details'' section in chart); comparable definition is in IMF, 
``IMF Glossary'', available at https://www.imf.org/en/About/Glossary.
    \116\ See World Bank. (2024). GDP per capita (current US$), 
available at https://data.worldbank.org/indicator/NY.GDP.PCAP.CD 
(see ``details'' section in chart); comparable definition is in IMF, 
``IMF Glossary'', available at https://www.imf.org/en/About/Glossary.
    \117\ See Proposed Rule, 89 FR at 57330.
    \118\ Id.
---------------------------------------------------------------------------

    Commerce received several comments on the proposed modifications to 
Sec.  351.408(b). Numerous commenters indicated their appreciation of 
Commerce's codification of its established practice and its goal of 
considering additional factors to determine which countries may be 
deemed economically comparable to a non-market economy. However, 
commenters also expressed concern that including the option of using 
both GNI and GDP and identifying the additional factors adds 
uncertainty to the selection of surrogate countries. Most commenters 
were not opposed to the use of GDP only or GNI only but were very 
concerned about the potential confusion and inconsistencies if Commerce 
were able to pick one or the other on a case-by-case basis. Other 
commenters expressed opposition to the consideration of additional 
factors in Commerce's analysis entirely for similar reasons.
    One commenter questioned the relationship between GNI and GDP and 
the additional factors. The commenter pointed out that the Proposed 
Rule stated that it ``will place primary emphasis'' on GNI or GDP, as 
compared to the additional factors it ``may also consider'' pursuant to 
new Sec.  351.408(b)(1) through (4),\119\ and questioned if Commerce 
was therefore mandated to analyze all of these factors in every case, 
or only GNI and GDP in all cases and the other factors in some cases. 
Moreover, that commenter stated that implementing the additional 
factors as a mandatory, case-specific, multi-factor economic analysis 
when the current methodology is often sufficient would unnecessarily 
increase costs in terms of time, human resources, and legal fees for 
both Commerce and domestic interested parties. Therefore, that 
commenter recommended that Commerce clarify that it may decline to 
consider the proposed additional factors absent record evidence that 
relying on GDP or GNI would result in understated dumping margins for 
the subject non-market economy entity or entities.
---------------------------------------------------------------------------

    \119\ Id (emphasis in the comment, not in the Proposed Rule).
---------------------------------------------------------------------------

    A second commenter also expressed that it was unclear when and why, 
in any given proceeding, Commerce would place primary emphasis on GNI 
over GDP and vice versa. That commenter recommended that Commerce 
provide clarification regarding how it will take GNI and GDP 
information into consideration. In addition, while that commenter 
agreed that Commerce should have the flexibility to consider 
information other than GNI and GDP in determining economic 
comparability, it also stated that the proposed Sec.  351.408(b)(3) 
related to the quality of the available data should be considered a 
separate and distinct determination from whether a country is 
economically comparable. Similarly, that commenter stated that by 
limiting the number of countries considered to be economically 
comparable based on factors unrelated to economic comparability, 
Commerce risked unnecessarily limiting potential surrogate countries 
and making it more difficult to identify the best available information 
for valuing a respondent's factors of production. Accordingly, that 
commenter recommended that Commerce confirm that the potential quality 
and accessibility of data are not relevant in determining whether a 
country can be considered economically comparable to the nonmarket 
economy country at issue.
    The third commenter acknowledged that the proposed changes 
commendably address the fact that the use of GNI alone may not result 
in a principled or predictable calculation of normal value or 
antidumping margins. However, that commenter also stated that the 
proposed changes do not address the fact that Commerce's practice 
continues to elevate economic comparability over merchandise 
comparability, adding greater uncertainty to the selection of surrogate 
countries and contrary to the intent of the statute. That commenter 
stated that because Commerce's practice is to first create a list of 
six surrogates deemed to be equal in terms of economic 
comparability,\120\ Commerce will select a country producing comparable 
merchandise that is ``the same'' in terms of economic development over 
a country that produces identical merchandise but is slightly less 
comparable in economic terms. Because the statute requires that a 
surrogate be both economically comparable and a significant producer of 
comparable merchandise, the third commenter stated that both criteria 
call for a comparison that will yield relative levels of comparability. 
Accordingly,

[[Page 101719]]

that commenter recommended that Commerce modify the current approach to 
balance economic comparability and merchandise comparability to make 
surrogate country determinations more predictable and consistent. 
Particularly in the case of products that are only produced in a few 
countries, that commenter suggested that Commerce place more weight on 
merchandise comparability to allow for the selection of a country that 
is likely to provide market-based factor values for the subject 
merchandise, even though its overall economy over time may have 
improved or declined relative to a nonmarket economy country. To assess 
merchandise comparability, the third commenter cited the Shanghai 
Foreign Trade litigation where Commerce identified various factors that 
allow parties to analyze, rank, and anticipate which merchandise will 
be considered comparable for purposes of section 773(c)(4)(ii) of the 
Act.\121\ The Court in Shanghai Foreign Trade recognized that 
Commerce's established practice in selecting surrogate financial 
statements was to apply a three-part test that examines ``physical 
characteristics, end uses, and production processes'' \122\ of the 
products produced by a company in a surrogate country to see if they 
were comparable.
---------------------------------------------------------------------------

    \120\ See Enforcement and Compliance's Policy Bulletin No. 04.1, 
regarding, ``Non-Market Economy Surrogate Country Selection 
Process'' (March 1, 2004), available on Commerce's ACCESS website at 
https://access.trade.gov/Resources/policy/bull04-1.html.
    \121\ See, e.g., Shanghai Foreign Trade Enterprises Co., Ltd. v. 
United States, 318 F. Supp. 2d 1339, 1348 (CIT 2004) (Shanghai 
Foreign Trade).
    \122\ Id. (citing Certain Cased Pencils from the People's 
Republic of China; Final Results and Partial Rescission of 
Antidumping Administrative Review, 67 FR 48612 (July 25, 2002), and 
accompanying Issues and Decision Memorandum at Comment 5).
---------------------------------------------------------------------------

    In addition, the third commenter also recommended that Commerce not 
arbitrarily foreclose the use of the country producing identical or 
more comparable merchandise simply because it is not one of the 
countries deemed by Commerce to be ``the same'' as the subject 
nonmarket economy country in terms of economic comparability in its 
annual list of comparable economies. That commenter recommended that 
both economic comparability and merchandise comparability factors 
should be weighed such that a country outside the current six-country 
GNI list might still be selected as the surrogate country based on 
significant production of identical merchandise (or merchandise that is 
more comparable to the subject merchandise than any products produced 
in any of the six listed countries).
    Lastly, a fourth commenter stated that it generally supported 
Commerce's proposed changes. However, that commenter was concerned that 
placing primary emphasis on ``either per capita gross domestic product 
(GDP) or per capita gross national income (GNI) . . .'' \123\ provides 
an equivocation that incorporates an additional and unnecessary element 
of uncertainty in an already complicated process of surrogate country 
selection. That commenter stated that given Commerce's long-standing 
and successful utilization of GNI alone, it recommended that Commerce 
codify the use of GNI in place of the current reference to GDP. With 
respect to the additional factors, the fourth commenter stated that it 
supported Commerce's proposal to incorporate into Sec.  351.408(b) the 
qualitative analysis of the availability of potential surrogate values, 
but only in part.
---------------------------------------------------------------------------

    \123\ See Proposed Rule, 89 FR at 57330.
---------------------------------------------------------------------------

    For the first proposed factor (i.e., economic activity), the fourth 
commenter stated that the reference in the Proposed Rule, to 
``development phase and role in the global economy,'' \124\ was too 
ambiguous and could be ripe for abuse even if not incorporated into the 
text of the regulation. The commenter stated that the phrase runs 
counter to Commerce's longstanding practice that its selection of 
surrogate values, such as surrogate companies for financial ratios, 
does not require Commerce to use surrogates that exactly replicate the 
experience of respondents. As for the second proposed factor (i.e., 
examination of trade patterns), the fourth commenter stated that the 
proposed revision inadvertently suggested that the import and export 
analysis may include commodities other than identical or comparable 
merchandise. That commenter therefore recommended that Commerce modify 
the regulation to consider the composition and quantity of ``exports of 
identical or comparable merchandise'' from those countries.
---------------------------------------------------------------------------

    \124\ Id., 89 FR at 57307, 57330.
---------------------------------------------------------------------------

    The commenter supported the third proposed factor (i.e., 
availability, accessibility, and quality of data), noting that Commerce 
includes similar elements in its deliberation.\125\
---------------------------------------------------------------------------

    \125\ See, e.g., Certain Activated Carbon From the People's 
Republic of China: Preliminary Results of Antidumping Duty 
Administrative Review, and Preliminary Determination of No 
Shipments; 2019-2020, 86 FR 33,988 (June 28, 2021), and accompanying 
Issues and Decision Memorandum (June 21, 2021) at 16-17.
---------------------------------------------------------------------------

    Finally, for the fourth proposed factor (i.e., additional economic 
factors for consideration), the fourth commenter stated that the 
introduction of indicators in the preamble such as purchasing power 
parity to account for differences in spending power between countries 
could largely negate the standard analysis of economic comparability 
using either GNI or GDP. The fourth commenter also noted that another 
example provided in the preamble--``regional indicators that would 
allow Commerce, when reasonable, to select a surrogate country or 
countries that are in the same geographic region as the nonmarket 
economy country''--is so broad and subjective that it might nullify all 
other considerations, such as GNI or net exports of merchandise under 
consideration. Accordingly, the fourth commenter stated that it did not 
support this last factor, and it urged Commerce to not include such 
language in Sec.  351.408(b).
Response
    Upon consideration of the comments on Commerce's proposed revisions 
to Sec.  351.401(b), it has become clear from the questions and 
concerns raised that a regulatory provision that only focuses on the 
``Economic Comparability'' aspect of Commerce's analysis is not 
sufficient. Accordingly, Commerce has revised the provision, codified 
each of the three steps in selecting surrogate countries, and revised 
the header of the provision to read ``Selecting Surrogate Countries.''
    The first step, now codified in Sec.  351.408(b)(1), explains that 
Commerce is directed by sections 773(c)(2)(B) and 773(c)(4)(A) of the 
Act to select surrogate countries which are at a level of economic 
development comparable to that of the nonmarket economy at issue. 
Furthermore, unlike in the Proposed Rule, final Sec.  351.408(b)(1)(i) 
provides that in measuring economic comparability, Commerce will place 
primary emphasis solely on GDP. Commerce acknowledges the concerns 
expressed by several commenters that if Commerce had the option of 
using either GNI or GDP in determining economic comparability, it could 
potentially lead to perceived inconsistencies and otherwise lead to 
confusion associated with the use of either measurement of economic 
comparability. After taking into consideration those comments, Commerce 
has determined that the agency and the public is best served by a 
single, consistent and predictable measurement to determine countries 
economically comparable to a nonmarket economy in all cases.
    As Commerce acknowledged in the Proposed Rule,\126\ for several 
years it has used GNI levels to measure economic comparability, a 
practice that

[[Page 101720]]

has been upheld by the CIT in multiple cases as being in accordance 
with law.\127\ However, as explained below, for purposes of comparing 
different economies for purposes of an AD analysis, the use of GDP 
levels is a more appropriate alternative. Accordingly, final Sec.  
351.408(b) will continue to provide that Commerce will use GDP to 
determine countries economically comparable to each nonmarket economy 
at issue in cases before it, starting with the next list of comparable 
economies issued by Commerce following the publication of this final 
rule.
---------------------------------------------------------------------------

    \126\ Id.
    \127\ Id. at n.128.
---------------------------------------------------------------------------

    Commerce recognizes that there are similarities between GNI and 
GDP, and both are acceptable options for measuring economic 
comparability. Both indicators are close to one another numerically and 
represent important means of measuring a country's overall economic 
activity. Some authoritative institutions, such as the World Bank, 
regularly publish both indicators and have found that GNI provides a 
useful indicator that is ``closely correlated with other, nonmonetary 
measures of the quality of life, such as life expectancy at birth, 
mortality rates of children, and enrollment rates in school.'' \128\ 
Moreover, the World Bank often relies on per capita GNI levels more 
heavily than per capita GDP levels as a means of measuring countries' 
income, as it includes earnings a country's citizens receive either 
within its borders or from its foreign assets.\129\ Other authoritative 
institutions, such as the Organization for Economic Cooperation and 
Development (OECD), also publish both indicators on a regular basis, 
and have found that many analysts prefer the theoretical construct of 
GNI over GDP, given its ability to isolate income earned by all of its 
citizens regardless of geographic boundaries.\130\ For reasons such as 
this, Commerce has relied upon GNI in making economic comparisons for 
several years.
---------------------------------------------------------------------------

    \128\ Why Use GNI Per Capita To Classify Economies Into Income 
Groupings?, World Bank, available at https://datahelpdesk.worldbank.org/knowledgebase/articles/378831; Neil 
Fantom and Umar Serajuddin, The World Bank's Classification of 
Countries by Income, World Bank, available at https://documents1.worldbank.org.
    \129\ Why Use GNI Per Capita To Classify Economies Into Income 
Groupings?, World Bank, available at https://datahelpdesk.worldbank.org/knowledgebase/articles/378831.
    \130\ See National Income Per Capita, OECD Factbook: Economic, 
Environmental and Social Statistics (May 6, 2014) (OECD Factbook 
2014), available at https://oecd-ilibrary.org/economics/oecd-factbook-2014/national-income-per-capita_factbook-2014-21-en.
---------------------------------------------------------------------------

    However, while there are benefits to using GNI when investigating 
relative levels of wealth across countries, Commerce has determined 
that the use of GDP would be more appropriate for this specific 
function. Primary among those reasons is that GDP measures the total 
value of goods and services produced within a country's borders during 
a specific period, while GNI measures the total income earned by 
citizens and residents, including money received from sources outside 
the country. According to the World Bank, the technical definition of 
GDP is ``the sum of gross value added by all resident producers in the 
economy plus any product taxes and minus any subsidies not included in 
the value of the products,'' and represents the income citizens earn on 
wealth they hold in the domestic economy and in other countries less 
the payments made to foreign owners of wealth located in the domestic 
economy.\131\ Using GDP, rather than GNI, avoids the challenges 
associated with measuring international salaries of citizens outside of 
the country of measurement associated with the GNI calculations. 
Accordingly, GDP is often considered among economic institutions and 
authorities to be the more practical of the two indicators.\132\
---------------------------------------------------------------------------

    \131\ World Bank, ``GDP Per Capita'' in Metadata Glossary of 
World Bank's Databanks, available at https://databank.worldbank.org/metadataglossary/world-development-indicators/series/NY.GDP.PCAP.KN. 
See also Paul Krugman & Maurice Obstfeld, International Economics: 
Theory and Practice (7th ed. 2005), at 281.
    \132\ See OECD Factbook 2014 at 58.
---------------------------------------------------------------------------

    Furthermore, because of the complexities associated with estimating 
GNI, GDP is widely used by economic institutions which compare 
economies. Although each measure of economic aggregation has its 
shortcomings, the OECD characterizes GDP as ``a core indicator of 
economic performance and is commonly used as a broad measure of average 
living standards or economic well-being,'' while the Federal Reserve 
Bank of St. Louis classifies it as ``one of the most common measures.'' 
\133\ Furthermore, the International Monetary Fund (IMF), states that 
GDP ``has become widely used as a reference point for the health of 
national and global economies'' and that it is often cited in news 
sources and in reports by governments, central banks, and the business 
community.\134\ In fact, as the primary measure of production in the 
international guidelines for economic accounting (System of National 
Accounts), the United States moved to the use of GDP to compare 
countries in the 1990s.\135\ The Bureau of Economic Analysis, which is 
the U.S. government agency responsible for reporting aggregated 
economic output for the country, explained that this move was based in 
large part by a desire to allow ``reliability in comparisons of 
economic activity across countries.'' \136\
---------------------------------------------------------------------------

    \133\ See ``GDP Per Capita,'' OECD National Accounts at a Glance 
2014 (2014), available at https://www.oecd-ilibrary.org/docserver/na_glance-2014-6-en.pdf, and Grittayaphong, Peter, Beyond GDP: Three 
Other Ways to Measure Economic Health, Federal Reserve Bank of St. 
Louis (April 19, 2023), available at https://www.stlouisfed.org/open-vault/2023/apr/three-other-ways-to-measure-economic-health-beyond-gdp.
    \134\ See Tim Callen and Sarwat Jahan, Gross Domestic Product: 
An Economy's All, International Monetary Fund: IMF's Finance & 
Development -Back to the Basics, available at https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/gross-domestic-product-GDP.
    \135\ See Gross Domestic Product as a Measure of U.S. 
Production, Bureau of Economic Analysis: Survey of Current Business, 
available at https://apps.bea.gov/scb/pdf/national/nipa/1991/0891od.pdf; Kelly Ramey, The Changeover from GNP to GDP--A Milestone 
in BEA History, Bureau of Economic Analysis, Volume 101, available 
at https://apps-fd.bea.gov/scb/issues/2021/03-march/pdf/0321-reprint-gnp.pdf.
    \136\ Id.
---------------------------------------------------------------------------

    Finally, while GNI may be a more accurate indicator of national 
wealth, it is less aligned with Commerce's objective of finding 
countries at comparable levels of economic development for the purposes 
of identifying appropriate surrogate for factors of production. GDP 
focuses squarely on a country's production. Reliance on GDP will also 
ensure that country comparisons will not be skewed by disproportionally 
high or low incomes of country citizens that lie outside the geographic 
boundaries of the comparison countries.
    To the extent that commenters raised concerns about the use of GDP, 
it was because Commerce has relied upon GNI to measure economic 
comparability for many years and its methodology had become transparent 
and predictable. Commerce continues to believe that its use of GNI has, 
historically, been lawful, reliable and transparent, and until Commerce 
issues its next list of comparable economies, Commerce will continue to 
rely on its current list of comparable economies determined based on 
GNI (which can be accessed at https://access.trade.gov/Resources/surrogate.aspx) after this final rule is issued. When Commerce next 
issues its list of comparable economies, it will be based on GDP data 
from the World Bank, consistent with both the current and revised 
regulations. For comparability purposes, and for consistency with how 
Commerce used GNI, the World Bank's GDP indicator will be US$ 
denominated nominal GDP levels.
    In addition to the switch from relying on GNI data to GDP data, 
under final Sec.  351.408(b)(1)(ii) Commerce may also

[[Page 101721]]

consider additional factors in determining whether countries are at a 
comparable level of economic development to the reference non-market 
economy. In the proposed regulation, Commerce set forth factors such as 
the ``overall size and composition of economic activity in those 
countries'' and ``the composition and quantity of exports from those 
countries.'' \137\ Certain commenters questioned how those general 
terms would relate to Commerce's comparable economy analysis. After 
consideration of those concerns Commerce has removed the factors from 
the regulation, instead clarifying here in greater detail than the 
Proposed Rule that in certain cases Commerce might consider additional 
factors that would be relevant to economic comparability, such as if 
the size or structure of certain market economies under consideration 
are significantly different from that of the nonmarket economy at 
issue. For example, a small island country might share a GDP level with 
a nonmarket economy in a particular year, but Commerce might determine 
that the uniqueness of the market economy's situation is such that it 
would be inappropriate to consider that small island country comparable 
to the nonmarket economy at issue for purposes of deriving surrogate 
values to use in Commerce's antidumping calculations. Likewise, 
Commerce might consider that an economy with a similar GDP in a certain 
year to the nonmarket economy is primarily agrarian or service-
oriented, while the nonmarket economy might be structured as a 
primarily industrial economy. Commerce might therefore consider that 
notwithstanding a similar GDP, other countries may serve as better 
comparators given Commerce's interest in finding surrogates for price 
and costs in production.
---------------------------------------------------------------------------

    \137\ See Proposed Rule, 89 FR at 57307.
---------------------------------------------------------------------------

    Commerce recognizes that there might be other factors, unique to a 
given situation, that may also warrant further consideration in 
determining if country should be used as a surrogate. To be clear, if 
Commerce determined to omit certain countries from its surrogate 
country list based on factors other than GDP, Commerce would identify 
those factors and explain its basis and reasoning for excluding that 
country from the surrogate country list when it issues that list on the 
Commerce website.\138\
---------------------------------------------------------------------------

    \138\ See Sec.  351.408(b)(1)(ii) (codifying that Commerce will 
provide its reasoning as described).
---------------------------------------------------------------------------

    Finally, under the economically comparable analysis, Commerce has 
codified its current practice and added Sec.  351.408(b)(1)(iii), which 
states that on an annual basis, Commerce will determine market 
economies economically comparable to individual nonmarket economies and 
list those market economies on its website.
    In addition to its economically comparable analysis, Commerce has 
also codified the second step of its surrogate country analysis at 
Sec.  351.408(b)(2). Sections 773(c)(2)(A) and 773(c)(4)(B) of the Act 
direct Commerce to consider countries that are significant producers of 
merchandise comparable to the subject merchandise. Accordingly, after 
issuing a list of certain countries that are economically comparable 
under Sec.  351.408(b)(1), Commerce will next select significant 
producers of comparable merchandise under Sec.  351.408(b)(2) from 
among economically comparable countries.
    Lastly, the third step, under Sec.  351.408(b)(3), provides that if 
there is more than one economically comparable country that produces 
comparable merchandise in a given case that might be considered a 
potential surrogate country, Commerce will consider the totality of the 
information on the record in selecting a surrogate country. Such 
criteria include the availability, accessibility, and quality of data 
from those countries and the similarity of production processes and 
products manufactured in the potential surrogate countries in 
comparison to the subject merchandise.
    Commerce introduced the element of data quality in the Proposed 
Rule,\139\ but did so with respect to the first step of its surrogate 
country analysis pertaining to economic comparability. As explained 
above, the inclusion of that element with respect to economic 
comparability raised concerns among commenters. Commerce agrees that in 
practice, although it may find that data availability, accessibility, 
and quality can at times be a concern, data quality normally does not 
become a significant issue until Commerce must select a surrogate 
country from among a list of economically comparable countries with 
significant producers of comparable merchandise. Even if Commerce has 
determined that a country is economically comparable to the nonmarket 
economy country, if the data quality on the record is unusable, 
insufficient data can create serious problems for the agency's normal 
value calculations. For example, incomplete data from a potential 
surrogate country may result in distorted surrogate values, which in 
turn can adversely affect Commerce's calculation of AD margins. 
Therefore, the data quality with respect to potential surrogate 
countries plays a pivotal role in ensuring the accuracy and 
transparency of the surrogate country selection process. Accordingly, 
Commerce has included the availability, accessibility, and quality of 
data element in the third step of Commerce's surrogate country 
selection analysis.
---------------------------------------------------------------------------

    \139\ Id., 89 FR at 57307.
---------------------------------------------------------------------------

    Commenters raised concerns regarding the proposed Sec.  
351.408(b)'s reliance on general economic comparability rather than 
focusing on the export composition of countries that produce 
merchandise identical or comparable to the subject merchandise. In 
response, Commerce included all three steps of its surrogate country 
analysis in the updated regulation, because while export composition is 
not part of the first step of Commerce's surrogate country analysis 
(which was the only part analyzed in the current regulation and 
addressed in the Proposed Rule), it is analyzed in the second and third 
parts of its analysis in selecting a surrogate country.
    Another concern raised by certain commenters was Commerce's 
proposed inclusion of ``additional factors which are appropriate to 
consider in light of unique facts or circumstances'' with respect to 
its economic comparability analysis.\140\ Commerce has not included 
that language in the final regulation but has retained the ``additional 
considerations in determining economic comparability'' at Sec.  
351.408(b)(1)(ii) and provided examples for when it might consider 
additional unique factors in its comparability analysis in this 
preamble. Commerce appreciates the need for predictability and 
consistency in its analysis but also recognizes that each country, 
whether a market economy or nonmarket economy, is unique, and if a 
factor arises in a given case that Commerce determines is significant 
and relevant enough to consider as part of its economic comparability 
analysis, Commerce must have the ability to do so to comply with its 
statutory responsibilities.
---------------------------------------------------------------------------

    \140\ See Proposed Rule, 89 FR at 57330 (at proposed Sec.  
351.408(b)(4)).
---------------------------------------------------------------------------

    In addition, certain parties commented more specifically on the 
importance of the comparability of merchandise from a potential 
surrogate country. One commenter suggested that Commerce should at 
times place greater importance on the comparability of merchandise over 
the comparability of economies in selecting a surrogate country. In 
accordance with that suggestion, the commenter recommended that both 
economic

[[Page 101722]]

comparability and merchandise comparability factors should be weighed 
such that a country outside the current six-country GNI list might 
still be selected as the surrogate country based on significant 
production of identical merchandise (or merchandise that is more 
comparable to the subject merchandise than any products produced in any 
of the six listed countries).
    Commerce has not adopted that commenter's suggestion in revising 
Sec.  351.408(b). The Act states that Commerce ``shall utilize, to the 
extent possible, the prices or costs of factors of production in one or 
more market economy countries that are--(A) at a level of economic 
development comparable to that of the nonmarket economy country, and 
(B) significant producers of comparable merchandise.'' \141\ While 
economic comparability and comparable merchandise production are both 
important considerations in Commerce's surrogate country analysis, it 
is Commerce's longstanding practice to prioritize economic 
comparability, with the similarity of merchandise produced in those 
potential surrogate countries serving as a secondary aspect of 
Commerce's analysis. The Federal Circuit has stated that when a statute 
does not mandate a procedure or methodology for applying a statutory 
test, ``Commerce may perform its duties in the way it believes most 
suitable'' \142\ and has affirmed Commerce's selection of surrogate 
countries in several cases on the basis of this methodology.\143\ 
Indeed, consistent with this practice, Commerce's modified surrogate 
country memo affirms the prioritization of ``economic comparability'' 
in the surrogate selection process, while also acknowledging the 
relevance of selecting a ``significant producer of comparable 
merchandise.'' \144\ Likewise, consistent with that practice, the 
revised regulation also prioritizes economic comparability, as 
reflected in the first, second and third steps of Commerce's surrogate 
selection analysis in Sec.  351.408(b)(1), (2) and (3) of the final 
rule.
---------------------------------------------------------------------------

    \141\ See sections 773(c)(4)(A) and 773(c)(4)(B) of the Act.
    \142\ See JBF RAK LLC v. United States, 790 F.3d 1358, 1364 
(Fed. Cir. 2015).
    \143\ See, e.g., Jiaxing Brother Fastener Co. v. United States, 
822 F.3d 1289, 1300 (Fed. Cir. 2016) (affirming Commerce's selection 
of Thailand over the Philippines as the surrogate country).
    \144\ See Memorandum, ``List of Surrogate Countries for 
Antidumping Investigations and Reviews from the People's Republic of 
China (``China''), dated August 27, 2024, available at https://access.trade.gov/Resources/surrogate/China_Surrogate_Country-List_Memo.pdf. The memorandum specifies that when multiple countries 
meet the criteria of economic comparability, the availability and 
quality of publicly available data should guide the selection 
process. Commerce's surrogate country memo also indicates that if no 
countries on the list produce comparable merchandise, Commerce may 
consider countries outside the list in selecting a surrogate 
country.
---------------------------------------------------------------------------

    Nonetheless, Commerce agrees with that commenter that the 
similarity of merchandise produced by countries that are both 
economically comparable and significant producers of subject 
merchandise can be an important consideration in the agency's surrogate 
country analysis, depending on the facts on the administrative record. 
Accordingly, in analyzing the comparability of merchandise from 
potential surrogate countries with subject merchandise, Commerce has 
codified in Sec.  351.408(b)(3) that besides the availability, 
accessibility and quality of data, Commerce will also consider the 
similarity of production processes and products manufactured in the 
potential surrogate countries to the subject merchandise. Consistent 
with Commerce's normal practice, Commerce may consider if the 
merchandise is identical or similar to the subject merchandise and may 
consider other factors besides the physical characteristics of the 
products if the administrative record contains such detailed 
information.\145\
---------------------------------------------------------------------------

    \145\ As one commenter pointed out, in Shanghai Foreign Trade 
the CIT recognized that Commerce's practice in selecting surrogate 
financial statements, for example, is to compare not only the 
physical characteristics of the potential surrogate product with the 
subject merchandise, but the end use and similarity of production 
process between the products as well. See Shanghai Foreign Trade, 
318 F. Supp. 2d at 1348. Such considerations might also be relevant 
in selecting a surrogate country, but only if the information on the 
record is of sufficiently quality and completeness to support such 
an analysis.
---------------------------------------------------------------------------

14. Commerce Will Remove the Integral Linkage Specificity Provision, as 
Well as the Agricultural and Small- and Medium-Sized Businesses 
Exceptions to the Specificity Rule (Currently Found at Sec.  
351.502(d), (e), and (f))

    It is axiom that Commerce will only countervail a subsidy program 
that provides benefits that are specific as that term is contemplated 
under U.S. CVD law; that is, not broadly available and widely used but 
narrowly focused and used by discrete segments of an economy.\146\
---------------------------------------------------------------------------

    \146\ See, e.g., sections 771(5)(A) and 771(5A)(D) of the Act 
and SAA at 929-930.
---------------------------------------------------------------------------

    In the Proposed Rule, Commerce proposed removing the integral 
linkage specificity provision, as well as the agricultural and small- 
and medium-sized business exceptions to the specificity rule, currently 
found at Sec.  351.502(d), (e), and (f).\147\ Commerce received 
comments on these proposed changes. After considering those comments, 
Commerce is removing these provisions consistent with the Proposed 
Rule.
---------------------------------------------------------------------------

    \147\ See Proposed Rule, 89 FR at 57308-10.
---------------------------------------------------------------------------

Integral Linkage Provision
    Consistent with the proposed changes to the regulation, the agency 
will delete the integral linkage provision found at current Sec.  
351.502(d) pursuant to which Commerce, at its discretion, may expand 
its analysis of whether a particular investigated subsidy program is 
specific under section 771(5A)(D) of the Act by expanding its 
specificity analysis to programs other than that particular 
investigated subsidy program if the investigated subsidy program is 
``integrally linked'' to other subsidy programs under investigation. 
The concept of integral linkage contained in Sec.  351.502(d) was a 
discretionary practice at the time of its codification. There is not, 
and has never been, a statutory requirement to expand the analysis of 
specificity under section 771(5A)(D) of the Act beyond the particular 
investigated subsidy program. Since 1998, when Commerce added the 
integral linkage provision to the regulations, respondents have rarely 
invoked this provision, and Commerce has rarely found two or more 
subsidy programs to be integrally linked.\148\ For these reasons, 
Commerce has determined to remove the integral linkage provision found 
at current Sec.  351.502(d).
---------------------------------------------------------------------------

    \148\ See, e.g., Countervailing Duties; Final Rule, 63 FR 65348, 
65357 (November 25, 1998) (1998 CVD Regulations); see also the 
Preamble to Countervailing Duties: Notice of Proposed Rulemaking and 
Request for Public Comments, 54 FR 23366, 23368 (May 31, 1989) (1989 
Proposed Regulations). The 1989 Proposed Regulations were never 
finalized.
---------------------------------------------------------------------------

    Two parties commented in opposition to the removal of the integral 
linkage provision. While they acknowledged Commerce's observation that 
there is no express statutory requirement to expand the analysis of 
specificity under section 771(5A)(D) of the Act, the commenters stated 
that the elimination of the regulation diminishes clarity and certainty 
by removing analytical standards deemed useful in resolving whether a 
measure satisfies the statute's specificity requirements. Commerce 
finds these arguments unpersuasive.
    While the commenters state that the elimination of this regulation 
diminishes clarity with respect to Commerce's analytical standards, 
these parties have cited no cases or instances since this regulation 
was promulgated

[[Page 101723]]

in which the integral linkage provision provided useful guidance or 
clarity to Commerce's analysis of a subsidy program's specificity. 
Because the integral linkage provision is not required by the Act and 
has not provided any useful assistance or clarity to the agency's 
specificity analysis conducted under section 771(5A)(D) of the Act, 
Commerce has removed the provision from the regulation.
The Agricultural Exception
    Consistent with the proposed changes to the regulation, in this 
final rule Commerce has removed the agricultural exception found at 
current Sec.  351.502(e). Current Sec.  351.502(e) provides that 
Commerce will not regard a domestic subsidy as being specific under 
section 771(5A)(D) of the Act solely because the subsidy is limited to 
the agricultural sector. When paragraph (e) was issued, Commerce 
explained that this exception for generally available agricultural 
subsidies was consistent with prior practice and that Commerce would 
find an agricultural subsidy to be countervailable only if it were 
specific within the agricultural sector, e.g., a subsidy limited to 
livestock or livestock received disproportionately large amounts of the 
subsidy.\149\
---------------------------------------------------------------------------

    \149\ See 1998 CVD Regulations, 63 FR at 65357-58.
---------------------------------------------------------------------------

    This regulation was based on Commerce's decisions in several cases 
during the 1980s, including Asparagus from Mexico,\150\ Fresh Cut Roses 
from Israel,\151\ and Certain Fresh Cut Flowers from Mexico.\152\ In 
Asparagus from Mexico, Commerce determined that the provision of water 
to agricultural producers was not countervailable, explaining: 
``{p{time} referential rates are not provided to the producers of any 
one agricultural product'' and ``{w{time} e do not consider the 
provision of water at a uniform rate to all agricultural producers in 
this region to be a benefit, which would constitute a bounty or grant, 
because Commerce considers the agricultural sector to constitute more 
than a single group of industries within the meaning of the Act.'' 
\153\ Commerce cited this finding in support of its determination that 
benefits from government-funded agricultural extension services were 
not countervailable in Fresh Cut Roses from Israel.\154\ This practice 
of considering the agricultural sector to constitute more than a 
specific industry or group of industries was reaffirmed again in 
Certain Fresh Cut Flowers from Mexico.\155\
---------------------------------------------------------------------------

    \150\ See Final Negative Countervailing Duty Determination: 
Fresh Asparagus from Mexico, 48 FR 21618, 21621 (May 13, 1983) 
(Asparagus from Mexico).
    \151\ See Fresh Cut Roses from Israel: Final Results of 
Administrative Review of Countervailing Duty Order, 48 FR 36635, 
36636 (August 12, 1983) (Fresh Cut Roses from Israel).
    \152\ See Certain Fresh Cut Flowers from Mexico, 49 FR 15007, 
15008 (April 16, 1984) (Certain Fresh Cut Flowers from Mexico).
    \153\ See Asparagus from Mexico, 48 FR at 21621.
    \154\ See Fresh Cut Roses from Israel, 48 FR at 36636.
    \155\ See Certain Fresh Cut Flowers from Mexico, 49 FR at 15008.
---------------------------------------------------------------------------

    Commerce's conclusion in this regard on the application of the CVD 
law was upheld by the CIT in Roses Inc. v. United States, where the 
Court held that ``Commerce's determination that a group composed of all 
of agriculture, that is, whatever is not services or manufacturing, is 
not within the meaning of the statutory words `industry or group of 
industries' is a reasonable interpretation of the statute.'' \156\
---------------------------------------------------------------------------

    \156\ See Roses Inc. v. United States, 774 F Supp. 1376, 1383-84 
(CIT 1991).
---------------------------------------------------------------------------

    Commerce first attempted to codify a specificity exception for the 
agricultural sector in the 1989 Proposed Regulations, which were never 
finalized.\157\ When Commerce attempted to codify this agricultural 
exception the agency was administering the CVD law with limited 
guidance from the Act with respect to the analysis of specificity. The 
CVD law did not have an explanation or a definition of a ``specificity 
test'' which is now incorporated under the current statute. In 
addition, the Trade Agreements Act of 1979 that governed Commerce's 
administration of the CVD law at that time did not set forth any 
criteria with respect to the analysis of specificity. Section 771(5)(B) 
of the Trade Agreements Act of 1979 only referenced domestic subsidies 
``provided or required by government to a specific enterprise or 
industry, or group of enterprises or industries.'' Indeed, the criteria 
to be used in any specificity analysis undertaken by Commerce was not 
in the Act but only in the 1989 Proposed Regulations.
---------------------------------------------------------------------------

    \157\ See 1989 Proposed Regulations at Sec.  355.43(b)(7).
---------------------------------------------------------------------------

    The agricultural exception that was codified in Sec.  351.502(e) in 
the 1998 CVD Regulations was based upon the 1989 Proposed Regulations. 
With respect to the codification in 1998 of the agricultural exception 
in Sec.  351.502(e), one commenter suggested that Commerce should 
abandon the special specificity rule for agricultural subsidies citing 
section 771(5B)(F) of the Act and Article 13(a) of the WTO Agreement on 
Agriculture referencing the so-called ``green box'' category of non-
countervailable agricultural subsidies. In response to that comment, 
Commerce stated that ``[g]iven the absence of any indication that 
Congress intended the `green box' rules to change the Department's 
practice or overturn Roses, Commerce is retaining the special 
specificity rule for agricultural subsidies.'' \158\
---------------------------------------------------------------------------

    \158\ 1998 CVD Regulations, 63 FR at 65358.
---------------------------------------------------------------------------

    Commerce has now reconsidered its exception for agricultural 
subsidies. A blanket specificity exception provided to agricultural 
subsidy programs denotes a conclusion by Commerce unrelated to any 
case-related (or case-specific) facts regarding the availability and 
use of a subsidy by any enterprise or industry or group thereof and 
that every country that is subject to a CVD investigation has an 
identical agricultural sector within its economy. The SAA states that 
Commerce can only make a specificity determination on a case-by-case 
basis.\159\ Accordingly, it is more consistent with the SAA to 
eliminate the blanket specificity exception for the group of 
enterprises or industries in agriculture.
---------------------------------------------------------------------------

    \159\ See SAA at 930.
---------------------------------------------------------------------------

    The elimination of the agriculture exception to specificity should 
not be construed as a change in policy by Commerce, nor does it imply a 
renewed emphasis on pursuing any particular agricultural subsidies or 
agricultural subsidies in general. Rather, Commerce's analysis of 
whether an agricultural subsidy is specific will be conducted on a 
case-by-case basis, consistent with the SAA, based on an examination of 
the specificity criteria enacted under section 771(5A)(D) of the Act 
within the framework of the specificity test set forth in the SAA. 
Commerce is legally bound by these criteria. In practice, the 
agricultural exception has not been a deciding factor in Commerce's 
analysis of agricultural subsidies because, as commenters have noted, 
Commerce has countervailed agricultural subsidies consistent with the 
specificity standards set forth within section 771(5A)(D) of the 
Act.\160\
---------------------------------------------------------------------------

    \160\ See, e.g., Sugar from Mexico: Final Affirmative 
Countervailing Duty Determination, 80 FR 57337 (September 23, 2015), 
and accompanying Issues and Decision Memorandum; Certain Frozen 
Warmwater Shrimp from the Socialist Republic of Vietnam: Final 
Affirmative Countervailing Duty Determination, 78 FR 50387 (August 
19, 2013), and accompanying Issues and Decision Memorandum; Final 
Affirmative Countervailing Duty Determinations: Certain Durim Wheat 
and Hard Red Spring Wheat from Canada, 68 FR 52747 (September 5, 
2003), and accompanying Issues and Decision Memorandum; and Ripe 
Olives from Spain: Final Affirmative Countervailing Duty 
Determination, 83 FR 28186 (June 18, 2018), and accompanying Issues 
and Decision Memorandum.
---------------------------------------------------------------------------

    Comments on the removal of the agricultural exception from the

[[Page 101724]]

regulation were evenly split between those parties that supported the 
removal of the specificity exception and those that opposed.
    The commenters that supported the removal of the agricultural 
exception stated that there is no basis under current law to maintain a 
regulatory exception that conflicts with both the statutory language of 
section 771(5A)(D) of the Act and the SAA. Other commenters that 
supported the removal of the exception also noted the changing economic 
landscape of the agricultural sector since the agricultural exception 
was implemented by Commerce in the 1980s.
    Those commenters that opposed the removal of the agricultural 
exception stated the following general points: (1) Commerce did not 
clearly indicate how the Act requires or permits the agency to delete 
the exception from the agency's regulation; (2) the removal of the 
exception would be inconsistent with the statute and Congress' 
affirmation of Commerce's agricultural exception practice; (3) domestic 
agricultural policies and broad-based agricultural subsidies are 
generally considered a normal function of government and, therefore, 
should not be susceptible to countervailing actions; (4) the 
agricultural exception has not prevented Commerce from conducting CVD 
investigations on agricultural products; (5) the agricultural sector is 
highly diverse and is composed of more than a single group of 
enterprises or industries within the meaning of section 771(5A)(D) of 
the Act; and (6) removing the exception would send the wrong signal to 
U.S. trading partners.

Response

    Before addressing these comments, Commerce must first address 
another point made by various commenters regarding the reference 
Commerce made to the economic criteria and the economic importance of 
the agricultural sector in the Proposed Rule. In the Proposed Rule, 
Commerce referenced various economic factors of the agricultural sector 
during the early 1980s when the agency created its agricultural 
exception and then explained how those economic factors may have 
changed in the ensuing four decades.\161\ These factors were cited in 
the Proposed Rule to explain, in part, how Commerce analyzed the 
specificity of investigated agricultural subsidies in the early 1980s 
when there was, as explained above, no statutory criteria with respect 
to analyzing whether a subsidy was limited to a specific enterprise or 
industry or group of enterprises or industries.\162\ Commerce also 
referenced these factors in an attempt to make the point that a blanket 
and static specificity exception provided to any one group of 
enterprises or industries could become de facto obsolete over a long 
period of time.\163\ Commerce did not intend to suggest that any 
analysis of specificity should or could be based solely on this type of 
economic data as that type of restricted analysis would be inconsistent 
with the SAA. The SAA is explicit on this point as it states that there 
is no precise mathematical formula for determining when the number of 
enterprises or industries eligible for a subsidy is sufficiently small 
as to be considered specific.\164\ A proposal to establish such 
quantitative criteria was made during the Uruguay Round but was quickly 
rejected by the United States and many other participants.\165\
---------------------------------------------------------------------------

    \161\ See Proposed Rule, 89 FR at 57308-57309.
    \162\ Id.
    \163\ Id.
    \164\ See SAA at 929-30.
    \165\ Id. at 930.
---------------------------------------------------------------------------

    The comments received by Commerce make clear that the discussion of 
various economic criteria in the Proposed Rule was confusing to the 
public and could be subject to various interpretations, some of which 
could be inconsistent with the agency's intent and with the SAA. 
Therefore, Commerce has not included that language in the preamble to 
this final rule.
    As to the remaining submissions, concerns that Commerce's removal 
of the agricultural exception is in violation of or inconsistent with 
the Act are without legal foundation. Congress incorporated the SAA and 
the specificity test established within the SAA into U.S. law; in 
addition, section 771(5A)(D) of the Act contains the criteria that 
Commerce must apply in its analysis to determine whether a subsidy 
program is specific. Nothing in the Act or the SAA prohibits Commerce 
from considering whether agriculture provides a basis for specificity. 
Removing the regulation that provided a blanket specificity exception 
for the agricultural sector recognizes the case-by-case nature of a 
specificity analysis consistent with the Act.
    The commenters' statement that Congress has affirmed Commerce's 
agricultural specificity exception is incorrect. To support this claim, 
the parties cited the preamble to the 1998 CVD Regulation where 
Commerce stated that ``[g]iven the absence of any indication that 
Congress intended the `green box' rules to change the Department's 
practice or overturn Roses, Commerce is retaining the special 
specificity rule for agricultural subsidies.'' \166\ However, it is 
clear from the context of the cited language in the preamble that it 
was solely related to an argument that Commerce should abandon the 
agricultural exception because of the creation of a category of ``green 
box'' agricultural subsidies under section 771(5B)(F) of the Act. Thus, 
the statement in the preamble referenced by these parties is 
unpersuasive as the issue of ``green box'' subsidies is unrelated to 
the removal of this exception. Commerce also notes that the treatment 
of ``green box'' agricultural subsidies under section 771(5B)(F) of the 
Act has long-since lapsed and is no longer applicable under the CVD 
law. Thus, the prior statutory exception to countervailing certain 
subsidies to the agricultural sector is no longer in effect.
---------------------------------------------------------------------------

    \166\ See 1998 CVD Regulations, 63 FR at 65358.
---------------------------------------------------------------------------

    Commenters opposing the removal of the agricultural exception also 
state that broad-based agricultural subsidies are a normal function of 
government and, therefore, should not be susceptible to countervailing 
actions. Commerce finds this argument unavailing as Commerce has the 
authority under the Act to countervail support that meets the statutory 
requirements for a countervailable subsidy, and these Commenters have 
not pointed to any statutory provision that prohibits Commerce from 
considering whether subsidies to the agricultural sector are 
countervailable. Congress has not exempted agricultural subsidies from 
the CVD law. In fact, to the contrary, a specific provision at section 
771B of the Act addresses subsidies provided to processed agricultural 
products.
    To support the claim that Commerce should not remove the 
agricultural exception, commenters stated that the exception has not 
prevented Commerce from investigating and countervailing agricultural 
subsidies. Yet the fact that the agency has countervailed agricultural 
subsidies under the existing regulations highlights the irrelevance of 
this exception and the lack of a need for it in the first place.
    The commenters opposing the removal of the agricultural exception 
also stated that the agricultural sector is highly diverse and is 
composed of more than a single group of enterprises or industries 
within the meaning of section 771(5A)(D) of the Act. Commerce does not 
disagree that the agricultural sector is generally highly diverse and 
may be composed of more than a single group of enterprises or 
industries. At the same

[[Page 101725]]

time, section 771(5A)(D) of the Act requires that Commerce determine 
whether a subsidy, including an agricultural subsidy, is limited to a 
group of enterprises or industries on a case-by-case basis,\167\ and 
therefore Commerce has removed the agricultural exception consistent 
with the Proposed Rule.
---------------------------------------------------------------------------

    \167\ See SAA at 930.
---------------------------------------------------------------------------

    In sum, the statements made by these commenters do not support the 
need to have a blanket and static specificity exception, especially 
because Commerce will continue to consider the issue of specificity 
based on the language in the SAA and section 771(5A)(D) of the Act.
    Finally, one commenter opposing the removal of the agricultural 
exception stated that its removal would disavow agriculture's unique 
situation and would send the wrong signal to U.S. trading partners. 
Commerce disagrees. As stated above, the elimination of the agriculture 
exception to specificity should not be construed as a change in policy 
by Commerce; indeed, Commerce has previously found certain subsidies to 
enterprises or industries in the agricultural sector to be 
countervailable.
    One commenter did not directly oppose the removal of the exception 
but emphasized that Commerce's analysis of specificity should be 
consistent with the specificity criteria that are set forth in Article 
2 of the WTO Agreement on Subsidies and Countervailing Measures (the 
SCM Agreement).\168\ Commerce agrees with this commenter, as the 
specificity criteria set forth within Article 2 of the SCM Agreement 
are incorporated within section 771(5A)(D) of the Act.
---------------------------------------------------------------------------

    \168\ See Agreement on Subsidies and Countervailing Measures 
(SCM Agreement); 19 U.S.C. 3511 (Approval and entry into force of 
Uruguay Round Agreements'') (December 9, 1994).
---------------------------------------------------------------------------

Small- and Medium-Sized Business Exception
    Commerce proposed deleting the small- and medium-sized business 
exception to the specificity rule currently found at Sec.  
351.502(f).\169\ That regulation states that Commerce ``will not regard 
a subsidy as being specific under section 771(5A)(D) of the Act solely 
because the subsidy is limited to small firms or small- or medium-sized 
firms (SMEs).'' The specificity test discussed in the SAA states that 
Commerce will find not specific only those subsidy programs ``which 
truly are broadly available and widely used throughout an economy.'' 
Therefore, Commerce has determined in this final rule to eliminate the 
specificity exception provided to SMEs under Sec.  351.502(f), 
consistent with the SAA.
---------------------------------------------------------------------------

    \169\ See Proposed Rule, 89 FR at 57308-310.
---------------------------------------------------------------------------

    A blanket specificity exception provided to SME subsidy programs 
suggests a conclusion by Commerce that every country that is subject to 
a CVD investigation has an identical or similar economy with respect to 
the role played by SMEs. The SAA and the language of section 771(5A)(D) 
of the Act require that Commerce analyze specificity based upon the 
``jurisdiction of the authority providing the subsidy'' and makes clear 
that specificity can be found when a subsidy is limited to any 
``group'' of enterprises or industries. Accordingly, Commerce has 
determined that it is appropriate to delete the SME exception that was 
under Sec.  351.502(f), as the specificity of SME subsidy programs 
should be determined on a case-by-case basis, pursuant to the language 
of the SAA and section 771(5A)(D) of the Act.
    Commerce's deletion of the SME exception, like the deletion of the 
agriculture exception, should not be construed as a change in the 
agency's policy or practice. In fact, the SME exception has also not 
been a deciding factor when raised, as Commerce has countervailed SME 
programs meeting the specificity standards set forth within section 
771(5A)(D) of the Act.\170\ These two blanket specificity exceptions 
have been removed from our regulations, consistent with both the SAA 
and section 771(5A)(D) of the Act.
---------------------------------------------------------------------------

    \170\ See, e.g., Aluminum Extrusions from the People's Republic 
of China: Final Affirmative Countervailing Duty Determination, 76 FR 
18521 (April 4, 2011), and accompanying Issues and Decision 
Memorandum discussing the Fund for SME Bank-Enterprise Cooperation 
Projects; and Large Diameter Welded Pipe from the Republic of Korea: 
Preliminary Results of Countervailing Duty Administrative Review; 
2018-2019, 86 FR 42779 (August 5, 2021), and accompanying Issues and 
Decision Memorandum discussing Smart Factory Construction and 
Advancement Project program.
---------------------------------------------------------------------------

    A subsidy allegation that alleges specificity solely because a 
program is limited to SMEs, in general, would not normally be 
sufficient to support an allegation of de jure specificity. With a 
specificity allegation made under section 771(5A)(D)(iii) of the Act, 
the agency would also normally expect that the interested party explain 
why there would be a reason to believe or suspect than an SME program 
would be de facto specific based upon information reasonably available 
to it.
    Four commenters submitted comments in support of the removal of the 
SME exception and two commenters opposed the deletion of the SME 
exception. The parties that opposed the removal of the SME exception 
stated that there is no conflict between the SME exception and the SAA. 
They submit that both the SCM Agreement and U.S. law provide that a 
subsidy program is not de jure specific if it sets forth objective 
criteria that are ``economic in nature and horizontal in application, 
such as the number of employees or the size of the enterprise.'' \171\
---------------------------------------------------------------------------

    \171\ The commenters' description of the CVD law is not a 
completely accurate statement of U.S. law. Section 771(5A)(D)(ii) of 
the Act is a corollary clause to de jure specificity. Under clause 
(ii), a subsidy would not be deemed to be de jure specific merely 
because it was bestowed pursuant to certain eligibility criteria. 
However, the eligibility criteria or conditions must be objective, 
clearly documented, capable of verification, and strictly followed. 
In addition, eligibility for the subsidy must be automatic where the 
criteria are satisfied. Finally, clause (ii) defines the term 
``objective criteria or conditions'' as criteria or conditions that 
are neutral and that do not favor one enterprise or industry over 
another. The quoted language referenced by these parties is taken 
from page 930 of the SAA and is taken out of context from the full 
definition of ``objective criteria or conditions.'' The SAA states 
that ``the objective criteria or conditions must be neutral, must 
not favor certain enterprises or industries over others, and must be 
economic in nature and horizontal in application, such as the number 
of employees or the size the enterprise.'' Therefore, the SAA sets 
forth three different legal requirements for ``objective criteria or 
conditions'' and these are (1) must be neutral, (2) must not favor 
certain enterprises or industries over others, and (3) must be 
economic in nature and horizontal in application, such as the number 
of employees or the size of the enterprise.
---------------------------------------------------------------------------

    The parties submit that the SAA states that there are ``many 
instances in which U.S. law or administrative practice will remain 
unchanged under the Uruguay Round Agreements'' and that the de jure 
specificity prong of the statute ``is consistent with existing Commerce 
practice.'' The parties also submit that finding programs for SMEs not 
specific is consistent with the original purpose of the specificity 
test that is set forth in the SAA.

Response

    While the first two statements are indeed accurate reflections of 
the language within the SAA and that a finding that an SME program is 
not specific, based on the facts on the record, may be consistent with 
the SAA's specificity test; however, these statements do not directly 
address the current regulatory provision for a blanket and static 
specificity exemption for SME programs. Commerce also notes that with 
respect to the cited SAA statement that the de jure specificity prong 
of the statute ``is consistent with existing Commerce practice,'' the 
SME exception cited to section 771(5A)(D) of the Act which covers both 
de jure as well as de facto specificity. Ultimately, Commerce is of the 
view that a decision of whether a subsidy is limited to an enterprise 
or industry or group of enterprises or industries within the

[[Page 101726]]

meaning of section 771(5A)(D) of the Act must be made on a case-by-case 
basis based upon record evidence.
    Accordingly, after careful consideration of the comments received 
on this issue, Commerce has removed the SME exception from the 
regulations for the reasons set forth above.

15. Commerce Will Revise and Move the Disaster Relief Exception to the 
Specificity Rule and Create an Employment Assistance Program Exception 
to the Specificity Rule, in Sec.  351.502(d) and (e), as Proposed, With 
Slight Modifications

    As stated above, for Commerce to find benefits provided by a 
particular program to be countervailable, the program must provide 
benefits that are specific as that term is contemplated under U.S. CVD 
law; that is, not broadly available and widely used but narrowly 
focused and used by discrete segments of an economy. In the Proposed 
Rule, Commerce proposed updating the disaster relief exception to the 
specificity rule and moving it from Sec.  351.502(g) to Sec.  
351.502(d).\172\ Commerce is now codifying that proposed move and 
updating the regulation in this final rule. The current disaster relief 
regulation states that Commerce will not regard disaster relief as 
being specific under section 771(5A)(D) of the Act if such relief 
constitutes general assistance available to anyone in the area affected 
by the disaster. With the onset of the global COVID-19 pandemic, 
Commerce encountered certain government programs that provided COVID-19 
relief to individuals and enterprises affected by the pandemic. Where 
the assistance was generally available to any individual or enterprise 
in the area affected by the pandemic, Commerce found the assistance to 
be not specific.
---------------------------------------------------------------------------

    \172\ See Proposed Rule, 89 FR at 57310.
---------------------------------------------------------------------------

    It was unclear under the current disaster relief specificity 
exception whether the definition of ``disaster relief'' included relief 
provided during a pandemic. Commerce's practice of finding pandemic 
relief (if available to any individual or enterprise in the affected 
area) to not be countervailable because the relief was determined to be 
not specific under section 771(5A)(D) of the Act has been 
uncontroversial. However, Commerce has modified the regulatory language 
to specify that Commerce will not regard disaster relief, including 
pandemic relief, as being specific under section 771(5A)(D) of the Act 
if such relief constitutes general assistance available to any 
individual or enterprise in the area affected by the disaster. This 
exception to specificity provided to disaster relief, including 
pandemic relief, would not apply when this relief is limited on an 
industry or enterprise basis because the relief would not be available 
to all individuals or enterprises in the area affected by the disaster.
    Similar to the exception provided for disaster relief assistance, 
Commerce proposed a new employment assistance program exception to the 
specificity rule at Sec.  351.502(e) in the Proposed Rule.\173\ As with 
the disaster relief assistance provision, Commerce is now codifying 
that proposed regulation in this final rule. Under Commerce's current 
practice, the agency does not generally find employment assistance 
programs that are created to promote the employment of certain classes 
or categories of workers or individuals to be specific.\174\ Under this 
new rule at Sec.  351.502(e), Commerce will regard employment 
assistance programs as being not specific under section 771(5A)(D) of 
the Act if such assistance is provided solely with respect to 
employment of general categories of workers, such as those based on 
age, gender, disability, veteran, and unemployment status, and is 
available to any individual with one or more of these characteristics 
without any industry restrictions.
---------------------------------------------------------------------------

    \173\ Id.
    \174\ See, e.g., Certain Steel Nails from Korea the Republic of 
Korea: Final Negative Countervailing Duty Determination, 80 FR 
289966 (May 20, 2015), and accompanying Issues and Decision 
Memorandum at 13.
---------------------------------------------------------------------------

    In examining the specificity of these types of employment 
assistance programs, similar to unemployment programs, programs that 
focus on the general employment of certain classes of individuals 
without industry- and enterprise-based restrictions would not be 
specific within the meaning of section 771(5A)(D) of the Act.
    However, job creation or retention programs that provide incentives 
to certain enterprises or industries, such as those implemented to 
attract new firms or industries or to provide incentives for firms to 
expand, would not fall within this exception. Similarly, any employment 
program related to the hiring of employees with specific job skills 
such as high-tech or engineering skills would also not fall within this 
exception. Rather, the specificity of such programs will continue to be 
determined on a case-by-case basis pursuant to the language of the SAA 
and section 771(5A)(D) of the Act.
    Two commenters submitted comments with respect to disaster relief 
and general employment exceptions. One party commented that Commerce 
failed to explain why it is appropriate to codify the agency's practice 
of not finding programs that are created to promote the employment of 
certain classes or categories of individuals to be specific. That 
commenter stated that while disaster relief--the other sole remaining 
exception--can be seen as a unique situation, it is unclear why 
employment assistance merits a regulatory exception. However, this 
party stated that if Commerce wanted to codify this practice it should 
ensure that the regulatory language is consistent with the explanation 
of the regulation provided by the agency in the preamble to the 
proposed rule. Therefore, this party recommended two changes to the 
text of this regulation that are highlighted: (1) assistance is 
provided solely with respect to general categories of workers; and (2) 
the assistance is available to everyone hired within those categories 
without any industry or enterprise restrictions. Commerce finds these 
suggestions improve the regulation and has made these changes in these 
Final Rules.
    Another commenter stated that with respect to both the disaster 
relief and general employment exceptions, Commerce should clarify 
whether these types of programs may be de facto specific or regionally 
specific if the facts of the case would normally support such a 
finding.
    With the removal of the exceptions for agricultural and small- and 
medium-sized businesses, Commerce has only codified two specificity 
exceptions for disaster relief and the general employment of categories 
of workers. The purpose and focus of the CVD law and specificity as set 
forth within the statute is based upon whether, on a de jure or de 
facto basis, a government has created a subsidy program that may 
distort the market allocation of resources by limiting that subsidy 
program, and the benefits from that subsidy program, to an enterprise 
or industry or a group of enterprises or industries.\175\ The remaining 
exceptions for disaster relief and general employment of categories of 
workers are unrelated to the enterprise or industry

[[Page 101727]]

specificity criteria set forth within section 771(5A)(D) of the Act. 
The disaster relief exception is based on the occurrence of natural 
disasters that are outside the control of a government, and the 
exception for general categories of workers is focused on individual 
qualities or characteristics that are unrelated to specific enterprises 
or industries.
---------------------------------------------------------------------------

    \175\ See, e.g., Notice of Proposed Rulemaking and Request for 
Public Comments, 54 FR 23366, 23367 (May 31, 1989); see Final 
Affirmative Countervailing Duty Determination: Certain Steel 
Products from Austria, 58 FR 37261 at General Issues Appendix (July 
9, 1993); Final Negative Countervailing Duty Determination; Carbon 
Steel Wire Rod from Czechoslovakia, 49 FR 19370 (May 7, 1984); Final 
Negative Countervailing Duty Determination; Carbon Stel Wire Rod 
from Poland. 49 FR 19274 (May 7, 1984), affirmed by the Federal 
Circuit in Georgetown Steel Corp v. United States, 801 F.2d 1308 
(Fed. Cir. 1986).
---------------------------------------------------------------------------

    The proposal by the commenter that general disaster relief programs 
may be found to be regionally specific would invalidate disaster relief 
programs because most natural disasters such as earthquakes, 
hurricanes, tornadoes, wildfires, and flooding normally do not impact, 
at any one time, an entire country but only specific regions within a 
country. Therefore, under Commerce's practice and this regulation, 
disaster relief programs will not be found to be regionally specific if 
the relief constitutes general assistance available to anyone in the 
area affected by the disaster. Similarly, Commerce does not find 
employment assistance programs provided to the general category of 
workers listed in the employment assistant regulation to be specific to 
industries or enterprises based on the conditions set forth in that 
regulation. However, employment programs related to the hiring of 
employees with specific job skills, and job creation or retention 
programs that provide incentives to certain enterprises or industries, 
such as those implemented to attract new firms or industries or to 
provide incentives for firms to expand, may be either de jure or de 
facto specific within the meaning of the Act based upon the facts of 
the case. While general employment assistance programs for general 
categories of rural or urban unemployed individuals would not normally 
be found to be regionally specific, a government worker assistance 
program that is implemented and legally restricted to only designated 
regions within the authority's jurisdiction would normally be found to 
be regionally specific within the meaning of section 771(5A)(D)(iv).

16. Commerce Has Made Some Small Changes to Proposed Sec.  
351.503(b)(3), the Benefit Regulation

    In the Proposed Rule, Commerce proposed to add a new paragraph to 
the benefit regulation at Sec.  351.503(b)(3) to provide rules for the 
general treatment of contingent liabilities and assets that are not 
otherwise addressed in the regulations.\176\ Under current Sec.  
351.505(d), in the case of an interest-free loan for which the 
repayment obligation is contingent upon the company taking some future 
action or achieving some goal in fulfillment of the terms of the loan, 
Commerce normally treats the outstanding balance of the loan as an 
interest-free short-term loan.
---------------------------------------------------------------------------

    \176\ See Proposed Rule, 89 FR at 57310.
---------------------------------------------------------------------------

    However, other types of contingencies exist which are not 
explicitly referenced in that loan regulation. Commerce has encountered 
hybrid programs which have elements of two or more types of financial 
contributions, and, thus, two or more types of benefits. For example, 
in India, a program provides for import duty waivers contingent upon 
future export performance of the recipient.\177\ With respect to Korea, 
Commerce has investigated a research and development (R&D) grant 
program in which participating companies are required to repay 40 
percent of the R&D grant if the R&D project is deemed by the government 
to be successful.\178\ In these cases, Commerce treated the outstanding 
contingent liability of the import duty exemptions in India and the R&D 
grant in Korea as contingent liability interest-free loans within the 
meaning of Sec.  351.505(d). In addition, under Sec.  351.510, which 
covers direct and indirect taxes and import charges, the benefit from 
the deferral of indirect taxes and import charges when the final waiver 
of such taxes and charges is contingent on fulfillment of other 
criteria such as realizing an amount of export earnings is also 
calculated using the methodology described under Sec.  351.505(d).
---------------------------------------------------------------------------

    \177\ See, e.g., Certain Hot-Rolled Carbon Steel Flat Products 
from India: Final Results of Countervailing Duty Administrative 
Review, 73 FR 40295 (July 14, 2008), and accompanying Issues and 
Decision Memorandum at Comment 42 (discussing the Export Promotion 
Capital Goods Scheme (EPCGS)).
    \178\ See, e.g., Corrosion-Resistant Carbon Steel Flat Products 
from the Republic of Korea: Final Results of Countervailing Duty 
Administrative Review, 76 FR 3613 (January 20, 2011), and 
accompanying IDM at 2-3 (discussing the Act on Special Measures for 
the Promotion of Specialized Enterprises for Parts and Materials).
---------------------------------------------------------------------------

    While the treatment of these contingent import duty exemptions and 
R&D grants under Sec.  351.505(d) has never been a source of 
controversy, for purposes of clarity and flexibility the agency 
proposed and in this final rule codifies a separate paragraph under the 
benefit regulation to specifically provide for the treatment of 
contingent liabilities and assets that are not otherwise addressed in 
the regulations in this final rule. As Commerce encounters ever more 
complicated government programs, the goal is to have a regulation that 
provides for the specific treatment of contingent liabilities to ensure 
that there is no question that any government program that incorporates 
a contingent element falls within the purview of the CVD law and 
Commerce's regulations.
    Commerce has also incorporated the element of contingent assets 
into this regulatory addition to ensure that a contingent asset that is 
provided by a government and that has not been measured under the other 
rules within our CVD regulations can be addressed within this benefit 
section of the CVD regulations. Therefore, for either the provision of 
a contingent liability or asset, under this change to the regulation 
the agency will treat the balance or value of the contingent liability 
or asset as an interest-free provision of funds and would calculate the 
benefit using, where appropriate, either a short-term or long-term 
commercial interest rate.
    Every comment Commerce received on this regulation was in support 
of the change. However, one of the commenters proposed a small change 
to the regulation. This commenter stated that the proposed regulation 
specifies that Commerce will treat the balance or value of the 
contingent liability or asset as an interest-free provision of funds 
and will calculate the benefit using a short-term commercial interest 
rate. The commenter noted that this approach may not be appropriate for 
all contingent liabilities and assets; for example, if the period 
between the provision and the closing of the contingency is greater 
than one year, the use of a short-term interest rate would not be 
appropriate. This commenter suggested that Commerce replace the 
proposed language with ``will calculate the benefit using a short-term 
commercial interest rate or a long-term commercial interest rate based 
on the time period between the provision and the closing of the 
contingency.'' Since the agency agrees that the regulation should 
reflect that, where appropriate, Commerce will use either a short-term 
or long-term interest rate to determine the benefit from a contingent 
liability or asset, Commerce has made that modification to Sec.  
351.503(b)(3).

17. Commerce Has Made Some Small Changes to Proposed Sec.  
351.505(c)(2) and 505(e)(2), the Loan Regulation

    Section 351.505 applies to the procedures and policies pertaining 
to loans under the CVD law. In the Proposed Rule, Commerce proposed to 
make modifications to Sec.  351.505(b), (c), and (e) and add new Sec.  
351.505(a)(6)(iii).\179\ After consideration of the comments on these 
changes, Commerce is implementing

[[Page 101728]]

those modifications with some small changes.
---------------------------------------------------------------------------

    \179\ See Proposed Rule, 89 FR at 57311-312.
---------------------------------------------------------------------------

    Section 351.505(a)(6)(ii) pertains to loans provided by government-
owned banks. Commerce proposed to add a paragraph (a)(6)(iii) to 
address the initiation standard for specificity allegations for loans 
provided by government-owned policy banks, which are special purpose 
banks established by governments. Under the new language in paragraph 
(a)(6)(iii), an interested party would meet the initiation threshold 
for specificity under paragraph (a)(6)(ii)(A) of Commerce's current CVD 
regulations with respect to section 771(5A)(D) of the Act if the party 
could sufficiently allege that loan distribution information is not 
reasonably available and that the bank provides loans pursuant to 
government policies or directives.
    Commerce has found that information on the distribution of loans 
and data on the enterprises and industries that receive loans from 
government-owned policy banks is usually not published and, therefore, 
not reasonably available to U.S. petitioning industries. Thus, these 
interested parties are hindered in their ability to make a specificity 
allegation under section 771(5A)(D)(iii) of the Act due to lack of 
transparency of these government-owned entities. It has been our 
experience that government-owned policy banks are normally established 
by laws and regulations which discuss the purposes of the policy banks; 
these laws and regulations are usually publicly available and, thus, 
would be available to U.S. petitioning industries.
    The provision of, and access to, capital is a critical component to 
the growth and development of firms and industries. The control of the 
distribution or allocation of capital by the government has been shown 
to lead to a misallocation and distortion of resources within an 
economy.\180\ Fundamentally, a subsidy is a distortion of the market 
process for allocating an economy's resources and this principal is an 
underlying foundation of Commerce's entire CVD methodology.\181\
---------------------------------------------------------------------------

    \180\ See, e.g., Shleifer, A., State versus Private Ownership, 
National Bureau of Economic Research Working Paper 6665 at 19 
(1998), available at https://www.nber.org/papers/w6665; Iannotta, 
G., Nocera, G., et al., The Impact of Government Ownership on Bank 
Risk, J. Fin. Intermediation (2013), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2233564; Gonzalez-
Garcia, J. and Grigoli, F., State-Owned Banks and Fiscal Discipline, 
IMF Working Paper (2013), available at https://www.imf.org/en/Publications/WP/Issues/2016/12/31/State-Owned-Banks-and-Fiscal-Discipline-40982; Sapienza, P., The Effects of Government Ownership 
on Bank Lending, J. of Fin. Economics (2004); La Porta, R., Lopez-
De-Silanes, F., et al., Government Ownership of Banks, J. Finance 
(2002); Levy Yeyati, E., Micco, A, et al., Should the Government Be 
in The Banking Business? The Role of State-Owned and Development 
Banks, Inter-American Development Bank Working Paper, available at 
https://publications.iadb.org/en/publication/should-government-be-banking-business-role-state-owned-and-development-banks; Ijaz 
Khwaja, A., and Mian, A., Do Lenders Favor Politically Connected 
Firms? Rent Provision in an Emerging Financial Market, Q. J. 
Economics (2005), ; Serdar Dinc, I., Politicians and Banks: 
Political Influences on Government-owned Banks in Emerging Markets, 
J. Fin. Economics (2005), ; Carvalho, D., The Real Effects of 
Government-Owned Banks: Evidence from an Emerging Market, J. Finance 
(2012); and Claessens, S., Feijen, E., et al., Political Connections 
and Preferential Access to Finance: The Role of Campaign 
Contributions, J. Fin. Economics (2008).
    \181\ See 1989 Proposed Regulations, 54 FR 23366, 23367 (May 31, 
1989).
---------------------------------------------------------------------------

    Therefore, based on the lack of publicly available data with 
respect to the distribution of loans for most of the state-owned policy 
banks that have been the subject of subsidy allegations in the past, 
Commerce's addition of Sec.  351.505(a)(6)(iii) addresses the 
initiation standard for an allegation of specificity for state-owned 
policy banks. Where loan distribution information for the state-owned 
policy bank is not reasonably available, under the new language in 
Sec.  351.505(a)(6)(iii) an interested party would normally meet the 
initiation threshold for specificity under the Act if the party 
sufficiently alleges that the bank provides loans pursuant to 
government policies or directives.
    Commerce is also modifying Sec.  351.505(b) and (c) to establish a 
uniform standard with respect to the treatment of long-term loans. 
Commerce currently calculates the benefit for long-term loans using 
different methodologies depending on whether the long-term loan has a 
fixed interest rate, a variable interest rate, or a different repayment 
schedule. These modifications would now ensure consistency in the 
benefit calculation of long-term loans by focusing on the key aspect 
that the benefit in any given year is the difference between the amount 
of interest the firm paid on the investigated loan and the amount of 
interest that the firm would have paid on a comparable commercial loan. 
In addition, the use of a comparable commercial loan as defined under 
Sec.  351.505(a) already appropriately adjusts for any differences in 
the government-provided loan based on whether the loan is fixed rate, 
variable rate, or with a term based on a different payment schedule.
    Therefore, consistent with the Proposed Rule Commerce has modified 
and deleted parts of current Sec.  351.505(c), specifically both Sec.  
351.505(c)(3) and (4). Current sections 351.505(c)(3) and (4) 
separately address long-term loans with different repayment schedules 
and long-term loans with variable interest rates. Commerce is deleting 
those provisions and adding a provision that indicates that, instead, 
Commerce will calculate the benefit conferred by any type of long-term 
loan in the same manner by taking the difference between what the 
recipient of the government loan would have paid on a comparable 
commercial loan and the actual amount the recipient paid on the 
government-provided loan during the period of investigation (POI)/
period of review (POR) and allocating that benefit amount to the 
relevant sales during the POI/POR. Therefore, all long-term loans will 
be addressed solely under Sec.  351.505(c)(2).
    One commenter suggested a change to the proposed Sec.  
351.505(c)(2) language, stating that the subsidy benefit conferred from 
a long-term loan would be based on ``the difference between the 
interest paid by the firm in that year on the government-provided loan 
and the interest the firm would have paid on the comparison loan.'' 
\182\ This commenter recommended that to ensure clarity, Commerce 
replace the term ``comparison loan'' with ``comparable commercial 
loan,'' the term used to describe the loan benchmark in Sec.  
351.505(a). Commerce agrees and has made this change in the final 
version of Sec.  351.505(c)(2).
---------------------------------------------------------------------------

    \182\ See Proposed Rule, 89 FR at 57331.
---------------------------------------------------------------------------

    In addition, consistent with the Proposed Rule Commerce has deleted 
sentences in current Sec.  351.505(c)(1) and (2) that state that in no 
event may the present value of the calculated benefit in the year of 
receipt of the loan exceed the principal of the loan. Commerce is also 
deleting the same sentence with respect to the provision of contingent 
liability interest-free loans at Sec.  351.505(e)(1). Section 771(5)(E) 
of the Act does not provide a cap on the benefit a loan may confer, so 
Commerce is therefore removing that regulatory restriction. The deleted 
language of the regulation was a holdover from the 1980s when Commerce 
would calculate a benefit from a loan by calculating a grant equivalent 
for the loan and then allocate that amount over the Average Useful Life 
(AUL) of a firm's renewable physical assets, a methodology that has 
long since been abandoned by Commerce.
    One commenter objected to the deletion of the language that in no 
event may the present value of the calculated benefit in the year of 
loan receipt exceed

[[Page 101729]]

the principle of the loan. That commenter stated that there should be a 
limit on the amount of the benefit based on reasonable presumptions of 
what a loan market would actually bear and stated that the Act directs 
Commerce to determine a loan benefit based on ``a comparable commercial 
loan that the recipient could actually obtain on the market.'' That 
commenter stated that a benchmark such as the one used when a company 
is determined to be uncreditworthy is susceptible to overestimation.
    As noted above, the ``benefit cap'' language that Commerce is 
deleting from the current regulation was based upon a loan methodology 
that Commerce ceased using over 30 years ago. When Commerce became the 
administering authority of the CVD (and AD) law in 1980, to determine 
the subsidy benefit conferred by a government loan, Commerce, after 
calculating the interest payment differential for the entire term of 
the government loan, would then calculate the present value of the 
stream of benefits to the year in which the loan was made. In other 
words, Commerce determined the subsidy value of the government loan as 
if the benefits had been bestowed as a lump-sum grant in the year in 
which the loan was given. This grant equivalent was then allocated 
evenly over the life of the loan to yield annual subsidy amounts. When 
the loan was provided for the purchase of capital equipment, this grant 
equivalent was allocated over the average useful life of the capital 
equivalent.\183\ Because Commerce was in essence treating the loan 
benefit as a grant, it employed this grant benefit cap. This grant 
equivalent loan methodology was abandoned by Commerce over 30 years ago 
and thus, the grant ``benefit cap'' language is obsolete and has been 
stricken from our loan regulations.
---------------------------------------------------------------------------

    \183\ See, Appendix 2 to the Final Affirmative Countervailing 
Duty Determinations on Certain Steel Products from Belgium; 47 FR 
39304; 39316 (September 7, 1982).
---------------------------------------------------------------------------

    More importantly, as the commenter pointed out, section 
771(5)(E)(ii) of the Act states that in the case of a loan, a subsidy 
benefit is conferred if there is a difference between the amount the 
recipient of the loan pays on the government loan and the amount it 
would have paid on a comparable commercial loan that it could actually 
obtain on the market. Commerce's Sec.  351.505 loan regulation 
implements this statutory requirement, and the Act does not provide any 
benefit cap on the loan subsidy calculated under section 771(5)(E)(ii) 
of the Act.
    Finally, while not germane to the broader statutory issue and to 
the modifications that have been made to Sec.  351.505, Commerce 
disagrees with the commenter's statement that an uncreditworthy 
benchmark is susceptible to overestimation. The fact that an 
uncreditworthy benchmark under Sec.  351.505(a)(3)(iii) will yield a 
loan benefit greater than a benchmark from ``a comparable commercial 
loan that the recipient could actually obtain on the market'' does not 
mean that the subsidy loan benefit is overestimated. The higher 
calculated subsidy benefit results from the government providing a loan 
to a firm that could not receive lending from a commercial bank because 
the firm is uncreditworthy. Commerce's uncreditworthy benchmark merely 
accounts for the fact that an uncreditworthy firm cannot obtain a 
commercial loan.
    In addition, Commerce proposed to modify current Sec.  351.505(e), 
which addresses the treatment of a contingent liability interest-free 
loan.\184\ Under current Sec.  351.505(e)(2), Commerce treats a 
contingent liability interest-free loan as a grant if at any point in 
time the agency determines that the event upon which repayment depends 
is not a viable contingency. However, the current regulation does not 
address the situation where the recipient firm has either taken the 
required action or achieved the contingent goal and the government has 
waived repayment of the contingent loan. Therefore, Commerce is 
modifying this regulation to state that it will also treat the 
contingent loan as a grant when the loan recipient has met the 
contingent action or goal and the government has not taken any action 
to collect repayment.
---------------------------------------------------------------------------

    \184\ See Proposed Rule, 89 FR at 57311.
---------------------------------------------------------------------------

    Commerce received no comments objecting to the revision in Sec.  
351.505(e)(2) under which Commerce will treat a contingent loan as a 
grant if ``the government has not taken action to collect repayment.'' 
However, one party recommended a minor change to the text to state that 
``the government has not taken meaningful action to collect 
repayment.'' Commerce agrees with this recommended edit and has made 
this change to Sec.  351.505(e)(2) in this final rule.

18. Commerce Has Modified Certain Language in Proposed Sec.  
351.509(b)(1), the Direct Taxes Regulation

    Commerce proposed modifying Sec. Sec.  351.509 and 351.510, the 
regulations covering direct taxes and indirect taxes and import charges 
(other than export programs).\185\ Commerce is codifying those proposed 
changes in this final rule. The modification to both provisions 
clarifies Commerce's treatment of the exemption of taxes and import 
charges in zones designated as being outside the customs territory of 
the country, and in response to comments Commerce has made a change to 
Sec.  351.509(b)(1) as proposed.
---------------------------------------------------------------------------

    \185\ Id., 89 FR at 57312.
---------------------------------------------------------------------------

    In the 2012 CVD investigation of Steel Pipe from Vietnam, Commerce 
determined that the exemption of import charges on capital assets into 
an export processing zone was not countervailable.\186\ Commerce stated 
that the Government of Vietnam designated the respondent company as an 
export processing enterprise, and based upon that designation the 
company's facilities are a ``non-tariff zone'' and thus the operations 
of the company were outside the customs territory of the country.\187\ 
Therefore, Commerce concluded that because the company was outside the 
customs territory of Vietnam, the exemption of import duties on capital 
goods did not provide a financial contribution in the form of revenue 
forgone.\188\ However, upon further consideration of our decision in 
Steel Pipe from Vietnam, Commerce has concluded that its treatment of 
firms or zones that are designated as being ``outside the customs 
territory'' of a country in that case to be at odds with our long 
established practice, our regulations, and the purpose of the CVD 
statute.
---------------------------------------------------------------------------

    \186\ See Circular Welded Carbon-Quality Steel Pipe from the 
Socialist Republic of Vietnam: Final Negative Countervailing Duty 
Determination, 77 FR 64471 (October 22, 2012), and accompanying 
Issues and Decision Memorandum at Comment 3.
    \187\ Id.
    \188\ Id.
---------------------------------------------------------------------------

    Under Sec.  351.102(a)(25), ``government-provided'' is a shorthand 
expression for any act or practice being analyzed as a possible 
countervailable subsidy. Critical to Commerce's analysis of whether a 
government act or practice constitutes a countervailable subsidy is a 
determination of what the situation of the firm would be in the absence 
of the government program. For example, Sec.  351.509(a), which 
addresses direct taxes, states that a benefit exists to the extent that 
the tax paid by the firm is less than the tax the firm would have paid 
in the absence of the program; under Sec.  351.510(a) regarding 
indirect taxes and import charges, a benefit exists to the extent that 
the taxes or an import charge paid by a firm as a result of the program 
are less than the taxes or import charges the firm would have paid in 
the absence of the program.

[[Page 101730]]

Similarly, under the benefit regulation at Sec.  351.503(b), Commerce 
will consider a benefit to be conferred by government programs when a 
firm pays less for its inputs (e.g., money, a good or service) than it 
otherwise would pay or receives more revenue than it otherwise would 
earn in the absence of the government program.
    The government designation of either a firm or a zone as being 
outside the customs territory constitutes a government act or program 
is consistent with the definition of ``government-provided'' under 
Sec.  351.102(a)(25). By establishing areas in which it will not 
collect taxes or import charges on capital goods, the government has 
taken an explicit action to provide both a financial contribution and a 
benefit to a firm that is operating within the designated area. Absent 
the government action, the firm otherwise would have paid either direct 
taxes or import charges to the government. These government actions 
provide incentives to exporters, and, as the Supreme Court explained in 
Zenith, a purpose of the countervailing duty law and the imposition of 
countervailing duties is ``to offset the unfair competitive advantage 
that foreign producers would otherwise enjoy from export subsidies paid 
by their governments.'' \189\
---------------------------------------------------------------------------

    \189\ See Zenith Radio Corp. v. United States, 437 U.S. 443, 
455-56 (1978).
---------------------------------------------------------------------------

    Thus, to ensure the appropriate application of the CVD statute, 
Commerce is amending both Sec. Sec.  351.509(a)(1) and 351.510(a)(1) to 
close a potential loophole through which foreign governments might 
provide a countervailable subsidy including a prohibited export 
subsidy. Commerce has included the additional language within Sec.  
351.509(a)(1): ``a benefit exists to the extent that the tax paid by a 
firm as a result of the program is less than the tax the firm would 
have paid in the absence of the program, including as a result of being 
located in an area designated by the government as being outside the 
customs territory of the country'' (emphasis added). For Sec.  
351.510(a), the amended language reads: ``a benefit exists to the 
extent that the taxes or import charges paid by a firm as a result of 
the program are less than the taxes the firm would have paid in the 
absence of the program, including as a result of being located in an 
area designated by the government as being outside the customs 
territory of the country'' (emphasis added). This new language is also 
included in Commerce's new Sec.  351.521(a)(1), discussed further 
below, that addresses indirect taxes and import charges on capital 
goods and equipment (export programs).
    Commerce has not added this language to Sec. Sec.  351.518 and 
351.519, which address the exemption, remission, or deferral upon 
export of prior-stage cumulative indirect taxes and the remission or 
drawback of import charges upon export for inputs consumed in the 
production of an exported product. The treatment of inputs consumed in 
the production of an exported product codified under these sections of 
our regulations addresses long-established rules of global trade 
adopted by the United States that were first established under the 
General Agreement on Tariffs and Trade (GATT) and later incorporated 
into the SCM Agreement. For the same reason, Commerce has not 
incorporated this language into Sec.  351.517, which addresses the 
exemption or remission upon export of indirect taxes.
    Commerce received only supportive comments for these changes. 
Commerce has also made a clarifying change to Sec.  351.509. The agency 
is removing the word ``normally'' from Sec.  351.509(b)(1) to codify 
Commerce's long-standing practice of always using the date that a firm 
filed its tax return to determine the receipt of an income tax benefit 
and stating that ``[f]or all exemptions or remissions related to income 
taxes, this date will be the date on which the firm filed its tax 
return.''

19. Commerce Has Moved the Proposed Language in the Provision of Goods 
or Services Regulation From Sec.  351.511(a)(2)(i) to 
351.511(a)(2)(iii) and Made a Small Revision to Proposed 
351.511(a)(2)(iii)(C)

    Section 351.511 regulates how Commerce examines and determines if 
goods or services are being sold for less than adequate remuneration 
(LTAR) in accordance with section 771(5)(E)(iv) of the Act. Section 
351.511(a)(2) defines ``adequate remuneration'' and describes the use 
of a market-determined benchmark price resulting from actual 
transactions in the country subject to the CVD proceeding for purposes 
of evaluating the adequacy of remuneration. Pursuant to the language of 
the current provision, under certain circumstances, an in-country, 
market-determined price could also include ``actual sales from 
competitively run government auctions.''
    In the Proposed Rule, Commerce proposed a modification to the 
regulation which would list the circumstances under which such auction 
prices may serve as a usable tier-one benchmark.\190\ Upon 
consideration of the comments on this issue, Commerce has determined to 
codify that modification in this final rule, although it has moved the 
provision from tier 1 to tier 3. Under the new language in the 
regulations, Sec.  351.511(a)(2)(iii), Commerce states that for a 
government run auction to be ``competitively run,'' the government 
auction must use ``competitive bid procedures that are open without 
restriction on the use of the good or service;'' it must be ``open 
without restrictions to all bidders, including foreign enterprises, and 
protect the confidentiality of the bidders;'' it must account ``for the 
substantial majority of the actual government provision of the good or 
service in the jurisdiction in question;'' and the winner of the 
government auction must be ``based solely on price.''
---------------------------------------------------------------------------

    \190\ See Proposed Rule, 89 FR at 57313-57315.
---------------------------------------------------------------------------

    While the preamble to the 1998 CVD Regulations provides some 
guidance on when Commerce would use actual sales from a government-run 
auction to evaluate adequate remuneration,\191\ the codification of a 
more defined set of auction criteria in Sec.  351.511(a)(2)(iii) 
ensures consistency and clarity in the application of this regulation 
and better informs the public of the criteria that will be used by 
Commerce in evaluating whether prices from a government-run auction can 
be used for purposes of evaluating the adequacy of remuneration.
---------------------------------------------------------------------------

    \191\ See 1998 CVD Regulations, 63 FR at 65377.
---------------------------------------------------------------------------

    Commerce received various comments on this regulation with some 
parties supporting and others opposing the auction criteria within the 
proposed Sec.  351.511(a)(2)(i). The commenters that opposed the 
criteria stated that (1) a May 2024 decision by a North American Free 
Trade Agreement (NAFTA) Binational Panel in Softwood Lumber from Canada 
stated that Commerce should use Quebec government auction prices; (2) 
the criteria are not based on statistical and economic data; (3) the 
auction criteria are different than the criteria listed in the Proposed 
Policies Regarding the Conduct of Changed Circumstances Reviews of the 
Countervailing Duty on Softwood Lumber from Canada, 68 FR 37456, 37457 
(June 24, 2003) (Proposed Policies); (4) the criterion that the auction 
be open to all bidders including foreign enterprises ignores a number 
of sound policy reasons why eligibility criteria might exist for an 
auction; and (5) it is common practice for prices for a minority of the 
transactions within a larger market to be used in determining

[[Page 101731]]

prices in that larger market, such as wholesale dealers auctions for 
used cars that are used as a basis for determining other prices for 
used cars and prices for aluminum sold on the London Metal Exchange 
which are used as a barometer for prices of aluminum in the world 
market.
    Some commenters opposing the auction criteria stated that instead 
of these auction criteria, Commerce should evaluate auction-based 
benchmarks on a case-by-case basis and give due regard for expert 
opinions submitted by interested parties. In addition, one commenter 
stated that Commerce should modify this regulation to state that the 
agency may use actual sales from competitively run government auctions 
if the government auction conforms to market-economy principles and the 
agency determines that such an auction is fair and emulates the 
characteristics of a private auction without adding distortions. That 
commenter further suggested that Commerce should not elaborate in the 
regulation or in the preamble to the final rule on how a government run 
auction would constitute a fair tier 1 benchmark because it may be very 
difficult for the agency to obtain all information associated with a 
particular auction.
    Commerce has carefully considered all the concerns raised by the 
commenters on this matter, as well as the proposed alternatives to the 
regulation. Commerce disagrees that those concerns merit a rejection of 
the proposed regulation language and does not agree with the suggested 
alternatives. Indeed, the suggested alternative language is 
inconsistent with the changes to the analysis of the provision of a 
good or service by the government provided in the Act by the URAA.
    Before the enactment of the URAA, under the Trade Agreements Act of 
1979, the government provision of a good or service would constitute a 
countervailable subsidy if the government provided that good or service 
``at preferential rates.'' \192\ Under the analysis of whether the 
government provision of a good or service was provided at a 
preferential rate, Commerce would compare the price charged by the 
government for that good or service to the companies that were subject 
to a CVD investigation to the price that the government received from 
other users of that good or service.\193\ The parameter of Commerce's 
analysis was not based upon market prices (i.e., transaction prices of 
that good or service between private parties) but was, instead, based 
upon the prices that the government charged and received for that good 
or service from different parties within its jurisdiction. Therefore, 
the analysis focused on government actions and behavior, not on the 
market actions between private, commercial parties. Commerce's analysis 
for the provision of a good or service, including the benchmark used to 
determine the countervailable benefit, was based upon the government 
prices for that good or service.
---------------------------------------------------------------------------

    \192\ See section 771(5)(B)(ii) of the Trade Agreements Act of 
1979.
    \193\ See, e.g., Sec.  355.44(f)(1) of the 1989 Proposed Rules, 
54 FR 23366 and 23381.
---------------------------------------------------------------------------

    The URAA, enacted in December 1994, changed the standard for 
determining whether the provision of a government good or service 
provided a countervailable benefit from one based on preferentiality 
and the difference in prices charged by the government to different 
parties for that good or service, to a standard based upon private, 
commercial market prices. Thus, the URAA rejected the preferentiality 
standard using government prices as a benchmark in determining whether 
there is a countervailable benefit conferred by the government 
provision of a good or service.\194\
---------------------------------------------------------------------------

    \194\ See, e.g., SAA at 927.
---------------------------------------------------------------------------

    When Commerce issued its regulations in 1998 for the provision of a 
good of service under Sec.  351.511, the agency stated that in the 1997 
proposed regulations it held this provision as ``reserved'' because 
Commerce had limited experience with the new benefit standard under 
section 771(5)(E)(iv).\195\ Nevertheless, Commerce included criteria in 
the final 1998 CVD Regulations, because while commenters recognized 
Commerce's lack of experience with the new statutory standard for a 
government provision of a good or service made it difficult to 
promulgate a regulation, these commenters requested guidance as to how 
Commerce intended to identify and measure adequate remuneration.\196\
---------------------------------------------------------------------------

    \195\ See, Preamble to 1998 CVD Regulations, 63 FR at 65377.
    \196\ Id.
---------------------------------------------------------------------------

    Even with this admitted lack of experience in 1998, when Commerce 
issued its CVD regulation on the provision of a good or service, the 
agency created rules that have generally served it well in addressing 
the provision of a good or service by the government.\197\ However, it 
is clear now, after many years of experience administering this area of 
law, that when Commerce included the discretion to rely on prices from 
competitively run government auctions, the agency lacked sufficient 
experience to adequately address the issue in its regulations. While 
Commerce provided some guidance in the Preamble to the 1998 CVD 
Regulations, the agency did not provide any useful regulatory criteria 
for the use of government auction prices within Sec.  351.511. 
Accordingly, Commerce is modifying the regulation now to correct for 
that problem.
---------------------------------------------------------------------------

    \197\ Id.
---------------------------------------------------------------------------

    In addition, in 1998, Commerce, based on this lack of experience in 
administering the new statutory provision for a government provision of 
a good or service, did not fully consider and address the use of 
government auction prices in the regulation within the change of the 
statutory context that rejected the use of government prices as a 
benchmark to determine whether the government provision of a good or 
service confers a countervailable subsidy. All the benchmark prices 
that Commerce may use under Sec.  351.511(a)(2)(i) and (ii), other than 
government auction prices, are prices that are derived from 
transactions between private, commercial parties. The use of a 
government auction price as a benchmark to determine whether the 
government price of a good or service confers a countervailable benefit 
uses one government price to measure the subsidy benefit of another 
government price. The use of this type of government price as a 
benchmark is a type of benchmark that would have been used under the 
preferentiality methodology that was rejected by Congress in the URAA. 
Essentially, the reference to the use of a government auction price is 
based on the old preferentiality standard because it is based on 
measuring a government provision of a good or service by using another 
government provision of a good or service as a benchmark.
    Commerce's practice in administering this area of law, however, 
makes clear that Commerce has maintained a concern regarding the use of 
government prices, including the use of government auction prices, for 
many years, because since the 1998 CVD Regulations were issued, 
Commerce has never relied upon a government auction price to measure 
the adequacy of remuneration of the government provision of a good or 
service. Commerce has used all the other benchmarks set forth within 
Sec.  351.511(a)(2)(i), (ii), and (iii), but not government auctions.
    This normal rejection of the use of government auction prices is 
based, in part, on the statutory standard enacted under the URAA that 
moved from the

[[Page 101732]]

use of government prices to the use of prices derived from transactions 
between private parties.\198\ Furthermore, the Preamble of the 1998 CVD 
Regulations states that Commerce will not use prices within a market 
that is distorted, because the government provider constitutes either a 
majority or substantial portion of the market. The rejection of the use 
of auction prices is based on that reasoning as well. Accordingly, 
based on both the language of the Act and the language within the 
Preamble of the 1998 CVD Regulations, in determining to modify this 
regulation, Commerce considered whether it would be more appropriate to 
just remove the provision within the regulation that allows the agency 
to use government auction prices or instead provide a set of more 
defined criteria as to when government auction prices may be used to 
determine the adequacy of remuneration. In consideration of the 
comments and administrative concerns, Commerce determined that it is 
best to maintain this discretionary option, but to codify criteria for 
the use of government auction prices.
---------------------------------------------------------------------------

    \198\ See, e.g., SAA at 927.
---------------------------------------------------------------------------

    While the use of a government price for the good or service, such 
as a government auction price, would be appropriate under the old 
``preferentiality'' standard for the provision of a good or service, 
Commerce recognizes that the preamble to Sec.  351.511(a)(2)(iii) 
provides for the use of possible government price discrimination.\199\ 
While Commerce expressed concerns that the possible use of government 
prices may continue the use of the preferentiality standard, the agency 
stated that there may be situations where there may be no better 
alternative than the use of a government price. However, Commerce 
stated that it would only rely on a government price as a benchmark if 
the government good or service is provided to more than a specific 
enterprise or industry or group thereof.\200\ The use of a government 
price (i.e., price discrimination) under Sec.  351.511(a)(2)(iii) is a 
``last resort'' when there are no other available benchmark options 
under Sec.  351.511(a)(2)(i), (ii), and (iii). Similarly to government 
auction prices, Commerce has never used government price discrimination 
as a benchmark to measure the adequacy of remuneration since the 
enactment of the URAA.
---------------------------------------------------------------------------

    \199\ See 1998 CVD Regulations, 63 FR at 65378.
    \200\ Id.
---------------------------------------------------------------------------

    Because a government auction price is akin to the use of a 
preferentiality benchmark and government price discrimination is 
referenced as a type of assessment that Commerce may make under a Sec.  
351.511(a)(2)(iii) market principles benchmark analysis, Commerce has 
determined that it is more appropriate to consider the use of 
government auction prices within Sec.  351.511(a)(2)(iii) instead of 
Sec.  351.511(a)(2)(i). In addition, the Preamble to the 1998 CVD 
Regulations states that Commerce will assess whether a government price 
was set in accordance with market principles through an analysis of 
such factors as the government's price setting-philosophy, costs 
(including rates of return sufficient to ensure future operations), or 
possible price discrimination.\201\ Because Commerce is moving the use 
of government auction prices into a Sec.  351.511(a)(2)(iii) market 
principles analysis, the agency is also codifying the types of 
assessment that were addressed in the Preamble to the 1998 CVD 
Regulations. Since 1998, Commerce has found that an assessment of costs 
(including rates of return) and whether the government's price setting 
philosophy (methodology) is consistent with market principles has been 
effective in our analysis of the government provision of goods and 
services like electricity, natural gas, water, and the provision or 
leasing of natural resources such as land, mining rights and stumpage.
---------------------------------------------------------------------------

    \201\ Id.
---------------------------------------------------------------------------

    While Commerce has maintained its discretion to use government 
prices from a government-run auction, Commerce will normally only use 
government auction prices when the agency determines that there is no 
other benchmark available under Sec.  351.511(a)(2)(i) and (ii). Before 
Commerce would even consider the use of government auction prices in 
that situation, the government-run auction must meet all the criteria 
established under Sec.  351.511(a)(2)(iii).
    While Commerce has explained above the reason the claims made by 
the commenters opposing the regulation are unpersuasive and 
inconsistent with the analysis of the provision of good by the 
government required by the Act and the 1998 CVD Regulations, Commerce 
will also further address each of the arguments raised by the 
commenters.
    First, a NAFTA Binational Panel in Softwood Lumber from Canada 
regarding the use of Quebec government auction prices is not binding on 
Commerce's development, creation or modification of Commerce's CVD 
regulations.\202\
---------------------------------------------------------------------------

    \202\ See SAA at 926.
---------------------------------------------------------------------------

    Second, the argument that the regulatory criteria are not based on 
statistical and economic data is equally without merit. The criteria 
established within this regulation are derived from the legal standards 
enacted by Congress under the URAA that changed the analysis of a 
government good or service based on government price discrimination 
(i.e., government prices) to a standard based upon transaction prices 
between private parties.\203\ The two studies that were commissioned by 
the parties to defend their arguments in a CVD case and which were 
referenced in the parties' comments to our Proposed Rules have no 
bearing on the statutory provision addressing the government provision 
of a good or service enacted by Congress in the URAA.
---------------------------------------------------------------------------

    \203\ Id. at 927.
---------------------------------------------------------------------------

    While Commerce is not questioning the academic credentials of the 
two individuals commissioned to produce the submitted studies, there 
are various schools of economic thought within this discipline. 
Nonetheless, even if there are different schools of economic thought on 
the matter, a general accepted principle of economics is that price is 
a function of demand and supply. Thus, changes to either the demand or 
the supply of a good would normally have an impact on the price of the 
good. In the instances where an interested party has argued that 
Commerce use a government auction price as a benchmark, both the supply 
of the good as well as administrative controls relating to the demand 
of the good have all been in the hands of a government authority. Thus, 
even ignoring the change in the statutory criteria that moved away from 
using a government price as a benchmark, as explained above from pre-
URAA to post-URAA, there is a clear element of distortion within 
jurisdictions in which the government has an overwhelming presence in 
the market. Moreover, through its administrative and policy 
preferences, the government can impact and change both the demand and 
supply of goods.
    Certain commenters also pointed out that the criteria in this 
regulation for a competitive run government auction are different than 
the criteria listed in the Proposed Policies. Commerce ultimately found 
those Proposed Policies to be not constructive and thus never adopted 
and implemented them.\204\ Instead,

[[Page 101733]]

Commerce is codifying its existing criteria now, within Sec.  
351.511(a)(2)(iii).
---------------------------------------------------------------------------

    \204\ See, e.g., Certain Softwood Lumber Products from Canada: 
Final Affirmative Countervailing Duty Determination, and Final 
Negative Determination of Critical Circumstances, 82 FR 51814 
(November 8, 2017), and accompanying Issues and Decision Memorandum 
at 104 (``The Policy Bulletin was a preliminary document, through 
which comments were solicited from the public pertaining to proposed 
policies for Canadian provinces to move to market-based systems of 
timber sales. Those proposed policies, however, were never adopted 
by the Department. The Department's analysis of a provincial 
stumpage system is not bound by proposed ideas that were never 
finalized, and which neither incorporated nor addressed the 
solicited comments'').
---------------------------------------------------------------------------

    Some commenters also suggested that the requirement that the 
auction be open to all bidders, including foreign enterprises, ignores 
a number of sound policy reasons why eligibility criteria might exist 
for an auction. Regardless of the government's policy reasons for 
placing restrictions on who may participate in the government run 
auction or on restricting how the good may be used, these governmental 
restrictive policies and administrative practices implement government-
created restrictions on the demand for the good. One of the parties 
claimed that the bidding restrictions that it places on its 
administrative auctions have no impact on demand of the government 
provided good. However, that statement raises the question as to why 
this authority maintains these bidding restrictions, if as the 
commenter stated, these restrictions have no impact on demand and 
price. Again, this argument is unpersuasive. However, Commerce does 
agree that legitimate bidding requirements that consist of deposit 
requirements that are applied equally to all bidders or the exclusion 
of government employees from participating in a government-run auction 
would not necessarily invalidate a government-run auction that 
otherwise met all the criteria set forth in the regulation.
    Some commenters stated that it is common practice that prices for a 
minority of the transactions within a larger market serve as market-
referenced prices, citing to instances where wholesale auto dealer 
auction prices for used cars can serve as the basis for determining the 
sales price for other used cars and that prices for aluminum sold on 
the London Metal Exchange are used as a barometer for prices of 
aluminum in the world market. Although that might be true, for purposes 
of Commerce's regulations and practice, Commerce does not find those 
situations to support a change to the proposed regulation 
modifications. Both the Act and Commerce's regulation state that a 
benchmark should be based on transaction prices between private 
parties. The London Metal Exchange is a private company and auto 
dealers are also private parties. Thus, auction prices on the London 
Metal Exchange and auctions conducted by auto dealers are auctions 
conducted by private parties. Therefore, regardless of the percentage 
of the market accounted for by these auctions, these referenced auction 
prices are transaction prices between private parties and not 
government transactions from a government run auction.
    One commenter stated that Commerce should not elaborate on how a 
government run auction would constitute a fair tier 1 benchmark because 
it may be very difficult for the agency to obtain all information 
associated with a particular auction. However, that commenter 
misinterpreted the language originally proposed within Sec.  
351.511(a)(2)(i). In order for an interested party to argue that prices 
from a government run auction should be used as a benchmark to measure 
whether a government provision of a good or service is for adequate 
remuneration in a CVD investigation or administrative review, that 
interested party must, at a minimum, provide documented evidence to 
demonstrate that the government run auction meets each of the criterion 
originally proposed under Sec.  351.511(a)(2)(i). It is not Commerce's 
responsibility to demonstrate that these criteria are not met before 
discarding the use of a proposed benchmark based on government auction 
prices. Accordingly, Commerce does not find this statement supports a 
change to Commerce's proposed modification of the regulation.
    For the reasons explained above, Commerce is not adopting the 
commenters' proposal to evaluate government auction-based benchmarks on 
a case-by-case basis and to give due regard for what these parties 
reference as ``expert opinions'' submitted by interested parties. 
However, Commerce will evaluate whether an interested party's proposed 
use of government auction prices as a benchmark meets the criteria 
under Sec.  351.511(a)(2)(iii) based on the evidence on the case 
record.
    Commerce has also addressed above the use of third-party opinions 
submitted by interested parties. Commerce is very cautious about the 
relevance it places on the use of third-party opinions or reports that 
are commissioned by interested parties in a case. As noted above, 
equally qualified economists may examine an identical issue and derive 
different conclusions. Commerce is also concerned that undue reliance 
on third-party reports and opinions commissioned in our CVD cases would 
reward the interested party that has the larger budget, which would 
raise a fairness issue in the administration of our cases.
    In addition, with respect to an issue like the use of prices from a 
government auction, much of the data required for a complete 
statistical or economic analysis by third parties may not be publicly 
available, and access to that data will also be in the control of the 
government, an interested party in a CVD case. Therefore, as an 
interested party, a foreign government is in the position to control 
access to that data and may decide to only grant access to a third 
party that will work in the interest of the government and deny access 
to a third party that is working on behalf of other interested parties 
in a CVD case. In the alternative, an interested party foreign 
government may only release data to the public that advances its cause 
or position in a CVD case while withholding data from the public that 
would result in an outcome that would contradict or undermine the 
arguments and positions it is espousing in its comments made before 
Commerce in a CVD proceeding.
    In addition, one commenter suggested that Commerce should modify 
this regulation to state that sales from competitively run government 
auctions will only be used if the government auction conforms to 
market-economy principles. Commerce has not adopted this suggestion 
because a general statement with respect to the government auction 
being consistent with ``market-economy principles'' provides less 
clarity and guidance as to the standard to be applied by the agency in 
its analysis of whether to consider using a government run auction as a 
benchmark. While current Sec.  351.511(a)(2)(iii) states that where 
there were no in-country or world market benchmarks available, Commerce 
will assess whether the government price is consistent with market 
principles, the preamble to the 1998 CVD Regulations provided a 
discussion to the methodologies that the agency would use to assess 
market principles. Based on the experience that Commerce has gained 
since 1998 in our analysis of the provision of a good or service under 
section 771(5)(E)(iv) of the Act, Commerce has determined that it is 
more appropriate to provide greater detail in the regulation and 
provide the criteria that Commerce will use in assessing a government 
run auction within the regulation itself.
    Finally, one commenter stated that Commerce should modify criterion 
(C) within Sec.  351.511(a)(2)(iii). That commenter stated that in some 
cases the provision of the good or service is not done by a national 
government

[[Page 101734]]

authority but by a subnational authority; thus, the use of the term 
``country'' may be interpreted to mean that when the provision of the 
good or service is made by a subnational level government that the 
comparison addressed in (C) will be made based on country-wide data 
basis. To clarify this point as concerns competitively run government 
auctions, Commerce has changed the term ``country'' in the proposed 
regulation to ``jurisdiction'' in this final rule.

20. Commerce Has Added a New Provision to Proposed Sec.  351.512, the 
Provision Covering the Purchase of Goods To Address the Exclusion of 
Certain Prices From Consideration as a Benchmark in Determining the 
Potential Benefit of a Subsidy

    When Commerce issued its current CVD regulations in 1998, it 
designated Sec.  351.512 as reserved.\205\ Commerce explained that it 
did not have sufficient experience with respect to the government 
purchase of a good for MTAR at the time; thus, it concluded that it was 
not appropriate then to set forth a standard with respect to its 
treatment of these types of financial contributions.\206\ More than 25 
years later, the issue of a subsidy in the form of the government 
purchase for MTAR has come before Commerce in only a limited number of 
cases. Nonetheless, in these cases, Commerce has developed certain 
methodologies with respect to this type of financial contribution, 
especially where the government is both a provider and a purchaser of 
the good at issue. In addition, Commerce has observed differences 
between the treatment of an MTAR and an LTAR relating to the basis for 
the applicable price comparison. Accordingly, in the Proposed Rule, 
Commerce proposed a regulation providing guidance specifically on 
subsidies covering the purchase of a good for MTAR.\207\ Upon 
consideration of the comments on this proposed regulation, Commerce has 
both codified the provision in this final rule and added certain 
language with respect to prices that might be excluded as potential 
benchmarks from Commerce's analysis in determining the benefit of a 
MTAR subsidy.
---------------------------------------------------------------------------

    \205\ See, 1998 CVD Regulations at 65412.
    \206\ Id., 63 FR at 65379.
    \207\ See Proposed Rule, 89 FR at 57313-57314
---------------------------------------------------------------------------

    First, Sec.  351.512(a)(1) addresses the benefit conferred from the 
government purchase of a good, which is derived from the standard in 
section 771(5)(E)(iv) of the Act. Under this provision, where a 
government or a public body purchases goods, a benefit exists to the 
extent that such goods were purchased for MTAR.
    Next, Sec.  351.512(a)(2) defines ``adequate remuneration'' within 
the context of an analysis of a government's purchase of a good. This 
standard for adequate remuneration for the purchase of a good is not as 
detailed as the definition for the provision of a good or service by a 
government under Sec.  351.511(a)(2) because Commerce has had a much 
longer history and more experience in addressing LTAR claims. While 
Commerce offers parties a general standard in this final rule, it 
anticipates that its MTAR practice will continue to evolve with 
additional cases.
    Under Sec.  351.512(a)(2)(i), Commerce will measure the adequacy of 
remuneration by comparing the price paid to the firm for the good by 
the government to a market-determined price for that good based on 
actual transactions between private parties in the country in question 
or, if such transactions are not available, then to a world market 
price or prices for that good. In applying this standard, consistent 
with the Act, Commerce's preference will be to use actual transactions 
between private parties within the country in question.
    Actual transactions in the country in question must be market-based 
and, therefore, would ordinarily consist of the sale of the 
investigated goods between private parties. In-country market-
determined prices would also include import prices. Similar to the 
treatment of actual transactions in Sec.  351.511, Commerce does not 
intend to adjust in-country prices to account for government distortion 
of the market. While Commerce recognizes that government involvement in 
a market may have some impact on the prices of the good, such 
distortion will normally be minimal unless the government constitutes a 
substantial portion of the market.
    Where sufficient evidence indicates that the government's 
involvement in the market has significantly distorted actual 
transaction prices or that market-determined in-country prices are 
otherwise not available, Sec.  351.512(a)(2)(i) states that Commerce 
will consider the use of world market prices as the comparison price 
for measuring the adequacy of remuneration. If there is useable 
information on the record for more than one world market price, 
Commerce will average the world market prices that are on the record 
absent record evidence that one or more of those world market prices 
are otherwise distorted.
    This regulation differs from Commerce's treatment of world market 
prices under the LTAR regulation, Sec.  351.511(a)(2)(ii), pursuant to 
which Commerce uses world market prices in analyzing the provision of 
goods or services for LTAR only when it is reasonable to conclude that 
the good in question is commercially available to the firm. Commerce 
has not adopted that standard for the government purchase of a good 
because section 771(5)(E) of the Act requires Commerce to assess 
benefit based upon the ``benefit to the recipient.'' The benefit 
analysis for the government purchase of a good is unrelated to whether 
the recipient of the benefit could purchase the good that it sold to 
the government.
    Under Sec.  351.512(a)(2)(ii), if there are no market-determined 
domestic prices or world market prices available, then Commerce could 
measure the adequacy of remuneration by examining any premium provided 
to domestic suppliers of the goods based on the government's 
procurement regulations and policies, those that are established in any 
bidding documents,\208\ or any other methodology. This assessment could 
include comparing the costs of production of the producer obtaining the 
benefit, including a reasonable profit margin to the price that is paid 
by the government for the purchased goods.
---------------------------------------------------------------------------

    \208\ In Aluminum Extrusions from the People's Republic of 
China: Preliminary Affirmative Countervailing Duty Determination, 75 
FR 54302 (September 7, 2010), Commerce found that the Procurement 
Law provided an incentive to domestic producers in that the 
government will purchase a good from a domestic producer as long as 
the price does not exceed the lowest offered price for that good 
from foreign producers by more than 20 percent. In the Final 
Determination Commerce found the program not used.
---------------------------------------------------------------------------

    Commerce recognizes that for certain products, such as enriched 
uranium, the primary purchasers in both the domestic and the world 
market are normally governments, government-owned entities, or 
government-controlled entities, or the purchase of such goods is highly 
controlled and regulated by the government.\209\ In such markets 
Commerce will closely examine the bidding and purchase conditions in 
assessing whether the purchase price paid by the government is 
consistent with market principles, which may include an analysis of the 
costs of producing or processing that good.
---------------------------------------------------------------------------

    \209\ See Uranium Enrichment, World Nuclear Association (2022), 
available at https://world-nuclear.org/information-library/nuclear-fuel-cycle/conversion-enrichment-and-fabrication/uranium-enrichment.aspx.
---------------------------------------------------------------------------

    Commerce received no objections to the benchmark methodology 
established within Sec.  351.512(a)(1) and (a)(2)(i) and (ii) of the 
MTAR regulation. However, Commerce did receive comments requesting that 
Commerce (1) further

[[Page 101735]]

illuminate the ``other methodologies'' it may use to assess whether the 
price paid by the government is consistent with market principles; (2) 
provide a non-exhaustive, illustrative list of examples of 
countervailable MTAR programs; (3) provide additional guidance on the 
type of information needed to support an MTAR allegation; (4) consider 
a provision for local content requirements (LCRs) and provide 
illustrative examples in the final regulations; (5) add language to 
Sec.  351.512(a)(2)(ii) to capture instances of distortion not 
specifically contemplated in the Proposed Rule that disrupt the 
proposed benchmark hierarchy by adding the term ``or the Secretary 
deems such prices to be distorted,'' and (6) clarify situations in 
which a price will not be considered a market-determined price, such as 
when a price may be impacted due to government involvement or other 
distortive activity in the market.
    With respect to the comment requesting Commerce to elaborate on the 
other methodologies it may use to determine whether a government price 
is consistent with market principles, as Commerce explained in the 
Proposed Rule, one methodology could be the comparison of the 
producer's costs of production, including a reasonable profit margin, 
to the price that is paid by the government for the purchased 
good.\210\ Commerce does not believe it is necessary at this stage to 
explain additional methodologies for making this assessment. This 
analysis will be conducted on a case-by-case basis, and, as Commerce 
has explained, to date there have not been a large number of MTAR cases 
to cite as examples in this regard. Likewise, Commerce has determined 
that it would not be helpful to codify a complete list of examples of a 
countervailable MTAR in this regulation because both the Act and this 
regulation set forth the criteria that will be used to analyze whether 
a government purchase of a good would confer a countervailable benefit.
---------------------------------------------------------------------------

    \210\ See Proposed Rule, 89 FR at 57313, 57314.
---------------------------------------------------------------------------

    Nonetheless, because there have been so few cases involving MTAR 
allegations before Commerce, Commerce has concluded that it might be of 
assistance to highlight three cases for general guidance in 
understanding MTAR determinations which Commerce has made to date. 
First, in Aluminum Extrusions, Commerce determined that a government 
purchase of a good provided a countervailable benefit because the 
investigated country's procurement law provided a price incentive of up 
to 20 percent for domestic manufactures over the prices offered by 
foreign manufacturers.\211\ Second, in Low Enriched Uranium from 
France, Commerce found a countervailable benefit based on the 
difference in the price the government paid for the purchase of LEU 
(low enriched uranium) from the respondent to import prices of 
LEU.\212\ Finally, in SC Paper from Canada, Commerce used private land 
transactions to determine whether a government's purchase of land was 
for MTAR.\213\
---------------------------------------------------------------------------

    \211\ See Aluminum Extrusions from the People's Republic of 
China: Preliminary Affirmative Countervailing Duty Determination, 75 
FR 54302 (September 7, 2010) (Aluminum Extrusions).
    \212\ See Notice of Final Affirmative Countervailing Duty 
Determination: Low Enriched Uranium from France; 66 FR 65901 
(December 21, 2001), and accompanying Issues and Decision Memorandum 
at Purchase at Prices that Constitute ``More Than Adequate 
Remuneration''.
    \213\ See Supercalendered Paper from Canada: Final Affirmative 
Countervailing Duty Determination; 80 FR 63535 (October 20, 2015), 
and accompanying Issues and Decision Memorandum at GNS Purchase of 
Land for More than Adequate Remuneration (MTAR).
---------------------------------------------------------------------------

    With respect to local content requirements (LCRs), Commerce has 
declined to address LCRs in this regulation because subsidies that 
include LCRs can take the form of not only MTARs but also subsidies 
provided in the form of loans, grants, and tax incentives. Therefore, 
if LCRs were solely addressed under the MTAR regulation, it would 
suggest that Commerce could not address LCRs provided within the 
context of loans, grants or tax incentives. For an example of an LCR 
raised in an MTAR allegation, see the Wind Towers from Canada 
investigation.\214\
---------------------------------------------------------------------------

    \214\ See Utility Scale Wind Towers from Canada: Final 
Affirmative Countervailing Duty Determinations and Final Negative 
Determination of Critical Circumstances, 85 FR 40245 (July 6, 2020), 
and accompanying Issues and Decision Memorandum at Comment 4 and 
Comment 5.
---------------------------------------------------------------------------

    With respect to the suggestion that Commerce add language to Sec.  
351.512(a)(2)(ii) to capture instances of distortion not specifically 
contemplated in the Proposed Rule, the commenter raising this issue 
suggested that Commerce include language that it will measure the 
adequacy of remuneration by analyzing any premium in the request for 
bid or government procurement regulations provided to domestic 
suppliers of the good if Commerce determines that there are no market-
determined domestic or world market prices available, ``or the 
Secretary deems such prices to be distorted.''
    Commerce has not modified Sec.  351.512(a)(2)(ii) to add the 
additional suggested step to Commerce's benchmark hierarchy. Commerce 
does not believe that it has ever determined in the context of an MTAR 
examination that when there were no non-distorted market-determined 
domestic or world market prices available, outstanding potential 
benchmarks on the record were otherwise distorted, and the commenter 
did not provide any citation to Commerce's making such a determination 
in past cases. Furthermore, Commerce sees no benefit in adding such a 
requirement to its normal analysis at this point. Indeed, adding such 
language would likely complicate Commerce's analysis in every case in 
which it determines that the potential benchmark domestic and world 
market prices are distorted by certain actions. One of the reasons 
Commerce is issuing these regulations is to make its process and 
procedures more transparent and less complicated to apply and enforce. 
Commerce has therefore not adopted that suggestion in the final rule.
    Finally, Commerce has agreed to clarify some situations in which it 
might reject a benchmark price for an MTAR allegation. In determining 
if a government has purchased a good for MTAR, Sec.  351.512(a)(2) 
states that Commerce will normally seek to measure the adequacy of 
remuneration by comparing the price paid to the firm for the good by 
the government with a market-determined price based on actual 
transactions, including imports, between private parties in the country 
in question. However, it also states that if market-determined prices 
for the good based on actual transactions in the country in question 
are unavailable, Commerce may measure the adequacy of remuneration 
using a world market price or prices for the good. As Commerce 
explained in the preamble to the Proposed Rule, ``If there is useable 
information on the record for more than one world market price, 
Commerce would average the world market prices that are on the record 
absent record evidence that one or more of those world market prices 
are otherwise distorted.'' \215\
---------------------------------------------------------------------------

    \215\ See Proposed Rule, 89 FR at 57313.
---------------------------------------------------------------------------

    In response to the Proposed Rule, certain commenters suggested that 
Commerce should expressly identify factors that would result in finding 
that a potential benchmark price derived from private market prices in 
the country or world market prices is distorted. One commenter went 
further and suggested that Commerce should indicate that even when a 
potential benchmark price is not distorted directly by government 
interference but instead through private market actions,

[[Page 101736]]

that price might also be unsuitable for consideration as a benchmark 
price for a MTAR analysis. Specifically, the commenter explained that 
there might be evidence of a limited number of private sellers of the 
goods or service in question in a particular country, such as in a 
monopoly or oligopoly; as a result, the prices derived from that 
country might be considered artificially too high or too low as a 
result of being set in a captive market. Further, the commenter 
suggested that if two or more competitors might establish price setting 
arrangements, or a foreign government has found that companies are 
guilty of collusion or other non-competitive behavior, such actions 
could result in setting prices for particular goods or services on 
nonmarket terms.
    Upon consideration of the comments, Commerce has determined to 
revise proposed Sec.  351.512(a)(2) to indicate that certain prices may 
be excluded from consideration as potential benchmark prices for 
purposes of an MTAR analysis under this provision. Commerce has 
numbered this new paragraph Sec.  351.512(a)(2)(iii) and moved the 
paragraph covering use of ex-factory or ex-works prices to Sec.  
351.512(a)(2)(iv). This new paragraph, titled ``Exclusion of certain 
prices,'' states that in measuring the adequacy of remuneration, 
Commerce may exclude certain prices from its analysis if it determines 
that interested parties have demonstrated, with sufficient information, 
that prices from a country are likely impacted because of particular 
actions, including government laws or policies. Commerce is aware that 
many governments have mandatory domestic-content requirements, price 
controls, production mandates, or other policies that can impact 
potential benchmark prices. If interested parties place information on 
the record which Commerce determines shows that prices have likely been 
impacted by such actions, then Commerce may look to other potential 
benchmarks on the record in measuring the adequacy of remuneration.
    In response to the suggestion that Commerce should consider 
potential price distortions from monopolies, oligopolies, price setting 
arrangements between private companies, collusion, and other 
anticompetitive actions, we note that, as a general matter, the 
countervailing duty law is focused on the actions of government 
entities and not on private-party behavior. Accordingly, Commerce has 
determined not to codify such a consideration, although Commerce may 
consider on a case-by-case basis whether parties have sufficiently 
demonstrated that such anticompetitive actions among private firms 
would likely impact benchmark prices for the purposes of an MTAR 
analysis. Commerce will not codify an analysis that it might later 
discover limits its authority or flexibility to consider whether 
certain potential benchmark prices are based on market principles or 
are otherwise impacted by anticompetitive behavior. Anticompetitive 
market conditions, including weak, ineffective or nonexistent 
enforcement of competition laws, could conceivably impact the 
appropriateness of a potential benchmark price, but in some countries a 
decision by a government or competition authority that certain private 
entities are engaged in anticompetitive conduct could be based on 
political or other considerations and not concerns about price 
distortion.
    Accordingly, Commerce has not codified in the regulation a 
requirement that Commerce conduct an analysis of anticompetitive 
private actions that might impact potential benchmark prices. At the 
same time, the regulation does not prohibit parties from submitting 
information in that regard and arguing that a particular potential 
benchmark price has been impacted by such anticompetitive conduct. 
While not dispositive, if interested parties provide sufficient 
information on the record demonstrating that a foreign government, 
multilateral organization or other governing authority has concluded 
that prices in a particular country are distorted as a result of the 
above-suggested anticompetitive behavior and actions, Commerce may 
consider such evidence in the context of the totality of the 
information placed on the record, (including, for example, any evidence 
that such prices were, in fact, impacted by the alleged anticompetitive 
behavior), in determining if the potential benchmark or benchmarks are 
useable for purposes of its MTAR analysis.
    With respect to Sec.  351.512(a)(2)(iv), in measuring adequate 
remuneration under paragraph (a)(2)(i) or (ii) of this section, 
Commerce will use an ex-factory or ex-works comparison price and the 
price paid to the firm for the good by the government in order to 
measure the benefit conferred to the recipient within the meaning of 
section 771(5)(E) of the Act. Therefore, if necessary, Commerce will 
adjust the comparison price and the price paid to the firm by the 
government to remove all delivery charges, import duties, and taxes to 
derive an ex-factory or ex-works price. This is another important 
difference from Commerce's LTAR methodology, which uses delivered 
prices pursuant to Sec.  351.511(a)(2)(iv). Under section 771(5)(E) of 
the Act, Commerce is required to determine the benefit of a subsidy 
based on the benefit conferred to the recipient. In an LTAR analysis 
under Sec.  351.511, Commerce determines the price that the recipient 
would have paid for the good or service from a private party and that 
good must be available to the recipient. Therefore, for the good to be 
available to the recipient, the recipient must incur delivery charges 
and any taxes or import changes to take possession of the good.
    However, in an MTAR analysis under section 771(5)(E) of the Act, 
Commerce's sole focus is the benefit that is provided to the recipient 
from the government purchase of the good. Any delivery charges or taxes 
are expenses that are ultimately incurred by the government as the 
purchaser of the goods and are not relevant to the revenue and benefit 
received by the MTAR subsidy recipient. Thus, the subsidy benefit 
conferred to the recipient in a MTAR analysis is solely the additional 
revenue (funds) received from the government, beyond what the market 
would have provided, for the purchase of that good. This is an 
important distinction between LTAR and MTAR benefit analyses under 
Sec. Sec.  351.511 and 351.512.
    Delivery charges could be considered the provision of a service; 
however, purchases of services by the government are not financial 
contributions under section 771(5)(D) of the Act. Thus, with respect to 
an MTAR analysis, delivery charges are also not countervailable 
subsidies under the CVD law. Including delivery charges within an MTAR 
analysis would potentially place Commerce in the position of finding 
countervailable the government purchase of services. Accordingly, for 
this reason as well, it is important that Commerce adjust the 
comparison price and the price paid to the firm by the government to 
remove all delivery charges in its MTAR analysis under Sec.  351.512.
    One commenter expressed concern about the use of ex-factory or ex-
works prices in the regulation. That commenter stated that it was 
worried that foreign governments could manipulate the price paid for 
the purchase of the good by shifting some of the payment for the good 
into the payment of freight to a respondent. Therefore, that commenter 
suggested that Commerce include a provision stating that Commerce would 
evaluate delivery charges on government purchases to determine whether 
delivery charges are consistent with prevailing market conditions and 
that the agency would accordingly adjust the government and benchmark 
prices.

[[Page 101737]]

    Commerce has not adopted this suggestion because the suggested 
language appears to be inconsistent with the express language of the 
Act. Sections 771(5)(D)(iv) and (E)(iv) of the Act provide explicitly 
that a government purchase for MTAR only relates to the government 
purchase of a good and not the government purchase of a service. 
Nonetheless, if Commerce, while investigating the government purchase 
of a good for MTAR, finds evidence on the record that a government may 
be engaging in possible price manipulation by switching funds from the 
payment of the good to other payments to a respondent, Commerce will 
conduct further analysis of the price the government paid for the good.
    In the Proposed Rule, Commerce also proposed including in the 
regulation its treatment of how it calculates a benefit when the 
government is both a provider and purchaser of the good, such as with 
electricity in Sec.  351.512(a)(3).\216\ In that situation, Commerce 
would normally measure the benefit to the recipient firm by comparing 
the price at which the government provided the good to the price at 
which the government purchased the same good from the firm. Commerce 
has determined to codify that provision in the final rule. While 
Commerce has not had a large number of cases in which it determined the 
existence of subsidies in the form of the government purchasing a good 
for MTAR, it has had numerous cases where the government is both the 
provider and purchaser of a good, e.g., the government both provided 
and purchased electricity from a respondent, in our investigations and 
administrative reviews.\217\
---------------------------------------------------------------------------

    \216\ Id., 89 FR at 57314.
    \217\ See, e.g., Countervailing Duty Investigation of Certain 
Hot-Rolled Steel Flat Products from the Republic of Korea: Final 
Affirmative Determination, 81 FR 53439 (August 4, 2016), and 
accompanying Issues and Decision Memorandum at 35-36; Certain 
Softwood Lumber Products from Canada: Final Affirmative 
Countervailing Duty Determination, and Final Negative Determination 
of Critical Circumstances, 82 FR 51814 (November 8, 2017), and 
accompanying Issues and Decision Memorandum at 159-74; and Certain 
Uncoated Groundwood Paper from Canada: Final Affirmative 
Countervailing Duty Determination, 83 FR 39414 (August 9, 2018), and 
accompanying Issues and Decision Memorandum at 149-83.
---------------------------------------------------------------------------

    Section 771(5)(E) of the Act states that a benefit will normally be 
treated as conferred when there is a ``benefit to the recipient.'' In 
other words, section 771(5)(E) of the Act provides the standard for 
determining the existence and amount of a benefit conferred through the 
provision of a subsidy and reflects the ``benefit-to-the-recipient'' 
standard which ``long has been a fundamental basis for identifying and 
measuring subsidies under U.S. CVD practice.'' \218\ Therefore, in 
situations where the government is acting on both sides of the 
transactions--both selling a good to, and purchasing that good from, a 
respondent--under Sec.  351.512(a)(3), Commerce will measure the 
benefit to the respondent by determining the difference between the 
price at which the government is selling the good to the company and 
the price at which the government is purchasing that good from the 
company. In other words, under the ``benefit-to-the-recipient'' 
standard set forth within section 771(5)(E) of the Act, if a government 
provided a good to a company for three dollars and then purchased the 
identical good from the company for ten dollars, logic dictates that 
the benefit provided to the company by the government would be seven 
dollars.
---------------------------------------------------------------------------

    \218\ See SAA at 927.
---------------------------------------------------------------------------

    Commenters both supported and opposed this regulatory provision. 
The commenters that opposed Sec.  351.512(a)(3) expressed concerns that 
this regulation (1) is inconsistent with the ``prevailing market 
conditions'' standard under section 771(5)(E)(iv) of the Act; (2) is 
not based on the ``benefit-to-recipient'' standard established under 
section 771(5)(E) of the Act; (3) is inconsistent with a 2024 Softwood 
Lumber Binational Panel decision and the WTO Appellate Body Report--
Canada--Feed-In Tariff Program; \219\ and (4) compares a wholesale 
price (government purchase of electricity) to a retail price 
(government provision of electricity). After careful consideration of 
those comments, Commerce finalizes Sec.  351.512(a)(3) with no changes.
---------------------------------------------------------------------------

    \219\ Article 1904 Binational Panel Decision, Certain Softwood 
Lumber Products from Canada: Final Affirmative Countervailing Duty 
Determination, USA-CAN-2017-1904-02 (May 6, 2024); Appellate Body 
Report, Canada--Feed-In-Tariff Program, WT/DS426/AB/R, adopted May 
24, 2013.
---------------------------------------------------------------------------

    There is, however, no support for the claim that the regulation is 
inconsistent with prevailing market conditions. The commenters that 
make that claim, focus specifically on the purchase of electricity. In 
the referenced cases, authorities are purchasing electricity from firms 
that are producing electricity from renewable resources such as 
biomass, and thus, given the increased production costs of producing 
electricity from renewable sources, the government needs to pay more 
for that electricity. However, the prevailing market condition in those 
cases is that there is no private, commercial market for this type of 
generated electricity because such a private market does not exist 
because of the market domination of cheaper electricity generated using 
cheaper methods of generation of electricity. The lack of a comparable 
private market is further confirmed by the fact that those firms that 
are generating electricity from renewable sources such as biomass are 
not choosing to displace their purchases of electricity with their own 
generated electricity but are selling this electricity to the 
government for a higher price than the price that they pay to purchase 
electricity. Electricity is a generic product in that it is an 
identical product regardless of how it is generated. Thus, this type of 
environment can only exist due to the presence of government subsidies 
or government mandates.
    What Commerce understands these commenters to be suggesting is that 
a government can create its own artificial ``market'' environment based 
upon a government's ability to create laws and regulations and its 
ability to provide subsidies, and these types of actions and government 
subsidies can escape the remedies provided under the CVD law because 
this type of unnatural environment would not be created by private, 
commercial parties that are driven by market principles.\220\ Commerce 
disagrees that such a conclusion of that situation is a correct 
understanding of the CVD law. Nothing in the Act or regulations 
anticipate that governments can avoid the disciplines of the CVD law 
through such artificial markets. Accordingly, the methodology 
established within Sec.  351.512(a)(3) exists, in part, because the 
situations in which the type of ``actual market-determined prices'' 
exist addressed in

[[Page 101738]]

Sec.  351.512(a)(2) are not present in the artificial environment 
created by foreign governments.
---------------------------------------------------------------------------

    \220\ For example, similar to these parties' statements with 
respect to electricity, there may be a situation in which within a 
government's jurisdiction a steel mill is producing a steel product 
using an inefficient and more costly production process compared to 
its competitors. Because the product this mill produces is identical 
to the product produced by its competitors, the company cannot sell 
the product at a price that would cover its production costs. The 
government, however, may want to keep this company producing steel 
products because it is the largest employer in the area. Therefore, 
the government might enact a law and regulation whereby the 
government will purchase a share of the company's production at a 
high price so that the company can remain in operation producing 
this product. Under an argument similar to the statements made by 
the commenters on this issue, the government might claim that there 
is not a subsidy because it has created an artificial ``market'' for 
a product that is inefficiently and costly produced, and that 
product otherwise would not have been produced because there is no 
private market party that would purchase this product at a price 
that would allow the producer to cover its costs of production. 
Under that scenario, the government might allege that that there is 
no subsidy because these are the ``prevailing market conditions'' 
for that type of inefficiently produced product. Again, that is not 
a correct assessment of the CVD laws and trade remedies.
---------------------------------------------------------------------------

    Commerce also disagrees that a benefit in such an artificial 
environment would be treated as ``conferred'' where there is a benefit 
to the recipient as set forth within section 771(5)(E) of the Act. The 
benefit to the recipient standard is whether a firm (i.e., recipient) 
pays less for its inputs (e.g., money, a good, or service) than it 
otherwise would pay in the absence of the government program, or 
receives more revenues than it otherwise would earn.\221\ The 
methodology established within Sec.  351.512(a)(3) is based on the 
revenue that a firm receives from the government purchase of a good 
that it otherwise would not have received absent the government action 
and program. As Commerce explained in the Proposed Rule,\222\ if a 
government provided a good to a company for three dollars while also 
purchasing that identical good from the company for ten dollars, both 
logic and the benefit-to-recipient standard dictates that the benefit 
provided to the company by the government is seven dollars.
---------------------------------------------------------------------------

    \221\ See Sec.  351.503(b) and the Preamble to the 1998 CVD 
Regulations, 63 FR at 65339.
    \222\ See Proposed Rule, 89 FR at 57314.
---------------------------------------------------------------------------

    Furthermore, Commerce rejects the argument that the administering 
authority is required to create, modify, and codify rules based upon a 
decision from a NAFTA Panel or the WTO Appellate Body. A chapter 19 
NAFTA Panel decision is not precedential and not binding on any case 
but the one before it,\223\ while WTO Panel and Appellate Body 
decisions are not binding on U.S. law, other than through the 
procedures set forth in sections 123 and 129 of the Uruguay Round 
Agreements Act.\224\
---------------------------------------------------------------------------

    \223\ See SAA at 926.
    \224\ See section 123 of the Uruguay Round Agreements Act 
(``Dispute settlement panels and procedures'') (19 U.S.C. 3533) and 
section 129 of the Uruguay Round Agreements Act (``Administrative 
action following WTO panel reports'') (19 U.S.C. 3538). See also 
Corus Staal BV v. Department of Commerce, 395 F.3d 1343 (Fed. Cir. 
2005).
---------------------------------------------------------------------------

    Certain commenters stated that the proposed methodology is faulty 
because it compares a wholesale price (price paid by government) to a 
retail price (price charged by the government). They posit that the 
price of electricity in the retail market will provide no useful 
information as to whether the purchase of electricity generated in the 
wholesale market has been made for MTAR. Further they argue that this 
methodology is not expressly conditioned on the consideration of 
``product similarity, quantities sold, imported or auctioned; and other 
factors affecting comparability,'' as it would be under the criteria 
set forth in the LTAR regulation, Sec.  351.511(a)(2)(i), for measuring 
adequacy of remuneration.
    Asserting that the price that electricity is sold for in the retail 
market will provide no useful information in determining whether the 
purchase of electricity generated in the wholesale market has been made 
for MTAR is illogical. As part of their claims, the commenters state 
that the price paid to the recipient by the government for generated 
electricity is a ``wholesale price,'' while the price the recipient 
pays to the government for generated electricity is a ``retail price.'' 
In a functioning commercial market, a wholesale price is normally lower 
than a retail price. Thus, if the government purchase of the good is a 
``wholesale price,'' while the price the government charges the 
recipient is a ``retail price,'' as claimed by these commenters, then 
the price paid by the government should logically be lower than the 
price the government charges the recipient for electricity. Therefore, 
if the ``wholesale price'' for electricity that is paid to the 
recipient by the government is higher than the ``retail price'' charged 
to the recipient for electricity, this fact would provide useful 
information to Commerce that the government purchase is for MTAR.
    Furthermore, these parties' reliance on the language within the 
LTAR regulation at Sec.  351.511(a)(2)(i) is misplaced. With respect to 
the language within that regulation regarding product ``similarity'' 
and ``comparability,'' the characteristics and properties of 
electricity do not change based upon how that electricity is generated. 
Moreover, Commerce has addressed above these ``similarity'' and 
``comparability'' comments with respect to the issue of ``wholesale'' 
prices and ``retail'' prices. In addition, to the extent that the cited 
LTAR regulation relates to ``prevailing market conditions'' for 
electricity, Commerce has already addressed that concern above.
    In addition, two more commenters suggested further modifications to 
the regulation. One commenter stated that the methodology set forth in 
Sec.  351.512(a)(3) is too rigid and fails to account for adjustments 
that may be necessary to ensure a fair and accurate price comparison. 
That commenter stated that the provision should be revised to allow for 
the removal of selling, distribution, and other operational expenses 
incurred between the government's purchase and resale of the goods in 
question from any government sales price used as benchmark.
    The other commenter stated that Commerce's methodology under this 
provision rests upon the assumption that the government sells goods at 
market-based prices and claimed that the fact that the price paid by 
the government is higher than the price it sells the good may, in fact, 
reflect the provision of a good for LTAR. Therefore, that commenter 
stated that Commerce should clarify that the exception provided under 
Sec.  351.512(a)(3) will not apply in situations where the same input 
is investigated for both LTAR and MTAR purposes.
    After consideration of these suggested modifications, Commerce has 
determined that these proposed modifications to Sec.  351.512(a)(3) are 
not warranted.
    Adjustments to benchmark prices for selling, distribution and 
operational expenses are adjustments that can be valid in an 
antidumping analysis, but are irrelevant for CVD purposes, and the 
commenter has not explained how such an adjustment would be consistent 
with Commerce's CVD practice or the CVD law in general. Furthermore, 
Commerce disagrees that the modifications to the regulation suggested 
by the second commenter are appropriate because the government 
provision of a good for LTAR and the government purchase of a good for 
MTAR are two different types of financial contributions under section 
771(5A)(D) of the Act, and Commerce analyzes benefits separately for 
each type of financial contribution. If there is a benefit from the 
government provision of a good for LTAR, the benefit from that 
financial contribution will be quantified using the methodology set 
forth within Commerce's LTAR regulation at Sec.  351.511; and if there 
is a benefit from a government purchase of a good then Commerce will 
quantify the benefit from that separate financial contribution using 
the methodology set forth within our MTAR regulation at Sec.  351.512. 
In addition, adjusting the benchmarks as suggested by this party would 
be inconsistent with section 771(5A)(E) of the Act that requires the 
benefit from a government financial contribution be determined based 
upon the benefit to the recipient. Furthermore, the suggested 
adjustment would also be inconsistent with Commerce's general 
definition of a ``benefit'' that is set forth under Sec.  351.503 of 
the CVD regulations.
    Finally, Sec.  351.512(b) addresses the timing of the receipt of 
the benefit from the government purchase of goods. Under Sec.  
351.512(b), Commerce will normally consider a benefit as having been 
received on the date on which the

[[Page 101739]]

firm receives payment from the government for the good. Under Sec.  
351.512(c), Commerce will normally allocate (expense) the benefit to 
the year in which the benefit is considered to have been received under 
paragraph (b) of this section. However, if the purchase is for, or tied 
to, capital assets such as land, buildings, or capital equipment, the 
benefit will be allocated over time as provided in Sec.  351.524(d)(2).

21. Commerce Made No Revisions to Proposed Sec.  351.521, the 
Regulation Addressing Indirect Taxes and Import Charges on Capital 
Goods and Equipment (Export Programs)

    Import substitution subsidies are defined as subsidies that are 
``contingent upon the use of domestic goods over imported goods, alone 
or as 1 of 2 or more conditions,'' in section 771(5A)(C) of the Act. 
When Commerce published its current CVD regulations in 1998, Commerce 
held in reserve Sec.  351.521 for import substitution subsidies.\225\ 
However, in the years in which that term has been defined in the Act, 
Commerce has had no issues with addressing and quantifying import 
substitution subsidies without an applicable regulation. Accordingly, 
Commerce is deleting that reserved regulation as unnecessary in this 
final rule.
---------------------------------------------------------------------------

    \225\ See 1998 CVD Regulations, 63 FR at 65414.
---------------------------------------------------------------------------

    Instead, Commerce proposed new Sec.  351.521, which would address 
Indirect Taxes and Import Charges on Capital Goods and Equipment 
(Export Programs).\226\ Commerce has found that programs that provide 
for an exemption from or reduction of indirect taxes and import charges 
on capital goods and equipment to be countervailable export subsidies 
and has had to address such subsidies under existing regulations on the 
treatment of direct taxes (Sec.  351.509); treatment of indirect taxes 
and import charges (other than export programs) (Sec.  351.510); and 
remission or drawback of import charges upon export (Sec.  
351.519).\227\ However, none of these current regulations directly 
addresses programs that provide an exemption from indirect taxes and 
import charges for exporters that purchase capital goods or equipment.
---------------------------------------------------------------------------

    \226\ See Proposed Rule, 89 FR at 57314-57315.
    \227\ See, e.g., Certain Frozen Warmwater Shrimp from Thailand: 
Final Negative Countervailing Duty Determination, 78 FR 50379 
(August 19, 2013), and accompanying Issues and Decision Memorandum 
at 9.
---------------------------------------------------------------------------

    A program that provides an exemption from indirect taxes and/or 
import duties for exporters that purchase capital equipment would not 
be addressed under the regulation for direct taxes (Sec.  351.509); nor 
would that program be addressed under Sec.  351.510, which is only 
applicable to domestic subsidies. In addition, Sec.  351.519 addresses 
duty drawback on inputs of raw materials that are consumed in the 
production of an exported product and thus would not be applicable to 
the exemption of indirect taxes and import charges provided on 
purchases of capital goods and equipment. Therefore, Commerce proposed 
this new regulation to explicitly address the exemption of indirect 
taxes and import charges on capital goods and equipment that are 
export-specific in the Proposed Rule.\228\ In consideration of the 
comments on this regulation, Commerce has determined that no further 
modification is necessary to it, so Commerce is codifying that 
regulation as proposed in this final rule.
---------------------------------------------------------------------------

    \228\ See Proposed Rule, 89 FR at 57314-57315.
---------------------------------------------------------------------------

    New Sec.  351.521(a)(1) and (2) addresses the exemption or 
remission of indirect taxes and import charges and the deferral of 
indirect taxes and import charges. In the case of export subsidies 
which provide full or partial exemptions from or remissions of an 
indirect tax or an import charge on the purchase or import of capital 
goods and equipment, Sec.  351.521(a)(1) provides that a benefit exists 
to the extent that the indirect taxes or import charges paid by a firm 
are less than they would have been but for the existence of the program 
(including firms located in customs territories designated as outside 
of the customs territory of the country). For the deferral of indirect 
taxes or import charges, the regulation provides that a benefit exists 
to the extent that appropriate interest charges are not collected. 
Under Sec.  351.521(a)(2), a deferral of indirect taxes or import 
charges will normally be treated as a government-provided loan in the 
amount of the taxes or charges deferred, consistent with the 
methodology set forth in Sec.  351.505; Commerce will use a short-term 
interest rate as the benchmark for deferrals that are a year in length 
or shorter; and for deferrals of more than one year, Commerce will use 
a long-term interest rate as the benchmark.
    Under Sec.  351.521(b), the timing of receipt of benefits for the 
recipient for the exemption from or remission of indirect taxes or 
import charges will be when the recipient firm would otherwise be 
required to pay the indirect tax or import charge, the date on which 
the deferred tax becomes due for deferral of taxes for one year or 
shorter, or the anniversary date of a deferral lasting for more than 
one year.
    Finally, Sec.  351.521(c) states that Commerce will allocate the 
benefit of a full or partial exemption, remission, or deferral of 
payment of import taxes or import charges to the year in which the 
benefit was considered received under Sec.  351.521(b).
    Commenters on this provision were all supportive of the new 
regulation, but one stated that Commerce should clarify in this 
regulation that export programs regarding indirect taxes and import 
charges on capital goods and equipment would normally be considered 
non-recurring subsidies, and the benefit from these subsidies would be 
allocated over time instead of expensed in the year of receipt.
    Commerce understands the concerns of the commenter but finds no 
reason to make this type of clarification within this regulation 
because the regulation addressing the allocation of benefit to a 
particular time period, Sec.  351.524, already explicitly states that 
Commerce will consider a subsidy to be non-recurring if the subsidy was 
provided for, or tied to, capital assets of a company.\229\
---------------------------------------------------------------------------

    \229\ See Sec.  351.524(c)(2)(iii).
---------------------------------------------------------------------------

22. Commerce Is Removing the Regulation Regarding Green Light and Green 
Box Subsidies, Sec.  351.522

    In the Proposed Rule, Commerce proposed deleting the Green Light 
and Green Box subsidies provision found at current Sec.  351.522 
because the provisions are no longer relevant under U.S. law.\230\ 
Commerce received no objections from the commenters to this change, and 
therefore is removing the regulation in this final rule. Under section 
771(5B)(G)(i) of the Act, the Green Light provisions under 
subparagraphs (B), (C), (D) and (E) lapsed 66 months after the WTO 
Agreement entered into force, circa 2000 and 2001, as these provisions 
were not extended pursuant to section 282(c) of the URAA. Under section 
771(5B)(G)(ii) of the Act, the provision for Green Box subsidies no 
longer applied at the end of the nine-year period beginning on January 
1, 1995. Because the statutory authority to consider Green Light and 
Green Box subsidies ended over 20 years ago, Commerce has eliminated 
these obsolete provisions.
---------------------------------------------------------------------------

    \230\ See Proposed Rule, 89 FR at 57315.

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[[Page 101740]]

23. Commerce Is Making Some Small Revisions to Proposed Sec.  351.525, 
the Regulation Covering the Calculation of Ad Valorem Subsidy Rates and 
Attribution of Subsidies to a Product

    Under section 701(a) of the Act, Commerce is required to 
investigate and quantify countervailable subsidies that are provided 
either directly or indirectly with respect to the manufacture, 
production, or export of merchandise subject to a CVD investigation or 
administrative review. The calculation and attribution rules that are 
set forth under Sec.  351.525 are the primary tools used to quantify 
the subsidies that are being provided either directly or indirectly to 
the manufacture, production, and exportation of subject merchandise.
    When Commerce developed the current attribution rules for cross-
owned companies 25 years ago, it had limited experience with the 
attribution of subsidies between affiliated companies. The practice of 
requiring information from cross-owned companies involved in the supply 
of an input product, a holding or parent company, or the production of 
subject merchandise evolved slowly for Commerce, and this practice led 
to the development of some of the attribution rules that are currently 
codified under Sec.  351.525. It was essentially not until 1993 when 
Commerce had investigations on steel products from various countries 
\231\ that the agency began to attribute to a respondent the subsidies 
that were provided to companies that were related to the respondent 
through cross-ownership.\232\ In those investigations, Commerce 
required ``complete responses for all related companies that conducted 
either of the following types of financial transactions: (a) Any 
transfer of funds (e.g., grants, financial assets) or physical assets 
to the respondent, the benefits of which were still employed by the 
producer of the subject merchandise during the POI; or (b) Any 
assumption of debt or other financial obligation of the respondent 
(e.g., loan payments, dividend payments, wage compensation) that the 
respondent would have had to pay during the POI.'' \233\ Therefore, 
collecting subsidy information from parent companies and affiliated 
input suppliers was a relatively recent practice in 1998 when Commerce 
first attempted to develop and codify a set of attribution rules.
---------------------------------------------------------------------------

    \231\ See Final Affirmative Countervailing Duty Determination: 
Certain Steel Products from Austria, 58 FR 37217, 37218 (July 9, 
1993).
    \232\ Under Sec.  351.525(b)(6)(vi), cross-ownership exists 
between two or more corporations where one corporation can use or 
direct the individual assets of the other corporation(s) in 
essentially the same ways it can use its own assets.
    \233\ See Final Affirmative Countervailing Duty Determination: 
Certain Steel Products from Austria, 58 FR 37217, 37218 (July 9, 
1993).
---------------------------------------------------------------------------

    In the ensuing years, Commerce has developed a detailed practice 
with respect to the treatment of cross-owned companies and the 
attribution to respondents of subsidies received by cross-owned 
companies. Based on this experience, Commerce proposed revising its 
attribution rules that are currently codified under Sec.  351.525(b)(6) 
in the Proposed Rule.\234\ After consideration of the comments on this 
issue, Commerce is codifying the revisions as proposed, with some small 
modifications, in this final rule.
---------------------------------------------------------------------------

    \234\ See Proposed Rule, 89 FR at 57315-57320.
---------------------------------------------------------------------------

    As an initial matter, cross-ownership is defined under current 
Sec.  351.525(b)(6)(vi), and Commerce has not modified that paragraph 
in this final rule, except for moving it to Sec.  351.525(b)(6)(vii) in 
light of changes to other provisions.\235\
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    \235\ Commerce notes that the standard set forth in the 
regulation is that cross-ownership will normally be met when there 
is a majority voting ownership interest between two corporations or 
through common ownership of two (or more) corporations. While the 
regulatory standard of control will normally be met by a majority 
ownership, cross-ownership is defined based on whether one company 
exercises control of another company to a degree where one 
corporation can use or direct the assets of another corporation in 
essentially the same ways it can use its own assets. Cross-ownership 
may also be based on a large minority voting interest, a ``golden 
share,'' and other corporate relationships such as common 
interlocking board members and corporate officers that administer 
the daily operations of a corporation. In addition, Commerce's 
experience since the promulgation of the cross-ownership standard in 
1998 has shown that other factors, such as certain familial 
relationships, may, in particular circumstances, warrant a finding 
of cross-ownership, with or without a majority voting ownership 
interest. See Coated Free Sheet Paper from Indonesia: Final 
Affirmative Countervailing Duty Determination, 72 FR 60642 (October 
25, 2007). Commerce has also found the absence of cross-ownership 
even when one corporation held the majority ownership interest in 
another corporation because that corporation, even with majority 
voting rights was precluded by a creditors' agreement from 
exercising control over certain critical corporate decisions within 
the second corporation. A finding of cross-ownership is an entity-
specific determination.
---------------------------------------------------------------------------

    Next, Sec.  351.525(b)(6)(iii) addresses holding or parent 
companies. Commerce has deleted the section that states that if a 
holding company merely serves as a conduit for the transfer of the 
subsidy from a government to a subsidiary, Commerce will attribute the 
subsidy solely to the products sold by the subsidiary. This language 
became redundant in light of revisions to the attribution section on 
the transfer of subsidies between corporations with cross-ownership, as 
described below. Notably, no commenter objected to this modification of 
the holding company or parent company attribution rule.
The Cross-Owned Input Producer Attribution Rule
    With respect to the cross-ownership attribution rule for input 
suppliers, Sec.  351.525(b)(6)(iv), Commerce made several changes to 
provide greater clarity with respect to the analysis of when an input 
is ``primarily dedicated'' to the production of a downstream product. 
In addition, Commerce has found that the examples provided in the 
preamble of the 1998 CVD Regulations (semolina to pasta; trees to 
lumber; and plastic for automobiles) \236\ have not provided much 
guidance with respect to many of the input products that Commerce has 
encountered in its CVD cases. Moreover, the analysis of whether an 
input is primarily dedicated has been an issue in recent CIT 
holdings.\237\ Therefore, Commerce has codified several factors that it 
will consider in its analysis of whether an input is primarily 
dedicated.
---------------------------------------------------------------------------

    \236\ See 1998 CVD Regulations, 63 FR at 65401 (providing 
examples of when it may be appropriate to attribute the subsidies 
received by an input supplier to the production of cross-owned 
corporations producing the downstream product--situations where the 
purpose of the subsidy provided to the input producers is to benefit 
both the input and downstream product.).
    \237\ See, e.g., Kaptan Demir Celik Endustrisi Ve A.S. v. United 
States, Court No. 21-00565, Slip-Op 23-62 (CIT April 26, 2023) 
(Kaptan v. United States) at 13-16; Nucor Corporation v. United 
States, Court No. 21-00182, Slip Op. 22-116 (CIT October 5, 2022) 
(Nucor Corp. v. United States) at 23-24; and Gujarat Fluorochemicals 
Ltd. v. United States, 617 F. Supp. 3d 1328, 1330 (CIT 2023) 
(Gujarat v. United States).
---------------------------------------------------------------------------

    In Sec.  351.525(b)(6)(iv)(A), Commerce added language to 
explicitly state that the attribution rule applies only to cross-owned 
corporations that produce the input, as opposed to cross-owned 
companies that procure the input from non-cross-owned companies and 
then provide that input to the respondent. To provide further clarity, 
Commerce has changed the title of this attribution regulation from 
``input supplier'' to ``input producer.'' The definition of an 
``input'' under this attribution regulation covers the creation or 
generation of by-products resulting from the production operations of 
the cross-owned input producer. With these changes to the regulation, 
Commerce is not intending to change its current practice that a 
primarily dedicated input does not have to be used directly in the 
production of subject merchandise but may be used as an input at 
earlier stages of production.
    One commenter opposed the modification of ``input supplier'' to

[[Page 101741]]

``input producer'' in the regulation. That commenter stated that the 
modifications to this cross-owned attribution rule for input producers 
could create a loophole to avoid the attribution of subsidies whereby a 
cross-owned input supplier can first provide the input to a cross-owned 
supplier that then will provide the input to the cross-owned 
respondent/producer. While this type of cross-owned transaction is 
covered by the input producer rule, Commerce has made a small 
modification to proposed Sec.  351.525(b)(6)(iv)(A) to clarify that 
transactions involving a cross-owned input producer that provides the 
input to a cross-owned supplier that then provides the input to the 
cross-owned producer fall within the cross-owned input producer 
regulation. The final language in Sec.  351.525(b)(6)(iv)(A) now 
states: ``If there is cross-ownership between an input producer that 
supplies, either directly or indirectly, a downstream producer and the 
production of the input product is primarily dedicated . . . .''
    On the other hand, a commenter that supported the revisions to 
Sec.  351.525(b)(6)(iv)(A) recommended that Commerce consider including 
subsidies to upstream input suppliers even if those suppliers are not 
cross-owned with the subject merchandise producer. This commenter 
stated that in the stainless-steel industry, for example, many 
producers in foreign countries are receiving subsidized nickel for 
stainless steel production which distorts the market and provides those 
foreign producers with an unfair competitive advantage.
    While Commerce agrees with the commenter that the described 
stainless-steel industry situation described is concerning, that type 
of subsidization is more properly addressed under other provisions of 
the regulations and the Act, such as the upstream subsidies provision 
at Sec.  351.523 and sections 701(e) and 771A of the Act; where the 
supplier is a state-owned enterprise, under sections 771(5)(D)(iii) and 
(E)(iv) of the Act that address the government provision of a good or 
service; or under the ``entrusts or directs a private party'' provision 
at 771(5)(B)(iii) of the Act.
The Primarily Dedicated Input Provision
    Section 351.525(b)(6)(iv)(B) sets forth several criteria or factors 
that Commerce will review when determining whether an input is 
primarily dedicated to the production of downstream products. First, 
Commerce will determine whether the input could be used in the 
production of a downstream product, including the production of subject 
merchandise. Then, under the additional criteria, in no particular 
hierarchy, Commerce may consider (1) whether the input is a link in the 
overall production chain; (2) whether the input provider's business 
activities are focused on providing the input to the downstream 
producer; (3) whether the input is a common input used in the 
production of a wide variety of products and industries; (4) whether 
the downstream producers in the overall production chain are the 
primary users of the inputs produced by the input producer; (5) whether 
the inputs produced by the input producer are primarily reserved for 
use by the downstream producer until the downstream producer's needs 
are met; (6) whether the input producer is dependent on the downstream 
producers for the purchases of the input product; (7) whether the 
downstream producers are dependent on the input producer for their 
supply of the input; (8) the coordination, nature, and extent of 
business activities between the input producer and the downstream 
producers whether directly between the input producer and the 
downstream producers or indirectly through other cross-owned 
corporations; and (9) other factors deemed relevant by Commerce based 
upon the case-specific facts. The analysis of the facts on the record 
of whether an input is primarily dedicated is always guided by the 
statutory mandate of addressing and including countervailable subsidies 
provided either directly or indirectly to the manufacture or production 
of subject merchandise as required under section 701(a) of the Act.
    Whether an input product is primarily dedicated is a highly fact-
intensive analysis of all the information on the record; such 
information is usually business proprietary and thus cannot be 
discussed in Commerce's public determinations. The fact that the data, 
and Commerce's analysis, usually rely on business proprietary 
information makes it a complicated process with respect to 
distinguishing specific determinations of ``primarily dedicated'' from 
one another. For some complicated input issues, just a few small 
differences in the facts on the record may be the deciding factor that 
render an input primarily dedicated or not. However, Commerce has 
concluded that the criteria set forth within Sec.  351.525(b)(6)(iv)(B) 
will provide additional clarity to the public and the courts with 
respect to Commerce's analysis of whether an input product is primarily 
dedicated to a downstream product.
    Commerce received comments both in support and in opposition of the 
criteria within Sec.  351.525(b)(6)(iv)(B). Commenters that opposed the 
list of primarily dedicated criteria stated that the list of factors 
was ``too long,'' and they took issue with it not being hierarchical 
and including a ``catch-all'' provision, which they stated made the 
other factors irrelevant. One of the commenters stated that the list 
has factors that are redundant and place too much emphasis on the 
relationship between the input producer and the producer of subject 
merchandise instead of the nature of the input. Another commenter 
suggested that Commerce condense these factors into one factor such as 
``the share of the input producer's sale of the input that are supplied 
to the downstream producer.'' Finally, another commenter stated that 
Commerce should continue to analyze the primarily dedicated issue on a 
case-by-case basis.
    After consideration of the comments on this regulatory provision, 
Commerce disagrees that the list of factors within Sec.  
351.525(b)(6)(iv)(B) is too long. The list of factors set forth in that 
regulation is based upon criteria that Commerce provided to the court 
in recent litigation of the issue of primarily dedicated inputs.\238\ 
In addition, Commerce has not put these factors in hierarchical order 
because whether inputs are primarily dedicated can, in many instances, 
be a complicated issue in which evidence on the record will indicate 
that certain of the factors may be more relevant than others, which may 
change based on case-specific facts. Moreover, given the wide array of 
inputs and corporate and business relationships between cross-owned 
companies, a strict hierarchy of criteria or factors could prevent 
Commerce from adequately addressing subsidies conferred directly or 
indirectly on the production or manufacture of subject merchandise as 
required under section 701(a) of the Act. Because of the complicated 
nature of the primarily dedicated issue, Commerce has also included 
within Sec.  351.525(b)(6)(iv)(B) the ability to review other factors 
deemed relevant based upon case-specific facts.
---------------------------------------------------------------------------

    \238\ See, e.g., Kaptan v. United States, Slip-Op 23-62 at 13-
16; Nucor Corp. v. United States, Slip Op. 22-116 at 23-24; and 
Gujarat v. United States, 617 F. Supp. 3d at 1330.
---------------------------------------------------------------------------

    Commerce disagrees that the list of factors in the regulation 
places too great an emphasis on the relationship between the cross-
owned input producer and the producer of subject merchandise. The 
attribution rule for

[[Page 101742]]

input products was developed because Commerce was concerned that a 
government would both directly provide subsidies to the downstream 
producer and provide production assistance to that downstream producer 
by subsidizing cross-owned companies that produce inputs required by 
that downstream producer. Therefore, while the nature of the input is 
important in the agency's primarily dedicated analysis, it is also 
important to analyze the nature of the relationship between the cross-
owned input producer and the cross-owned downstream producer because it 
is that relationship that dictates the provision of that input.
    Commerce has also determined that condensing the factors within 
Sec.  351.525(b)(6)(iv)(B) into the single factor of ``the share of the 
input producer's sales of the input that are supplied to the downstream 
producer'' is too limited and could obfuscate the purpose of the input 
producer attribution regulation. For example, one might observe that an 
input producer provides a critical input to the production of the 
downstream product and that the cross-owned input provider is the sole 
supplier of that input to the cross-owned downstream producer. However, 
the sales of that input to the downstream producer might account for 
only a small share of the input producers' total sales of the input. 
Under the lone factor consideration proposed by this commenter, 
Commerce would find this critical input not to be primarily dedicated, 
while under a more comprehensive consideration of multiple factors, 
Commerce might find the reverse. Therefore, consideration of the 
proposed one lone factor would not be sufficiently informative, either 
with respect to the purpose of the input producer regulation or to the 
issues of whether an input product is primarily dedicated.
    Likewise, Commerce, will continue to consider the factors set forth 
in Sec.  351.525(b)(6)(iv)(B) and will not go back to deciding whether 
an input is primarily dedicated to the production of the downstream 
product on a case-by-case basis, without consideration of those 
factors, as suggested by one commenter. A major impetus behind the 
agency's codification of the factors for analyzing primarily dedicated 
inputs within Sec.  351.525(b)(6)(iv)(B) is recent court decisions that 
have taken umbrage with Commerce's case-by-case approach for our 
analysis of whether an input is primarily dedicated. To go back to a 
case-by-case approach would fail to address some of the criticism 
raised by the courts with respect to Commerce's primarily dedicated 
analysis.
    In addition, under the strict CVD deadlines in the Act, Commerce 
has limited time in which to make its initial decisions as to whether 
an input is primarily dedicated. Indeed, Commerce must make these 
complicated decisions in an investigation or administrative review 
within days of receipt of the information on cross-owned companies 
because the agency must provide foreign respondents with explicit 
instructions as to which cross-owned input producers will be required 
to provide full questionnaire responses. Delays in making these cross-
owned input producer decisions adversely impact Commerce' ability to 
remain in compliance with the statutory deadlines established by 
Congress. Therefore, having criteria in the regulation provides clarity 
to the interested parties regarding Commerce's preliminarily dedicated 
analysis and assists the agency in its decision-making process, which 
will help to ensure that all statutory deadlines are met in a more 
efficient manner.
    Thus, Commerce continues to believe that the codification of these 
criteria or factors in Sec.  351.525(b)(6)(iv)(B) is appropriate and 
ensures consistency in the agency's analysis of whether an input is 
primarily dedicated. In addition, Commerce has determined that the 
codification of these criteria or factors provides clarity to both the 
interested parties and the courts with respect to the issue and 
analysis of whether an input is primarily dedicated.
    In addition, one commenter expressed its concerns about the revised 
language in Sec.  351.525(b)(6)(iv)(B), stating that Commerce expanded 
the input provider rule by providing a more extensive definition of 
``primarily dedicated'' to include within the definition inputs that 
merely ``could be used in the production of a downstream product 
including subject merchandise, regardless of whether the input is 
actually used for the production of subject merchandise.'' This 
commenter stated that this modification, in effect, addresses upstream 
subsidies without complying with the statutory provisions for upstream 
subsidies set forth within the Act. The party suggested that Commerce 
should incorporate a more definitive limiting principle based not on 
whether the input product ``could'' be used to produce a downstream 
product including the subject merchandise but that the input product 
must actually be used to produce the downstream product.
    Commerce finds that this description of the regulation misconstrues 
the original, non-modified language within Sec.  351.525(b)(6)(iv). The 
original language of the regulation only referenced ``cross-ownership 
between an input supplier and a downstream producer, and the production 
of the input product is primarily dedicated to production of the 
downstream product.'' The original language in the regulation did not 
require that the input product be related to the production of 
downstream products that include subject merchandise, only that the 
input has to be used to produce downstream products. While Commerce has 
effectively administered the regulation to ensure that the subject 
merchandise was included as one of the downstream products, the 
original language could be interpreted otherwise. Therefore, to remove 
the ambiguity in the original regulation, Commerce has modified it to 
state that the input is one that could be used in the production of 
subject merchandise. Thus, the new language has been inserted into the 
regulation to restrict the application of this attribution rule, not to 
expand the scope of this attribution regulation. In the Proposed Rules, 
we used the phrase ``could be used in the production of a downstream 
product including subject merchandise, regardless of whether the input 
is actually used for the production of subject merchandise.'' For 
clarity in the final rule we have shortened the language to simply 
state ``could be used in the production of a downstream product 
including subject merchandise.''
    Commerce notes that it has continued to include the term ``could be 
used'' rather than the commenter's suggested term ``actually used,'' 
because in Commerce's examination of a ``primarily dedicated'' input, 
Commerce will examine whether the input is one that is normally used to 
produce subject merchandise. If the input is not an input that is 
normally used to produce subject merchandise, then the input would not 
be ``primarily dedicated.'' Commerce has retained the phrase ``could be 
used'' specifically instead of ``actually used'' because of the 
agency's long-standing practice that it does not trace the use of a 
subsidy. It has also retained that phrase, more importantly, because of 
concerns of potential manipulation to avoid countervailing duties.
    For example, one can imagine a situation in which a respondent 
purchased an input from both a cross-owned producer and from a non-
crossed-owned company, and yet claims in its reporting to Commerce that 
it only ``actually uses'' the inputs purchased from the non-cross-owned 
company to produce subject merchandise that is exported to the United 
States. It might be true, but it also might not be true,

[[Page 101743]]

and in either case it might be difficult, if not impossible, to verify. 
Using the term ``could be used,'' rather than ``actually used'' 
therefore addresses that potential for manipulation.
    In addition, the modifications made to the input producer 
regulation do not relate to the provision of upstream subsidies. As the 
preamble of the 1998 CVD Regulations states, input products provided by 
a cross-owned producer that are not primarily dedicated to the 
downstream products would not fall within the cross-owned attribution 
rule but would be addressed under the upstream subsidies provision of 
the statute.\239\ The modifications to this regulation do not change 
that policy.
---------------------------------------------------------------------------

    \239\ See 1998 CVD Regulations, 63 FR at 65401.
---------------------------------------------------------------------------

    Finally, one commenter suggested that Commerce should add 
clarifying language to the regulation to define the production of an 
input as including the generation or creation of an input as a by-
product. The agency does not see a need to include this type of 
clarification within the regulatory language, as the regulatory 
language is expansive enough to include by-products and this preamble 
sufficiently and explicitly explains that the production of an input 
would also include inputs that are by-products of the cross-owned 
company's production process.
Cross-Owned Providers of Utility Products
    Since the publication of the original attribution rules in 1998, 
Commerce has increasingly faced more complex cross-ownership issues and 
corporate structures. Moreover, the transactions between these cross-
owned corporate entities and their provision of ``inputs'' as defined 
and addressed within the CVD regulations have multiplied with increased 
complexities. Therefore, with over 25 years of experience in addressing 
transactions between cross-owned companies since the publication of the 
1998 attribution rules, Commerce has concluded that it is appropriate 
now to codify an additional attribution rule to cover the provision of 
certain inputs that are more than just input products used in the 
manufacture or production of downstream products; specifically cross-
owned providers of electricity, natural gas or similar utility goods. 
Commerce proposed this addition to the regulation in the Proposed 
Rule,\240\ and, after consideration of comments on this provision, 
Commerce is now codifying it as part of the final rule.
---------------------------------------------------------------------------

    \240\ See Proposed Rule, 89 FR at 57317.
---------------------------------------------------------------------------

    Under Sec.  351.525(b)(6)(v), titled ``Providers of utility 
products,'' if there is cross-ownership between a company providing 
electricity, natural gas or other similar utility product and a 
producer of subject merchandise, Commerce will attribute subsidies 
received by that provider to the combined sales of that provider and 
the sales of products sold by the producer of subject merchandise if at 
least one of the following two conditions is met: a substantial 
percentage, normally defined as 25 percent or more, of the production 
of the electricity, natural gas, or other similar utility product by 
the cross-owned utility provider is provided to the producer of subject 
merchandise; or the producer of subject merchandise purchases 25 
percent or more of its electricity, natural gas, or other similar 
utility product from the cross-owned provider. Commerce has concluded 
that the criteria for determining whether an input product is primarily 
dedicated to the production of downstream products is not particularly 
useful for utility products such as electricity and natural gas. Among 
other considerations, electricity and natural gas are not physical 
inputs into the production of downstream products but have emerged as 
goods or services that can effectively subsidize the production or 
manufacture of certain products. Therefore, a consistent standard of 
analysis for the attribution of utility products provided by a cross-
owned corporation will assist the agency in effectuating the 
requirements of section 701(a) of the Act.
    This regulation focuses on the provision of utility products 
between cross-owned companies to provide both clarity to the public and 
consistency of treatment among Commerce's cases. With the codification 
of this standard, Commerce recognizes that in most economies, providers 
of goods such as electricity and natural gas are government-regulated 
public utilities, and manufacturers require utility goods and services 
to conduct their operations. In Commerce's view, a utility company 
providing 25 percent of its output to one company indicates a 
significant level of dependency and dedication to one customer, and a 
company that purchases 25 percent of its energy needs from one supplier 
has also become engaged in a significant supplier relationship. 
Therefore, Commerce has established a 25 percent threshold for 
attributing subsidies received by the cross-owned utility company and 
the producer of subject merchandise.
    However, if the cross-owned utility company is an authority and 
there is an allegation that the government is providing the electricity 
or natural gas for LTAR or that the private cross-owned utility company 
is entrusted or directed to provide electricity or natural gas for 
LTAR, Commerce will normally analyze these types of allegations under 
Sec.  351.511, its regulation on the provision of a good or service.
    In response to the Proposed Rule, Commenters both supported and 
opposed the attribution of subsidies provided to cross-owned providers 
of utility products in the regulation.
    One of the commenters opposing the provision stated that Commerce 
should not implement this rule and should instead apply the primarily 
dedicated standard used for inputs used in the production of a 
downstream product.
    Commerce disagrees with the application of the primarily dedicated 
standard to utility products and services because that standard is 
neither relevant nor informative to the agency's analysis of a cross-
owned utility provider. The criteria used for an input producer address 
a physical input that is incorporated into a downstream product. 
Normally, utility goods such as electricity, while necessary for the 
manufacturing or production process of a manufactured good, are not 
physical inputs into that merchandise. Therefore, the factors set forth 
within Sec.  351.525(b)(6)(v) for a primarily dedicated analysis are 
not instructive for the analysis as to whether subsidies provided to a 
cross-owned utility provider should be attributed to producers of the 
subject merchandise.
    Other commenters opposing the provision stated that the 25 percent 
threshold will limit Commerce's flexibility, and they suggested that 
Commerce should address cross-owned utility providers instead on a 
case-by-case basis.
    Commerce disagrees with this suggestion. The purpose of this new 
attribution regulation for cross-owned utility providers is to provide 
both clarity to the public with respect to the agency's treatment of 
cross-owned utility providers and to provide more consistency in 
Commerce's treatment of cross-owned utility providers. Going back to 
analyzing cross-owned utility providers on a case-by-case basis would 
undermine both of those policy and administrative goals. In addition, 
the 25 percent threshold for a utility good provides useful regulatory 
guidance that will assist Commerce in determining which cross-owned 
companies need to provide full questionnaire responses, a decision that 
needs to be made in mere days given the strict CVD deadlines in the 
Act. Moreover, the new attribution rule for cross-owned utility 
providers will effectively and efficiently implement the statutory 
mandate under section 701(a) of the Act that Commerce

[[Page 101744]]

investigate the subsidies that are conferred, directly or indirectly, 
on the production and manufacture of subject merchandise.
    In response to concerns which some commenters expressed, Commerce 
recognizes that it is possible that after a CVD order has been put in 
place a respondent may attempt to avoid the application of this 
regulation by attempting to reduce the amount of electricity provided 
or purchased to a level below the 25 percent threshold. Accordingly, to 
prevent this type of potential avoidance of the application of this 
attribution regulation, in reviewing record documents in its 
proceedings, Commerce will be sensitive to these potential types of 
provision and consumption changes after the issuance of a CVD order, 
and it also recommends that other interested parties in its proceedings 
be sensitive to those potential concerns as well.
    One of the commenters supporting the regulation suggested that 
Commerce codify the language in the preamble that if the cross-owned 
utility provider is an authority and there is an allegation that the 
utility good or service is provided for LTAR or there is an allegation 
of entrustment or direction, Commerce will analyze the provision of the 
utility good or service under Sec.  351.511, the regulation on the 
provision of a good or service.
    Commerce sees no need to make this an additional regulatory 
provision under our attribution regulations as this standard is already 
explicitly addressed under Commerce's LTAR regulation at Sec.  351.511, 
the government provision of a good or service.
    Finally, one of the commenters supporting the regulation for 
providers of utility products recommended that Commerce create a 
separate regulatory provision for cross-owned freight service providers 
using the same 25 percent threshold used for cross-owned providers of 
utility products.
    Commerce has not adopted this recommendation. Since the 
implementation of the 1998 CVD Regulations that included the 
attribution rules for cross-owned companies, while Commerce has 
investigated hundreds of different subsidies related to the production 
or manufacture of merchandise that is covered in a CVD investigation, 
the agency has rarely, if ever, had allegations related to the 
subsidization of freight services other than those covered under the 
statutory provision of a government good or service. Therefore, 
Commerce does not see a need to promulgate an attribution rule to cover 
the provision of freight services from cross-owned companies. However, 
Commerce does recognize that if a cross-owned freight service provider 
transferred a subsidy to the cross-owned producer/respondent, the 
transfer of that subsidy could fall under Sec.  351.525(b)(6)(vi), the 
attribution rule for the transfer of a subsidy between companies with 
cross-ownership.
Other Service Providers
    While the proposed, and now final, regulation addressed only the 
attribution of subsidies for cross-owned utility product providers, in 
the Proposed Rule Commerce acknowledged that it retains the authority 
to include subsidies received by certain cross-owned companies that are 
not utility product providers when it concludes the specific facts on 
the record warrant such inclusion.\241\
---------------------------------------------------------------------------

    \241\ See Proposed Rule, 89 FR at 57317-57318.
---------------------------------------------------------------------------

    For example, Commerce has at times had to determine whether to 
include subsidies received by cross-owned companies that provide land, 
employees, and manufacturing facilities, including plants and 
equipment, to the producer of subject merchandise. In that situation, 
if the record reflects that in order to manufacture or produce 
merchandise that is subject to an investigation or administrative 
review the cross-owned company requires a manufacturing facility and 
equipment, land upon which to place its manufacturing facilities, and/
or employees, Commerce may find that government subsidies provided to 
those cross-owned companies are providing, directly or indirectly, 
subsidies to the manufacture and production of subject merchandise as 
set forth within section 701(a) of the Act. In that case, Commerce 
might determine it appropriate to attribute the subsidies received by 
that provider to the combined sales of that provider and the sales of 
products sold by the producer of subject merchandise.
    Likewise, there may be situations in which Commerce determines that 
it is appropriate to include subsidies received by certain cross-owned 
service providers in its calculations. The preamble to the 1998 CVD 
Regulations refers to the situation in which a government provides a 
subsidy to a non-producing subsidiary such as a financial subsidiary 
and notes that consistent with Commerce's treatment of holding 
companies, the agency would attribute a subsidy to a non-producing 
subsidiary to the consolidated sales of the corporate group.\242\ 
Commerce normally does not include cross-owned general service 
providers in the attribution of subsidies.\243\ Where cross-owned 
service providers provide critical inputs into the manufacture and 
production of subject merchandise,\244\ Commerce may include cross-
owned service providers in the attribution of subsidies. In all cases, 
whether to include subsidies provided by cross-owned service providers 
in the attribution of subsidies is a case-specific determination.
---------------------------------------------------------------------------

    \242\ See 1998 CVD Regulations, 63 FR at 65402.
    \243\ See, e.g., Bottom Mount Combination Refrigerator-Freezers 
from the Republic of Korea: Final Affirmative Countervailing Duty 
Determination, 77 FR 17410 (March 26, 2012), and accompanying Issues 
and Decision Memorandum at Comment 22.
    \244\ For the purposes here, Commerce is using the term 
``input'' as defined in Sec.  351.503(b) and the 1998 CVD 
Regulations, 63 FR at 65359, where the term ``input'' is defined as 
money, a good, or a service.
---------------------------------------------------------------------------

    For example, if there is cross-ownership with a company providing 
R&D, tolling, or engineering services directly related to the 
production or assembly of subject merchandise, Commerce may determine 
that it is appropriate to attribute subsidies received by the service 
provider to the combined sales of that provider and the producer of 
subject merchandise. In the case of a cross-owned company performing 
R&D for the respondent company, Commerce might determine to include the 
subsidies provided by the government to that cross-owned R&D service 
provider. Similarly, if the respondent company has a cross-owned toller 
that assembles or manufactures the subject merchandise which is 
subsequently sold or exported by the respondent, Commerce might include 
subsidies provided by the government to that cross-owned toller.\245\ 
With respect to engineering services, while Commerce will not include 
subsidies to companies that provide only general engineering services 
to a respondent, the agency might include subsidies to those service 
providers if the services are directly related to the manufacture, 
production or export of subject merchandise. For example, in Fabricated 
Structural Steel from Canada, Commerce included cross-owned companies 
that provided engineering drafting services because these services were 
critical to the production and manufacture of subject merchandise.\246\ 
While the revisions to Sec.  351.525(b)(6) do not include subsidies to 
cross-owned providers of services or

[[Page 101745]]

subsidies to cross-owned providers of land, employees, and 
manufacturing facilities, the agency may attribute such subsidies in 
its CVD calculations where supported by the record.
---------------------------------------------------------------------------

    \245\ See Certain Fabricated Structural Steel from Canada: 
Preliminary Negative Countervailing Duty Determination and Alignment 
of Final Determination with Final Antidumping Duty Determination, 84 
FR 33232 (July 12, 2019), and accompanying preliminary decision 
memorandum at section VI. Subsidies Valuation.
    \246\ Id.
---------------------------------------------------------------------------

Transfer of a Subsidy
    Under the language for the transfer of subsidies (formerly Sec.  
351.525(b)(6)(v), now Sec.  351.525(b)(6)(vi)), if a cross-owned 
corporation receives a subsidy and transfers it to a producer of 
subject merchandise, Commerce will attribute the subsidy only to 
products produced by the recipient of the transferred subsidy. 
Moreover, when the cross-owned corporation that transferred the subsidy 
could fall under two or more of the attribution rules under Sec.  
351.525(b)(6), the transferred subsidy will be attributed solely to the 
recipient of the transferred subsidy as set forth under Sec.  
351.525(b)(6)(vi). With these revisions to the transfer attribution 
rule, as proposed in the Proposed Rule \247\ and codified in this final 
rule, Commerce clarifies that when a cross-owned corporation transfers 
a subsidy, that subsidy will be attributed only to the recipient of the 
subsidy.
---------------------------------------------------------------------------

    \247\ See Proposed Rule, 89 FR at 57318.
---------------------------------------------------------------------------

    In addition, the agency amended the title of Sec.  351.525 in the 
Proposed Rule from ``Transfer of subsidy between corporations with 
cross-ownership producing different products'' to ``Transfer of subsidy 
between corporations with cross-ownership'' to indicate that the 
transfer of a subsidy can be from any cross-owned corporation, not just 
from a cross-owned corporation that is a manufacturer.
General Questionnaire Reporting Requirements
    In the preamble to the Proposed Rules, Commerce set forth our 
normal practice for general questionnaire reporting requirements for 
cross-owned corporations. We are making no changes to the reporting 
requirements. We are providing these instructive guidelines to provide 
clarity to the public and to ensure consistency across our cases. For 
cross-owned corporations covered by Sec.  351.525(b)(6)(iv), Commerce 
will normally only request information or a questionnaire response for 
input producers that provide the input to the producer of subject 
merchandise during the POI or POR. Similarly, for cross-owned 
corporations that covered by Sec.  351.525(b)(6)(v), Commerce will 
normally only request information or a questionnaire response for 
cross-owned utility companies that provided electricity, natural gas or 
other utility products to the producer of subject merchandise during 
the POI or POR. In addition, for corporations producing subject 
merchandise under Sec.  351.525(b)(6)(ii) that were cross owned during 
the POI and POR, they must provide information and a questionnaire 
response covering the AUL of a firm's renewable physical assets even if 
one or more did not export subject merchandise to the United States 
during the POI or POR. Due to the ease of switching export shipments of 
subject merchandise between cross-owned corporations producing the 
subject merchandise and the potential for evasion of a CVD order, 
Commerce will analyze subsidies conferred to all cross-owned 
corporations producing subject merchandise and will calculate one CVD 
rate for these cross-owned entities. Commerce will also attribute 
subsidies provided during the AUL to all holding or parent companies 
that are cross owned with the producer of subject merchandise during 
the POI or POR. Finally, information on the transfer of non-recurring 
subsidies from a cross-owned company during the AUL must be reported, 
even if the company that transferred the subsidy to the producer of 
subject merchandise is no longer cross-owned during the POI or POR or 
has ceased operations.
Non-Attribution of Subsidies to Plants or Factories and General 
Standing for Finding Subsidies Tied
    In the Proposed Rule, Commerce proposed two additions to the 
attribution rules under Sec.  351.525(b) to codify two longstanding 
Commerce practices with respect to the attribution of subsidies to 
plants and factories and the tying of a subsidy.\248\ Commerce is now 
finalizing those changes as proposed. Under Sec.  351.525(b)(8), 
Commerce will not tie or attribute a subsidy on a plant- or factory-
specific basis. Under Sec.  351.525(b)(9), a subsidy will normally be 
determined to be tied to a product or market when the authority 
providing the subsidy (1) was made aware of, or otherwise had knowledge 
of, the intended use of the subsidy and (2) acknowledged that intended 
use of the subsidy prior to, or current with, the bestowal of the 
subsidy. Commerce is also modifying Sec.  351.525(b)(1) to reflect 
references to the above additions of paragraphs (8) and (9) to the 
regulation.
---------------------------------------------------------------------------

    \248\ Id., 89 FR at 57318-57319.
---------------------------------------------------------------------------

    In the preamble to the 1998 CVD Regulations, Commerce rejected 
comments proposing a regulation to allow the agency to tie or attribute 
subsidies on a plant- or factory-specific basis.\249\ Commerce's 
practice from at least the publication of the 1998 CVD Regulations, 
over 25 years ago, has been consistent--subsidies will not be 
attributed or tied on a plant- or factory-specific basis. Commerce is 
now codifying that practice in its regulations.
---------------------------------------------------------------------------

    \249\ See 1998 CVD Regulations, 63 FR at 65404.
---------------------------------------------------------------------------

    Commerce's approach to tying goes back to 1982. In Certain Steel 
Products from Belgium, Commerce stated that it determines that a grant 
is ``tied when the intended use is known to the subsidy giver and so 
acknowledged prior to or concurrent with the bestowal of the subsidy.'' 
\250\ When Commerce examines whether a subsidy is tied to a product or 
market, it has consistently used this test that will now be codified in 
Sec.  351.525(b)(9).
---------------------------------------------------------------------------

    \250\ See Final Affirmative Countervailing Duty Determinations; 
Certain Steel Products from Belgium, 47 FR 39304, 39316-17 
(September 7, 1982).
---------------------------------------------------------------------------

    Under this regulatory provision, Commerce will continue to 
carefully examine all claims that a subsidy is tied to a product or 
market, based on the case-specific facts on the record. To support a 
claim that a subsidy is tied, the documents on the record must 
demonstrate, in accordance with Sec.  351.525(b)(9), that the authority 
providing the subsidy explicitly acknowledged the intended purpose of 
the subsidy prior to, or concurrent with, the bestowal of the subsidy. 
Because the authority and the respondent company have access to all the 
program-specific documentation related to the bestowal of a subsidy, 
the authority and the respondent company will be required to submit 
these documents to support any claim that a subsidy is tied. In 
general, these documents include all application documents submitted by 
the respondent company to the authority providing the subsidy and all 
the subsidy approval documents from that authority. A mere claim that a 
subsidy is tied to a product or market, absent the submission of 
supporting documents, will not be sufficient.
    Because interested parties other than the respondent government and 
company may not have access to documents related to the application and 
approval of the subsidy, such interested parties may make arguments 
that a subsidy is tied to a product or market based on information that 
is reasonably available to them. The tying of R&D subsidies raises a 
number of difficult and challenging issues due to the complex and 
highly technical nature of certain R&D projects. Therefore, in general, 
the documents submitted to support a tying claim for R&D subsidies

[[Page 101746]]

must clearly set forth the products that are the focus of the R&D 
project.
    Finally, as Commerce noted in the preamble to the 1998 CVD 
Regulations, if subsidies that are allegedly tied to a particular 
product are in fact provided to the overall operations of a company, 
Commerce will continue to attribute the subsidy to all products 
produced by the company.\251\
---------------------------------------------------------------------------

    \251\ See 1998 CVD Regulations, 63 FR at 65400.
---------------------------------------------------------------------------

    The tying standard finalized in these regulations was initially 
developed in 1982 based on the conclusions of the Steel Issues Group, 
an interagency group whose deliberations were based on governing 
legislation and related administrative proceedings.\252\ In the 1982 
Subsidies Appendix \253\ Commerce explained that a subsidy is ``tied'' 
when the intended use is known to the subsidy giver and so acknowledged 
prior to or concurrent with the bestowal of the subsidy. Commerce has 
applied this standard ever since and is codifying it in these final 
regulations.\254\ In reaching this conclusion, the Steel Issues Group 
considered multiple sources to determine that the definition or 
identification of the intended purpose of a subsidy should be the 
primary consideration in determining if a subsidy is tied and how that 
subsidy should be allocated.\255\
---------------------------------------------------------------------------

    \252\ Richard Herring & Brien Stonebreaker, Evolution of 
Countervailing Duties (CVD) Regulations and Methodology in the 
United States, 30 Int'l Trade L. & Reg. 1 (2024) (CVD Evolution).
    \253\ The 1982 Subsidies Appendix was published as Appendix 2--
Methodology attached to the Final Affirmative Countervailing Duty 
Determinations; Certain Steel Products from Belgium, 47 FR 39304, 
39317 (September 7, 1982).
    \254\ See CVD Evolution at 5-9. The 1998 CVD Regulations, 63 FR 
at 65402-03, subsequently provided further discussion of the 
fungibility of money and the attribution and tying of subsidies.
    \255\ CVD Evolution at 5 and 9. As explained in CVD Evolution, 
the Steel Issues Group considered several sources in determining the 
correct approach to the tying of subsidies, including then section 
771(5) of the Act defining a subsidy as being provided ``directly or 
indirectly'' on the manufacture, production and exportation of 
merchandise imported into the United States and the legislative 
history to the Trade Agreements Act of 1979 (Public Law 96-39, 93 
Stat. 144, 96th Congress (July 26, 1979)), including the Senate 
Report (Senate Report of the Committee on Finance, Trade Agreements 
Act of 1979, S. Rep. No. 96-249 (July 17, 1979), at 85-86) and the 
House Report (House of Representatives Report of the Committee on 
Ways and Means, Trade Agreements Act of 1979, H.R. Rep. No. 96-317 
(July 3, 1979) at 74-75). It also considered Viscose Rayon Stable 
Fiber from Sweden, in which Commerce determined that government 
grants were provided specifically to develop the production of modal 
fiber, and, therefore, the benefits were allocated to the production 
of modal fiber and not to all products produced by the respondent as 
the fungibility of money would have supported. See Viscose Rayon 
Stable Fiber from Sweden; Final Results of Administrative Review of 
Countervailing Duty Order, 46 FR 60486 (December 10, 1981) (Viscose 
Rayon Stable Fiber from Sweden)).
---------------------------------------------------------------------------

    With respect to the codification of these regulations, one 
commenter expressed concerns as to the attribution regulation regarding 
subsidies to plants and factories and suggested that Commerce tie 
subsidies to plants and factories when an authority provides a subsidy 
to a specific plant or factory that does not produce subject 
merchandise.
    In 1998, Commerce expressed concern that if subsidies were to be 
tied to a particular plant or factory, interested parties could use 
that methodology in an attempt to escape the payment of appropriate 
countervailing duties by selling the production of a subsidized plant 
or factory domestically, while exporting from an unsubsidized 
factory.\256\ This commenter did not address this long-standing concern 
regarding manipulation of payment of countervailing duties through the 
use of tying subsidies to a firm's individual plants or factories. In 
addition, Commerce has had a consistent long-standing practice codified 
in 1998 that it will only tie subsidies on a product- or market-
specific basis.\257\ Notably, the commenter did not claim that Commerce 
should tie a subsidy to a specific plant or factory when that plant or 
factory produces only subject merchandise, nor did the commenter 
provide statutory or regulatory support for its request that Commerce 
change its long-standing position on this issue. Accordingly, Commerce 
has made no modifications to its regulation in this regard and will not 
expand the concept of typing subsidies on a plant- or factory-specific 
basis.
---------------------------------------------------------------------------

    \256\ See 1998 CVD Regulations, 63 FR at 65404.
    \257\ See current Sec.  351.525(b)(4) and (5).
---------------------------------------------------------------------------

    Another commenter suggested that Commerce should add a second tying 
standard in the regulation that would apply to the government provision 
of a good or service. Under this proposed second tying standard, the 
government provision of a good or service would be tied to a particular 
market or product if the authority providing the subsidy could have 
reasonably been expected to know the intended use of the subsidy. This 
party stated that it was proposing this special tying standard for the 
provision of a good or service because it was concerned that government 
authorities could exploit a loophole, wherein they would choose not to 
specify their knowledge of the use of the subsidy in order to avoid 
tying in a CVD proceeding.
    Commerce has not adopted this proposal for the following reasons. 
First, since Commerce developed its tying standard in 1982, the agency 
has only found subsidies to be tied based upon actual documentation 
that a subsidy is tied to a particular product or market. The 
documentation normally relied upon by Commerce were applications and 
approval documents for the conferred subsidy. Actual documentation for 
tying was required because Commerce wanted documented evidence that a 
subsidy is tied to help alleviate concerns that a respondent party was 
attempting to avoid the application of countervailing duties by making 
unsupported and ad hoc claims that a subsidy was tied to non-subject 
merchandise. In addition, Commerce required documented evidence because 
the agency did not want to be in a position of having to guess the 
intent of the authority providing the subsidy.
    Second, Commerce believes that creating a second standard for tying 
that does not require actual documentation creates a much larger 
loophole in our practice than the loophole the party is suggesting that 
Commerce close.
    Finally, the commenter provided no legal justification for creating 
two different and potentially conflicting standards for tying a subsidy 
to a particular product or market, especially where one standard is 
solely based upon the type of financial contribution.
Limiting the Number of Examined Cross-Owned Companies
    In addition to the other changes Commerce made to Sec.  351.525(b), 
Commerce also proposed to add text that would stipulate that when 
record information and resource availability supported limiting the 
number of cross-owned corporations examined, Commerce could do so 
before conducting a subsidy attribution analysis under any subsidy 
attribution provisions.\258\ Specifically, proposed Sec.  351.525(b)(1) 
stated that the Secretary ``may determine to limit the number of cross-
owned corporations examined under this section based on record 
information and resource availability.''
---------------------------------------------------------------------------

    \258\ See Proposed Rule, 89 FR 57318-57319.
---------------------------------------------------------------------------

    Commerce explained in the preamble to the Proposed Rule that it has 
determined in past cases that a limitation of examination was warranted 
when a respondent had a large number of cross-owned input suppliers and 
examination of each of those input suppliers would have been unduly 
burdensome based on the record information and available 
resources.\259\
---------------------------------------------------------------------------

    \259\ Id., 89 FR at 57319.
---------------------------------------------------------------------------

    Commerce received several comments on this addition to the 
regulation from domestic industries and law firms asserting that 
Commerce's limitation of

[[Page 101747]]

examination cross-owned companies was unnecessary, overly broad, and 
would likely result in inaccurate overall ad valorem subsidy rates 
because Commerce could not account for all countervailable benefits 
received by cross-owned companies if it limited the companies examined. 
Two commenters expressed concerns that respondents could avoid 
countervailable duties by separately incorporating dozens of affiliates 
and cross-owned entities assuming Commerce will excuse many of them on 
resource constraint grounds. Another commenter stated that such a 
limitation would be tantamount to allowing certain subsidies to go 
unremedied. That commenter asserted that Commerce could now consider 
transnational subsidy allegations after changes made to its regulations 
in March 2024, so it is even more important for Commerce to ensure that 
subsidies granted to all possible cross-owned entities are reflected in 
Commerce's CVD calculations. Yet another commenter claimed that the 
proposed change was not necessary because there are already 
restrictions on what entities Commerce considers to be cross-owned 
companies, and section 777A(c)(2) of the Act allows Commerce to limit 
the number of respondents it reviews in the first place.
    In addition, several of the domestic industries commenting on this 
issue claimed that limiting the number of cross-owned entities examined 
would be inconsistent with the Act. One commenter noted that sections 
701 and 775 of the Act instruct Commerce to countervail specific 
subsidies provided ``directly or indirectly'' to subject merchandise, 
including subsidies discovered during a proceeding, and not examining 
all of the cross-owned input suppliers would violate these provisions. 
Another commenter stated that section 777A(c)(2) of the Act may allow 
Commerce to limit respondents selected but does not further limit the 
cross-owned affiliates of a producer who may have subsidies which can 
be attributed to the producer.
    Three commenters argued that if Commerce kept the limitation 
language they would prefer to be deleted in the regulation, the agency 
should also codify criteria on how it would select cross-owned 
companies for examination. They pointed to Commerce's current 
respondent selection methodology, which is now being codified at Sec.  
351.109(c), as an example, and stated that Commerce should add 
additional clarification about the factors that Commerce will consider 
when determining which cross-owned corporations to examine. In that 
regard, one commenter requested that Commerce permit parties to submit 
public information regarding subsidies to each cross-owned company in 
question to ensure large subsidies provided to certain cross-owned 
entities are not left unexamined and take into consideration how 
significant an input is to the production of the subject merchandise 
when selecting cross-owned input suppliers or utility suppliers to 
examine.
    Finally, one commenter suggested that if Commerce continues to 
retain this limitation language in the regulation, it should adopt a 
rebuttable presumption that unexamined cross-owned entities receive 
subsidies at a rate attributable to subject merchandise that is an 
average of the rates calculated with respect to examined cross-owned 
entities.

Response

    After consideration of the comments on this issue, Commerce has 
determined to make no change to the proposed regulation. Some 
commenters downplayed Commerce's resource constraints, but in some 
cases Commerce lacks the resources to review every cross-owned entity 
in a given segment or proceeding. In fact, Commerce is sometimes faced 
with dozens of cross-owned entities to examine in CVD proceedings, but 
the public may be unaware of that fact if the names and number of 
cross-owned input suppliers, for example, are proprietary. For this 
reason, Commerce presumes that those commenters downplaying Commerce's 
resource constraints were unaware of such factual scenarios.
    Commerce is tasked by Congress to be the administrator of the CVD 
law. Commerce disagrees with certain commenters that because the Act 
expressly allows Commerce to select respondents when the number of 
potential respondents is too large to examine, the Act does not also 
permit Commerce to limit examination of certain transactions or 
entities when resource constraints and the record supported such a 
limitation. Indeed, it is common for Commerce to limit the number of 
transactions \260\ or affiliated parties reviewed in a case when the 
facts on the record warrant such limitation.\261\ This should not be 
surprising to anyone who practices before Commerce--it is the normal 
authority given to a Federal agency in charge of administering an 
administrative proceeding.
---------------------------------------------------------------------------

    \260\ See, e.g., 4th Tier Cigarettes from the Republic of Korea: 
Preliminary Affirmative Determination of Sales at Less Than Fair 
Value and Preliminary Negative Determination of Critical 
Circumstances, 85 FR 44281 (July 22, 2020), and accompanying issues 
and decision memorandum at 1 (explaining that ``Commerce limited 
home market sales reporting requirements to two sales channels'').
    \261\ See, e.g., Countervailing Duty Investigation of Certain 
Cold-Rolled Steel Flat Products from the Russian Federation: 
Preliminary Affirmative Countervailing Duty Determination, 
Preliminary Negative Critical Circumstances Determination, and 
Alignment of Final Determination with Final Antidumping 
Determination, 80 FR 79564 (December 22, 2015), and accompanying 
preliminary decision memorandum at 2 (stating that ``given the large 
number of NLMK's cross-owned affiliated input suppliers of scrap, it 
was not practicable to examine each of them. As such we determined 
to limit our examination to NLMK's two largest suppliers of scrap 
during the period of investigation'').
---------------------------------------------------------------------------

    Furthermore, the Act reflects that Commerce anticipated that 
Commerce could limit the number of cross-owned companies examined. By 
recognizing in section 777A(c)(2) of the Act that it may not be 
``practicable'' for Commerce to examine every potential respondent 
``because of the large number of exporters or producers involved in an 
investigation or review,'' Congress clearly appreciated that Commerce 
has limited resources and therefore some restrictions must be necessary 
at times when the burden is too large for the task at hand. In certain, 
but not all, cases, this becomes an issue when Commerce is faced with a 
large number of cross-owned entities.
    When Commerce examines cross-owned entities, such as cross-owned 
input suppliers, it must essentially conduct an additional, complete, 
investigation of the cross-owned entity or entities, including issuing 
questionnaires and supplemental questionnaires to examine the subsidies 
received by the cross-owned entities for purposes of attributing the 
subsidies received by the cross-owned entities to the respondent 
company. When Commerce has fully developed the record in this regard, 
it must then analyze the information and consider which of the 
attribution methodologies is appropriate for effectuating the purpose 
of identifying the subsidies to the production and exportation of the 
subject merchandise. Moreover, the inclusion of cross-owned entities in 
Commerce's analysis expands Commerce's verification obligations, 
increasing the resources that Commerce must devote to fulfilling its 
statutory obligations regarding verification.
    Commerce acknowledges that a general statement in the regulation 
that Commerce may limit the number of cross-owned corporations based on 
record information and resource availability does not provide guidance

[[Page 101748]]

on how Commerce will select those entities. Commerce agrees that it 
should take into consideration how significant an input is to the 
production of the subject merchandise when identifying cross-owned 
input suppliers or other cross-owned entities that meet the criteria 
for attribution of subsidies (i.e., parent companies, producers of 
subject merchandise) and also agrees that as a normal practice, similar 
to its respondent selection methodology, Commerce should try to 
identify the biggest and most relevant cross-owned entities as part of 
that process. However, every case is factually different, as is every 
product, and in some cases the cross-owned input suppliers that provide 
the most important input might not also be the largest cross-owned 
input suppliers. Accordingly, Commerce disagrees that at this time 
Commerce should codify the process by which it will identify cross-
owned entities in every case or provide a list of criteria that would 
either be too general to be useful or omit material criteria. Instead, 
the agency will explain its methodology on the record of each unique 
case in which it determines that the information before it and resource 
limitations will prevent Commerce from examining every cross-owned 
entity.
    In response to the comment that Commerce should allow domestic 
industries in every case the opportunity to place public information on 
the administrative record regarding the subsidization of each cross-
owned company in question to ensure that large subsidies are not left 
unexamined, that suggestion presumes that all of the cross-owned 
companies are publicly identified and that there is a reasonable number 
of cross-owned companies to allow for such an analysis. If, for 
example, there are 30 or 40 cross-owned companies, one can expect that 
the domestic industry would request that Commerce allow them an 
extensive amount of time to gather subsidy information. Commerce's 
investigations and reviews are restricted by statutory deadlines that 
cannot be met if Commerce sets forth procedures in the regulations that 
would lead to lengthy extensions. Accordingly, Commerce has determined 
not to codify a requirement in the regulation that allows interested 
parties to submit publicly available subsidy information on the cross-
owned entities in every case. Instead, Commerce will determine whether 
to allow such a procedure on a case-by-case basis, and when it does, 
will likely need to convey to the interested parties that they only 
have a limited amount of time in which to submit such information.
    Finally, Commerce has determined not to adopt a rebuttable 
presumption suggested by one commenter that unexamined cross-owned 
entities receive subsidies at a rate attributable to subject 
merchandise that is an average of the rates calculated with respect to 
examined cross-owned entities. Although Commerce has limited the number 
of cross-owned entities that it has reviewed in past cases, it has not 
done so with frequency, and thus lacks enough experience in limiting 
review of such entities to serve as the basis for such a presumption.
Trading Companies
    Commerce is finalizing Sec.  351.525(c), which pertains to trading 
companies, as proposed.\262\ When Commerce first codified its trading 
company practice in 1998, trading companies were not selected as 
respondents in Commerce's investigations or administrative reviews. 
However, when Commerce started using CBP import data to identify the 
largest producers/exporters of subject merchandise for purposes of 
selecting respondents, Commerce discovered that in many cases, the 
largest exporters were trading companies. Commerce used the 1998 
trading company regulation to cumulate the subsidies provided to the 
trading company with those provided to the producers from which the 
trading company has sourced the subject merchandise that it exported to 
the United States but did not set forth a detailed methodology.\263\ To 
provide consistency and clarity with respect to its cumulation 
methodology when a trading company is selected as a respondent, 
Commerce is now adding this methodology to the trading company 
regulation as proposed.
---------------------------------------------------------------------------

    \262\ See Proposed Rule, 89 FR at 57319.
    \263\ Commerce's practice of cumulating subsidies provided to 
trading companies with the subsidies provided to the producer of 
subject merchandise began in 1984 with the Final Affirmative 
Countervailing Duty Determination; Oil Country Tubular Goods from 
Korea, 49 FR 46776, 46777 (November 28, 1984). When Commerce 
codified this practice in Commerce's current CVD regulations in 
1998, Commerce did not set forth a detailed methodology but stated 
that the subsidy benefits provided to trading companies would be 
cumulated with the subsidy benefits provided to the producer of the 
subject merchandise. See 1998 CVD Regulations, 63 FR at 65404. The 
preamble to the trading company regulation did not provide guidance 
as to how these subsidy benefits were to be cumulated. Id. While 
this approach provided Commerce with some flexibility as to how the 
subsidy benefits provided to trading companies were to be cumulated 
with the subsidy benefits conferred to the producer of subject 
merchandise, this lack of clarity in the language of the regulation 
also led to inconsistencies in the application of the methodology.
---------------------------------------------------------------------------

    In Sec.  351.525(c)(i) through (iii), Commerce has included 
language stating that when the producer of subject merchandise exports 
through a trading company, Commerce will pro-rate the subsidy rate 
calculated for the trading company by using the ratio of the producer's 
total exports of subject merchandise to the United States sold through 
the trading company to the producer's total exports of subject 
merchandise to the United States and add the resultant rate to the 
producer's calculated subsidy rate. If the producer exports subject 
merchandise to the United States through more than one trading company, 
this calculation would be performed for each trading company and added, 
or cumulated, to the producer's calculated subsidy rate. This 
modification to the regulation provides consistency in the application 
of the trading company regulation and provides clarity to the public 
with respect to this practice.\264\
---------------------------------------------------------------------------

    \264\ See, e.g., Certain Cold-Rolled Steel Flat Products from 
the Republic of Korea: Final Results of Countervailing Duty 
Administrative Review, 2019, 87 FR 20821 (April 8, 2022), and 
accompanying Issues and Decision Memorandum at Comment 6.
---------------------------------------------------------------------------

    Commerce received a comment requesting that we modify the proposed 
language for this provision. The commenter suggested that in situations 
where the trading company is cross-owned with the producer of the 
subject merchandise, the Secretary should use a trading company ratio 
of one to cumulate the subsidies provided to the trading company 
instead of pro-rating the subsidy rate calculated for the trading 
company by using the ratio of the producer's total exports of subject 
merchandise to the United States sold through the trading company 
divided by the producer's total exports of subject merchandise to the 
United States. The commenter stated that the use of a trading company 
ratio of one would be consistent with Commerce's obligation pursuant to 
section 701(a) of the Act to establish an ad valorem rate equal to the 
countervailable subsidies conferred on the subject merchandise.
    Commerce has not adopted this suggestion because the use of a 
trading company ratio of one would, in fact, be inconsistent with 
Commerce's obligation pursuant to section 701(a) of the Act to 
establish an ad valorem rate equal to the countervailable subsidies 
conferred on the manufacture, production, and export of subject 
merchandise because the full amount of the calculated subsidies 
conferred upon the trading company would be cumulated or added onto the 
subsidy

[[Page 101749]]

rate calculated for the producer/respondent.
    For example, assume that a producer/respondent exports all its 
subject merchandise to the United States through four cross-owned 
trading companies, one-fourth (25 percent) of its exports go through 
each of the four cross-owned trading companies, and each of the four 
trading companies has a calculated subsidy rate of two percent. 
Therefore, because each cross-owned trading company has a calculated 
subsidy rate of two percent, every export of subject merchandise to the 
United States by the producer/exporter through any of these trading 
companies would be subsidized by two percent at the trading company 
level.
    Under the methodology that Commerce is codifying under this 
regulation, the agency in determining the trading company subsidy rate 
that will be cumulated (added onto) the producer's rate will be 
determined by pro-rating the subsidy rate calculated for the trading 
company by using the ratio of the producer's total exports of subject 
merchandise to the United States sold through the trading company 
divided by the producer's total exports of subject merchandise to the 
United States. Thus, in the example above, because 25 percent of the 
producer's exports of subject merchandise to the United States is 
exported through each of the four cross-owned trading companies, 
Commerce will calculate 0.25 of the two percent subsidy rate calculated 
for each of the four trading companies (2.00 x 0.25 = 0.50). It will 
then take this pro-rated subsidy amount of 0.50 calculate for each of 
the four trading companies and add each of the amounts onto the 
producer's CVD rate. Adding the calculated 0.50 subsidy rate four times 
to account for each of the trading companies will derive a total of two 
percent that will be cumulated (added) onto the producer's calculated 
subsidy rate to reflect the additional subsidies conferred on the 
exports of subject merchandise to the United States at the trading 
company level. This calculation methodology that Commerce is codifying 
in this regulation accurately calculates the level of trading company 
subsidies.
    Under the proposal to use a ratio of one for this calculation, the 
full amount of the calculated subsidy rate for each of the four cross-
owned trading companies would be cumulated and added onto the subsidy 
rate even though each of the four cross-owned trading company only 
exported 25 percent of the producer's total exports of subject 
merchandise to the United States. Instead of the correct ratio used by 
Commerce under this regulation, which is 0.25 percent, the proposal by 
this commenter to use a ratio of one assumes that each of the four 
trading companies exported 100 percent of the producer's exports of 
subject merchandise to the United States. This ratio would result in 
the full two percent subsidy rate calculated for each of the four 
trading companies to be separately added onto the producer's subsidy 
rate. Thus, the calculation proposed by this commenter would be: two 
multiplied by one, plus two multiplied by one, plus two multiplied by 
one, plus two multiplied by one, equals eight, (2 x 1 + 2 x 1 + 2 x 1 + 
2 x 1 = 8). Therefore, under this party's proposed methodology, 
Commerce would add an additional subsidy rate of eight percent onto the 
producer/respondent's subsidy rate instead of the accurate two percent 
because each of the four cross-owned trading companies had an 
individual subsidy rate that was calculated at two percent. In other 
words, although the CVD rate determined for each entity was two 
percent, in the end under the proposed calculation, Commerce would have 
to cumulate those rates four times because there were four trading 
companies and would thus apply an additional eight percent subsidy rate 
onto the calculated producer's subsidy instead of the accurately 
calculated two percent rate. Such a calculation is inconsistent with 
the directive of section 701(a) of the Act to establish an ad valorem 
rate equal to the countervailable subsidies conferred on the subject 
merchandise. Accordingly, Commerce has not adopted this proposal in the 
final rule.
    That commenter also claims that pro-rated ratios for attribution 
under this regulation are contrary to the well-established concept of 
control of corporate decisions between cross-owned companies, as the 
trading company (exporter) and producer should be considered the same 
corporate entity. However, the comment appears to be based on a 
misinterpretation of the attribution rules set forth in Sec.  351.525. 
The paragraph of that regulation addressing corporations with cross-
ownership, Sec.  351.525(b)(6), specifies specific criteria for the 
types of cross-owned companies that would fall within this cross-
ownership subsection of our attribution regulation; and the attribution 
regulations are clear that not all cross-owned companies, even cross-
owned input producers, would fall within Sec.  351.525(b)(6).\265\
---------------------------------------------------------------------------

    \265\ See, e.g., 1998 CVD Regulations, at 63 FR 65401.
---------------------------------------------------------------------------

    More importantly, Commerce's trading company regulation and 
methodology is not part of the cross-owned attribution rules found at 
Sec.  351.525(b)(6) because the attribution of subsidies conferred upon 
trading companies is not based upon cross-ownership; instead, it is 
based upon the requirements set forth within section 701(a) of the Act 
that Commerce must determine the amount of countervailable subsidies 
conferred upon the manufacture, the production, and the exportation of 
subject merchandise. Therefore, Commerce's trading company regulation 
is derived from the statutory requirement to determine the amount of 
countervailable subsidies on the exportation of subject merchandise and 
was not derived from the concept of cross-ownership. Indeed, Commerce 
first implemented its trading company methodology in 1984,\266\ a full 
decade before contemplating the attribution of subsidies from 
affiliated or cross-owned companies.
---------------------------------------------------------------------------

    \266\ See Final Affirmative Countervailing Duty Determination: 
Oil Country Tubular Goods from Korea, 49 FR 46776 (November 28, 
1984).
---------------------------------------------------------------------------

Ad Valorem Subsidy Rate in Countries With High Inflation
    With respect to Sec.  351.525(d), Commerce has observed instances 
where the country whose imports were the subject of investigation or 
review was experiencing high inflation during either the POI or POR or 
had experienced levels of high inflation during the AUL period of the 
firm's renewable physical assets when the government had provided large 
non-recurring subsidies such as equity infusions to the respondent 
company. In those cases, Commerce addressed the high inflation rate to 
prevent distortions in the calculated ad valorem subsidy rate. However, 
the agency's treatment of high inflation has been inconsistent. For 
example, in cases on CTL Plate from Mexico in 2000, 2001, and 
2004,\267\ Turkish Pasta \268\ in 2001, Steel Wire

[[Page 101750]]

Rod from Turkey \269\ in 2002, Cold-Rolled Steel from Brazil \270\ in 
2002, and CTL Plate from Mexico Reviews \271\ in 2004, Commerce made 
adjustments to its subsidy calculations to account for periods of high 
inflation but did not do so in Honey from Argentina \272\ in 2004 and 
Biodiesel from Argentina \273\ in 2017.\274\ Therefore, to clarify its 
practice and to improve consistency as to when the agency will adjust 
its subsidy calculations for high inflation, Commerce proposed new 
paragraph Sec.  351.525(d) in the Proposed Rule to provide that 
Commerce would normally adjust its subsidy calculations for when 
inflation is higher than 25 percent per annum during the relevant 
period.\275\ Commerce received only comments in support of this 
provision, so is now codifying it in this final rule. Commerce has used 
a variety of methodologies to account for high inflation and Sec.  
351.525(d) will allow for any of them to be used in the appropriate 
context. Consistent with Steel Wire Rod from Turkey, Commerce is 
defining ``high inflation'' as an annual inflation rate above 25 
percent.
---------------------------------------------------------------------------

    \267\ See Certain Cut-to-Length Carbon Steel Plate from Mexico: 
Final Results of Administrative Review, 65 FR 13368 (March 13, 2000) 
(CTL Plate from Mexico 2000), and accompanying Issues and Decision 
Memorandum at 3-4; see also Certain Cut-to-Length Carbon Steel Plate 
from Mexico: Final Results of Administrative Review, 66 FR 14549 
(March 13, 2001) (CTL Plate from Mexico 2001), and accompanying 
Issues and Decision Memorandum at 5-6; and Certain Cut-to-Length 
Carbon Steel Plate from Mexico: Final Results of Administrative 
Review, 69 FR 1972 (January 13, 2004) (CTL Plate from Mexico 2004) 
(CTL Plate from Mexico 2004), and accompanying Issues and Decision 
Memorandum at 4.
    \268\ See Certain Pasta from Turkey: Final Results of 
Countervailing Duty Administrative Review, 66 FR 64398 (December 13, 
2001), and accompanying Issues and Decision Memorandum at 3.
    \269\ See Final Negative Countervailing Duty Determination: 
Carbon and Certain Alloy Steel Wire Rod from Turkey, 67 FR 55815 
(August 30, 2002), and accompanying Issues and Decision Memorandum 
at 3 (Steel Wire Rod from Turkey).
    \270\ See Final Affirmative Countervailing Duty Determination: 
Certain Cold-Rolled Carbon Steel Flat Products from Brazil, 67 FR 
621128 (October 3, 2002), and accompanying Issues and Decision 
Memorandum (Cold-Rolled Carbon Steel Flat Products from Brazil) at 
7.
    \271\ See CTL Plate from Mexico 2000 Issues and Decision 
Memorandum at 3-4; see also CTL Plate from Mexico 2001 Issues and 
Decision Memorandum at 5-6; and CTL Plate from Mexico 2004 Issues 
and Decision Memorandum at 4.
    \272\ See Honey from Argentina: Final Results of Countervailing 
Duty Administrative Review, 69 FR 29518 (May 24, 2004) (Honey from 
Argentina), and accompanying Issues and Decision Memorandum (making 
no adjustments to account for high inflation).
    \273\ See Biodiesel from the Republic of Argentina: Final 
Affirmative Countervailing Duty Determination, 82 FR 53477 (November 
16, 2017) (Biodiesel from Argentina), and accompanying Issues and 
Decision Memorandum (making no adjustments to account for high 
inflation).
    \274\ Neither Honey from Argentina nor Biodiesel from Argentina 
reference high inflation in Argentina, although the companion 
antidumping cases completed at the same time made adjustments to 
account for high inflation. See Honey from Argentina: Final Results 
of Antidumping Duty Administrative Review, 69 FR 30283 (May 27, 
2004), and accompanying Issues and Decision Memorandum at Comment 4; 
see also Biodiesel from Argentina: Final Determination of Sales at 
Less Than Fair Value and Final Affirmative Determination of Critical 
Circumstances, in Part, 83 FR 8837 (March 1, 2018), and accompanying 
Issues and Decision Memorandum at Comment 6.
    \275\ See Proposed Rule, 89 FR at 57319-57320.
---------------------------------------------------------------------------

    In Steel Wire Rod from Turkey, the annual inflation rate in Turkey 
exceeded 25 percent during the POI. Therefore, to prevent any 
distortions in its calculated subsidy rate due to the high level of 
inflation, Commerce adopted a methodology to adjust for inflation 
during the POI. Adjusting the subsidy benefits and the sales figures 
for inflation neutralizes any potential distortion in Commerce's 
subsidy calculations caused by high inflation and the timing of the 
receipt of the subsidy. To calculate the ad valorem subsidy rates for 
each program Commerce indexed the benefits received in each month and 
the sales made in each month to the last year of the POI/POR to 
calculate inflation-adjusted values for benefits and the relevant sales 
denominators. In these high inflation calculation adjustments, Commerce 
used the changes in the Wholesale Price Index for Turkey as reported in 
the IMF's International Financial Statistics. In other cases where a 
country was experiencing high inflation, the agency used government-
published indexes that are used by companies to adjust their accounting 
records on a monthly basis in its analysis.\276\
---------------------------------------------------------------------------

    \276\ See, e.g., Final Affirmative Countervailing Determination; 
Steel Wheels from Brazil, 54 FR 15523, 15526 (April 18, 1989).
---------------------------------------------------------------------------

    Commerce has also investigated non-recurring subsidies, normally 
the provision of equity, where the provision of the subsidy occurred 
during a period within the AUL in which the country experienced high 
inflation. The issue before Commerce in those cases was how to account 
for the periods of high inflation to accurately calculate the benefit. 
In Cold-Rolled Steel from Brazil, Commerce found that from 1984 through 
1994, Brazil experienced persistent high inflation.\277\ There were no 
long-term fixed-rate commercial loans made in domestic currencies 
during those years with interest rates that could be used as discount 
rates. Commerce determined that the most reasonable way to account for 
the high inflation in the Brazilian economy through 1994, given the 
lack of an appropriate Brazilian currency discount rate, was to convert 
values of the equity infusions provided in Brazilian currency into U.S. 
dollars.\278\ If the date of receipt of the equity infusion was 
provided, Commerce applied the exchange rate applicable on the day the 
subsidies were received or, if that date was unavailable, the average 
exchange rate in the month the subsidies were received.\279\ Then 
Commerce applied as the discount rate a contemporaneous long-term 
dollar lending rate in Brazil.\280\ Therefore, for Commerce's discount 
rate, it used data for U.S. dollar loans in Brazil for long-term, non-
guaranteed loans from private lenders, as published in the World Bank 
Debt Tables: External Finance for Developing Countries.\281\
---------------------------------------------------------------------------

    \277\ See, e.g., Cold-Rolled Carbon Steel Flat Products from 
Brazil at 7.
    \278\ Id.
    \279\ Id.
    \280\ Id.
    \281\ Id.
---------------------------------------------------------------------------

    In three reviews of CTL Plate from Mexico, Commerce determined, 
based on information from the Government of Mexico (GOM), that Mexico 
experienced significant inflation from 1983 through 1988 and 
significant, intermittent inflation during the period 1991 through 
1997.\282\ In accordance with past practice, because Commerce found 
significant inflation in Mexico and because the respondent AHMSA 
adjusted for inflation in its financial statements, Commerce made 
adjustments, where necessary, in each of those reviews to account for 
inflation in the benefit calculations.\283\ Because Mexico experienced 
significant inflation during only a portion of the 15-year allocation 
period, had Commerce either indexed for the entire period or converted 
the non-recurring benefits into U.S. dollars at the time of receipt 
(i.e., dollarization) for use in Commerce's calculations, such actions 
would have inflated the benefit from these infusions by adjusting for 
inflationary as well as non-inflationary periods. Thus, in the CTL 
Plate from Mexico \284\ reviews, Commerce used a loan-based methodology 
instead to reflect the effects of intermittent high inflation.
---------------------------------------------------------------------------

    \282\ See CTL Plate from Mexico 2000 Issues and Decision 
Memorandum at 3-4; see also CTL Plate from Mexico 2001 Issues and 
Decision Memorandum at 5-6; and CTL Plate from Mexico 2004 Issues 
and Decision Memorandum at 4.
    \283\ See CTL Plate from Mexico 2000 Issues and Decision 
Memorandum at 3-4; see also CTL Plate from Mexico 2001 Issues and 
Decision Memorandum at 5-6; and CTL Plate from Mexico 2004 Issues 
and Decision Memorandum at 4.
    \284\ See CTL Plate from Mexico 2000 Issues and Decision 
Memorandum at 3-4; see also CTL Plate from Mexico 2001 Issues and 
Decision Memorandum at 5-6; and CTL Plate from Mexico 2004 Issues 
and Decision Memorandum at 4.
---------------------------------------------------------------------------

    The methodology Commerce used in the CTL Plate from Mexico reviews 
assumed that, in lieu of a government equity infusion/grant, a company 
would have had to take out a 15-year loan that was rolled over each 
year at the prevailing nominal interest rate. The benefit in each year 
of the 15-year period equaled the principal plus interest payments 
associated with the loan at the nominal interest rate prevailing in 
that year. Because Commerce assumed that an equity infusion/grant given 
was equivalent to a

[[Page 101751]]

15-year loan at the current rate in the first year, a 14-year loan at 
current rates in the second year and so on, the benefit after the 15-
year period would be zero, just as with Commerce's grant amortization 
methodology. Because nominal interest rates were used, the effects of 
inflation were already incorporated into the benefit. The use of this 
methodology had been upheld by the Federal Circuit in British Steel 
III.\285\ Commerce used the loan-based methodology in the CTL Plate 
from Mexico reviews, described above, for all non-recurring, peso-
denominated grants received since 1987.
---------------------------------------------------------------------------

    \285\ British Steel plc v. United States, 127 F.3d 1471 (Fed. 
Cir. 1997) (British Steel III).
---------------------------------------------------------------------------

    It is Commerce's intent that Sec.  351.525(d) will provide enhanced 
consistency in the treatment of economies experiencing high inflation. 
To implement this methodology for countries experiencing high inflation 
during the POI or POR, Commerce normally will follow the methodology 
used in Steel Wire Rod from Turkey. For cases where the high inflation 
occurred during the AUL period at the time of a provision of equity or 
other nonrecurring subsidies, Commerce may rely on the methodology 
employed in CTL Plate from Mexico or Cold-Rolled Steel from Brazil.

24. Commerce has Made Certain Revisions to Proposed Sec.  351.526, the 
Regulation Covering Subsidy Extinguishment From Changes in Ownership

    Under current Sec.  351.526, Commerce may consider a program-wide 
change to lower the cash deposit rate from the subsidy rate that was 
calculated for the firm during the POI or POR in establishing an 
estimated countervailing duty cash deposit rate if certain conditions 
are met. While program-wide changes that result in the adjustment of 
the cash deposit rate are extremely rare, Commerce has eliminated the 
program-wide change regulation because it treats differently the 
interests of the interested parties by providing an avenue only for 
respondent-interested parties to lower the cash deposit rate but no 
comparable avenue for the U.S. industry, a situation that Commerce has 
concluded is fundamentally unfair and at odds with the neutral 
application of the countervailing duty law. Moreover, nothing in the 
Act requires the practice of recognizing a program-wide change for this 
purpose. Indeed, section 705(c)(1)(B)(ii) of the Act indicates that the 
cash deposit rate shall be based on the estimated countervailable 
subsidy rate and makes no reference to exceptions for changes of any 
sort to such subsidy programs.
    The only comments Commerce received on this change supported the 
elimination of the program-wide change regulation. Furthermore, in 
deleting the program-wide changes regulation, Commerce is not seeking 
to change its practice with respect to determining when an investigated 
program is terminated. Commerce will maintain its long-standing 
practice to find a program to be terminated only if the termination is 
effectuated by an official act, such as the enactment of a statute, 
regulation, or decree, or the termination date of the program is 
explicitly set forth in the statute, regulation, or decree that 
established the program.\286\
---------------------------------------------------------------------------

    \286\ See Drawn Stainless Steel Sinks from the People's Republic 
of China: Final Results of the Expedited First Sunset Review of the 
Countervailing Duty Order, 83 FR 35212 (July 25, 2018), and 
accompanying Issues and Decision Memorandum at ``Likelihood of 
Continuation or Recurrence of a Countervailable Subsidy'' (``[I]n 
order to determine whether a program has been terminated, we will 
consider the legal method by which the government eliminated the 
program and whether the government is likely to reinstate the 
program. Commerce normally expects a program to be terminated by 
means of the same legal mechanism used to institute it. Where a 
subsidy is not bestowed pursuant to a statute, regulation or decree, 
Commerce may find no likelihood of continued or recurring 
subsidization if the subsidy in question was a one-time, company-
specific occurrence that was not part of a broader government 
program.'').
---------------------------------------------------------------------------

    Moreover, Commerce will continue its practice of investigating 
terminated programs that potentially provided a benefit during the POI 
or POR. For example, if Commerce was reviewing a company during a POR 
with a calendar year of 2023, but during the underlying CVD 
investigation Commerce found that a program providing grants for the 
purchase of capital equipment was terminated in 2016, Commerce might 
still include this terminated program in the 2023 administrative review 
if the AUL, and therefore the benefit stream of the grant, lasted to or 
beyond the review period. Depending on the AUL, under this practice 
Commerce would continue to include that program in all future 
administrative reviews until the non-recurring benefit was fully 
allocated.
    In the place of the removed Sec.  351.526, Commerce proposed adding 
a new regulation that would address subsidy extinguishment from changes 
in ownership.\287\ After considering comments on this regulation, 
Commerce has determined to finalize it with some revisions. Section 
771(5)(f) of the Act provides that a change in ownership of all or part 
of a foreign enterprise or the productive assets of a foreign 
enterprise does not, by itself, require a determination that a past 
countervailable subsidy received by the enterprise no longer continues 
to be countervailable, even if the change in ownership is accomplished 
through an arm's length transaction. The SAA explains that ``the term 
`arm's-length transaction' means a transaction negotiated between 
unrelated parties, each acting in its own interest, or between related 
parties such that the terms of the transaction are those that would 
exist if the transaction had been negotiated between unrelated 
parties.'' \288\ In addition, the SAA states that ``[s]ection 771(5)(F) 
is being added to clarify that the sale of a firm at arm's length does 
not automatically, and in all cases, extinguish any prior subsidies 
conferred'' because the ``issue of the privatization of a state-owned 
firm can be extremely complex and multifaceted.'' \289\
---------------------------------------------------------------------------

    \287\ See Proposed Rule, 89 FR at 5732-57322.
    \288\ See SAA at 258.
    \289\ Id. (``While it is the Administration's intent that 
Commerce retain the discretion to determine whether, and to what 
extent, the privatization of a government-owned firm eliminates any 
previously conferred countervailable subsidies, Commerce must 
exercise this discretion carefully through its consideration of the 
facts of each case and its determination of the appropriate 
methodology to be applied.'').
---------------------------------------------------------------------------

    Consistent with the Act and SAA, and against a broader background 
of domestic litigation and WTO dispute settlement findings, in 2003 
Commerce published a modification to its change-in-ownership 
methodology (CIO Modification Notice) for sales by a government to 
private buyers (i.e., privatizations).\290\ In a subsequent CVD 
proceeding in 2004 involving pasta from Italy, Commerce extended that 
methodology to address sales by a private seller to a private buyer 
(private-to-private sales).\291\ The agency has implemented the 
methodology set forth in Pasta From Italy in numerous CVD proceedings 
since.
---------------------------------------------------------------------------

    \290\ See Notice of Final Modification of Agency Practice Under 
Section 123 of the Uruguay Round Agreements Act, 68 FR 37125 (June 
23, 2003) (CIO Modification Notice).
    \291\ See Certain Pasta from Italy: Final Results of the Seventh 
Countervailing Duty Administrative Review, 69 FR 70657 (December 7, 
2004) (Pasta from Italy), and accompanying Issues and Decision 
Memorandum at 2-5.
---------------------------------------------------------------------------

    Commerce is now codifying that methodology in Sec.  351.526(a), 
which establishes the presumption that non-recurring subsidies continue 
to benefit a recipient in full over an allocation period determined 
consistent with Commerce's regulations,\292\ notwithstanding an 
intervening change in ownership. However, under Sec.  351.526(b), the 
recipient is able to rebut the presumption of the existence

[[Page 101752]]

of the subsidy by demonstrating with sufficient evidence that a change 
in ownership occurred in which the seller sold all (or substantially 
all) of its company assets, retained no control of the company and its 
assets, and, in the case of government-to-private sales, that the sale 
was either at an arm's length transaction for fair market value, or, in 
the case of a private-to-private sale, was an arm's-length transaction 
and no one demonstrated that the sale was not for fair market value.
---------------------------------------------------------------------------

    \292\ See Sec.  351.524.
---------------------------------------------------------------------------

    Section 351.526(b)(2) and (3) set forth the factors Commerce 
considers in determining whether the transactions at issue were 
conducted at arm's-length and for fair market value. In determining if 
the transactions were for fair market value, proposed Sec.  
351.526(b)(3)(ii) sets forth a non-exhaustive list of considerations 
including (1) whether the seller performed or obtained an objective 
analysis in determining the appropriate sales price and implemented 
recommendations pursuant to an objective analysis for maximizing its 
return on the sale; (2) whether the seller imposed restrictions on 
foreign purchasers or purchasers from other industries, overly 
burdensome or unreasonable bidder qualification requirements, or any 
other restrictions that artificially suppressed the demand for or the 
purchase price of the company; (3) whether the seller accepted the 
highest bid reflecting the full amount that the company or its assets 
were actually worth under the prevailing market conditions and whether 
the final purchase price was paid through monetary or close equivalent 
compensation; and (4) whether there were price discounts or other 
inducements in exchange for promises of additional future investment 
that private, commercial sellers would not normally seek and, if so, 
whether such committed investment requirements were a barrier to entry 
or in any way distorted the value that bidders were willing to pay.
    Section 351.526(b)(4) states that Commerce will not find the 
presumption of continued benefits during the POR to be rebutted if an 
interested party has demonstrated that, at the time of the change in 
ownership, the broader market conditions necessary for the transaction 
price to accurately reflect the subsidy benefit were not present or 
were severely distorted by government action or inaction such that the 
transaction price was meaningfully different from what it would have 
been absent the distortive government action or inaction. Section 
351.526(b)(i) and (ii) provide that Commerce may consider certain 
fundamental conditions and legal and fiscal incentives provided by the 
government in reaching this determination.
    Finally, Sec.  351.526(c) addresses the situation in which an 
interested party has rebutted the presumption of continued benefits 
during the POR. In that case, the full amount of pre-transaction 
subsidy benefits, including the benefits of any concurrent subsidy 
meeting certain criteria, would be found to be extinguished and 
therefore not countervailable. Under Sec.  351.526(c)(2), concurrent 
subsidies would be defined as ``subsidies given to facilitate, 
encourage, or that are otherwise bestowed concurrent with a change in 
ownership.'' The same provision provides three criteria that Commerce 
normally will consider in determining if the value of a concurrent 
subsidy has been fully reflected in the fair market value prices of an 
arm's-length change in ownership and is therefore fully extinguished.
    Commerce received multiple comments on this regulation, including 
those that agreed with codifying Commerce's existing practice in this 
area in full, as proposed. One commenter noted that establishing a 
rebuttable presumption that non-recurring subsidies continue to provide 
a benefit over the allocation period notwithstanding changes in 
ownership through government-to-private or private-to-private sales is 
an effective way to address the issue, since respondents are in the 
best position to provide the information needed to show whether or not 
recipients continue to benefit from a subsidy after a change in 
ownership.
    Another commenter suggested that Commerce should clarify certain 
procedural requirements for parties seeking to challenge Commerce's 
baseline presumption. Noting concerns regarding respondents' 
questionnaire responses, the commenter suggested that Commerce should 
clarify that the agency will not consider extinguishment arguments in 
the absence of timely disclosure in the initial questionnaire of a 
relevant change in ownership and an intent to challenge the baseline 
presumption, followed by complete responses to the change-in-ownership 
appendix from both the respondent and the foreign government. The 
commenter stated that this denial of consideration of extinguishment 
arguments should apply in that situation whether or not Commerce has 
found any non-recurring subsidies in previous segments of the 
proceeding.
    This commenter also suggested that to address situations in which 
the foreign government undertakes a program of debt forgiveness in 
order to make otherwise non-viable assets viable and thereby enable the 
acquisition and continued operation of production capacity that would 
otherwise have been forced to exit the market, Commerce should add a 
fourth enumerated incentive, as Sec.  351.526(b)(4)(ii)(D), for ``the 
forgiveness or modification of debts or other liabilities by 
government-owned or directed financial institutions.''
    A third commenter stated that Commerce should modify Sec.  
351.526(c)(1) to clarify that finding that a program has been 
extinguished does not affect whether a program is countervailable prior 
to the change in ownership and therefore the program should still be 
countervailed and attributed to sales made prior to the change in 
ownership.
    For concurrent subsidies, another commenter stated that Commerce 
should modify the identified criteria regarding extinguishment to 
address subsidies bestowed prior to initiation of the bidding process 
instead of prior to a sale because basing a determination for 
concurrent subsidies on whether the subsidy was bestowed prior to sale 
would allow parties to manipulate the analysis based on when the sale 
occurred.
    A fifth commenter stated that the rebuttal presumption, articulated 
in Sec.  351.526(a)(1) that Commerce will presume that non-recurring 
subsidies continue to benefit a recipient in full over an allocation 
period . . . notwithstanding an intervening change in ownership--is not 
required by Act and should be more specifically restricted by 
distinguishing between transactions involving a government-to-private 
sale or a private-to-private sale. That commenter stated that private-
to-private sales do not require the same scrutiny, since those 
transactions are more than likely to be at arm's length. Thus, when a 
party has demonstrated that it has satisfied Sec.  351.526(b)(1), by 
showing that (i) the seller retains no control of the company or 
assets, and (ii) the sale was at arm's length, the commenter stated 
that Commerce's inquiry should end. According to the commenter, this 
approach is consistent with Sec.  351.526(b)(1)(ii), which states that 
the burden should be on the petitioning party with sufficient evidence 
that the sale was not for fair market value. The commenter stated that 
this approach should be reflected in Commerce's ``Change-in-ownership

[[Page 101753]]

appendix'' and any other practice that addresses change in ownership.
    Finally, a sixth commenter expressed concerns that the non-
exhaustive factors Commerce may consider in analyzing market 
distortion's effect on the presumption of continued benefits 
articulated in Sec.  351.526(b)(4), are overly broad and ill-defined. 
That commenter suggested that Commerce should promulgate a more 
detailed standard to define the level of ``severely distorted'' and 
what constitutes a ``properly functioning market.'' Further, that 
commenter expressed concerns about any arbitrary interpretation of 
distortion from country to country based on each country's regulatory 
environment.
Response
    As an initial matter, some of the comments Commerce received on 
this regulation were similar to the comments Commerce received when 
promulgating its CIO Modification Notice, and therefore Commerce refers 
the public to that notice, as well, for an in-depth discussion of this 
methodology.\293\
---------------------------------------------------------------------------

    \293\ See CIO Modification Notice, 68 FR at 37125.
---------------------------------------------------------------------------

    With respect to the specific comments on the regulation as 
proposed, Commerce agrees in part with the comment that the agency 
should clarify that it will not consider extinguishment arguments in 
the absence of timely disclosure in the initial questionnaire of a 
relevant change in ownership and an intent to challenge the baseline 
presumption followed by complete responses to the change-in-ownership 
appendix from both the respondent and the foreign government and should 
apply this denial of consideration of extinguishment arguments whether 
or not Commerce has found any non-recurring subsidies in previous 
segments of the proceeding. Specifically, Commerce agrees with the 
general principle that it is important that other interested parties in 
a case have adequate time to evaluate the information and claims in 
such a rebuttal to defend their interests, including demonstrating 
under Sec.  351.526(b)(5) that certain market distortions exist. 
Accordingly, Commerce has added a provision to Sec.  351.526(b)(4) that 
makes clear that the agency will normally require that such rebuttals 
be included in a respondent's initial questionnaire response.
    Commerce emphasizes, however, that there may be instances where 
such a requirement is not appropriate, in recognition of the fact that 
the provision of complete information regarding complex changes in 
ownership, including a full response to the change-in-ownership 
appendix that forms part of Commerce's current standard questionnaire, 
can be a very resource-intensive exercise. Consider the hypothetical 
example of an investigation where none of the subsidy programs under 
investigation at the time of the initial questionnaire responses were 
non-recurring subsidies provided prior to a change in ownership and, 
therefore, a change in ownership during the AUL would normally be 
irrelevant to Commerce's analysis of subsidy benefits during the POI. 
If Commerce were to subsequently initiate on and include new subsidy 
allegations involving non-recurring subsidies in that investigation 
after the deadline for the respondent's initial questionnaire response, 
it would normally be appropriate to allow the respondent additional 
time to provide its rebuttal in light of the new potential relevance of 
a change in ownership. Similar situations may arise involving 
administrative reviews. Under those and similar circumstances, Commerce 
would consider what alternative deadlines for such a rebuttal are 
appropriate with a view to ensuring that all interested parties have an 
opportunity to present relevant evidence and fully defend their 
interests. Finally, to accommodate the addition of this new deadline to 
the regulations at Sec.  351.526(b)(4), we have moved the market 
distortions that appeared at Sec.  351.526(b)(4) in the proposed 
regulations to a new paragraph at Sec.  351.526(b)(5).
    Commerce disagrees that adding Sec.  351.526(b)(4)(ii) to 
explicitly address situations in which the government undertakes a 
program of debt forgiveness in order to make otherwise non-viable 
assets viable and thereby enables the acquisition and continued 
operation of production capacity that would otherwise have been forced 
to exit the market is necessary. First, the regulation already makes 
clear that the factors noted in Sec.  351.526(b)(4)(i) and (ii) are not 
exhaustive, and, as such, parties are free to include other 
considerations in their arguments that they can demonstrate are 
relevant under this provision. Second, the relevance of the types of 
debt forgiveness to which this commenter refers may be more 
appropriately considered as a concurrent subsidy under Sec.  
351.526(c)(2) depending on the particular facts and circumstances of 
the change in ownership.\6\ Finally, for over 20 years Commerce has 
applied the basic methodology set forth in the Proposed Rule, and that 
experience has not suggested that commenter's expressed concerns are a 
significant or recurring problem. Accordingly, Commerce has determined 
that such a change to the regulation is neither necessary nor 
appropriate.
    With respect to the comment that Commerce should modify proposed 
Sec.  351.526(c)(1) to clarify that a finding that a program has been 
extinguished does not affect whether a program is countervailable prior 
to the change in ownership, Commerce has concluded that the regulation 
is sufficiently clear in this regard. However, for the sake of 
additional certainty, Commerce notes here that, if a subsidy program 
was countervailable prior to the change in ownership, that benefit 
(i.e., the benefit generated prior to the change in ownership) would 
still be countervailed and attributable to sales made prior to the 
change in ownership under the language of Sec.  351.526(c)(1).
    One commenter raised a concern that basing a determination on 
whether a concurrent subsidy was bestowed ``prior to sale'' would allow 
parties to manipulate this analysis based on its consideration of when 
the sale occurred and that this could also permit the provision of a 
subsidy after the completion of the bidding process but before the 
finalized sale has occurred. Commerce disagrees and concludes that the 
language of Sec.  351.526(c)(2) is sufficiently flexible and robust to 
address the scenarios of concern that this commenter raises. In 
particular, the provisions in Sec.  351.526(c)(2)(i) and (iii) ensure 
that all concurrent subsidies are reflected in the transaction price. 
Moreover, Commerce's experience does not suggest that the commenter's 
concern here is a significant or recurring problem.
    Moreover, Commerce disagrees with the commenter that stated that 
private-to-private sales should not require the same scrutiny as 
government-to-private sales, since the former transactions are more 
than likely to be at arm's length. According to this commenter, when a 
party has demonstrated that it has satisfied Sec.  351.526(b)(1) by 
showing that (i) the seller retains no control of the company or 
assets, and (ii) the sale was at arm's length, Commerce's inquiry 
should end, or at least that the burden should be on the petitioning 
party to provide sufficient evidence that the sale was not for fair 
market value. In practice, according to this commenter, this should 
mean that the respondent company or government should not be required 
to provide information which speaks to whether a private-to-private 
transaction was at fair market value.
    Commerce does not agree with the commenter's conclusions in this 
regard.

[[Page 101754]]

As Commerce explained in response to similar comments in the CIO 
Modification Notice,\294\ in the normal course of an investigation or 
review, Commerce will usually issue a questionnaire that solicits basic 
information about a change in ownership, as well as the broader market 
conditions in which that transaction took place. In instances where a 
party (normally the respondent company) wishes to rebut the baseline 
presumption that non-recurring subsidies continue to benefit a 
recipient in full over an allocation period in light of an intervening 
change in ownership, that party will need to provide a response to 
Commerce's change in ownership questionnaire. Accordingly, as much of 
the necessary information to analyze such a fact-intensive transaction 
(regardless of whether it is government-to-private or a private-to-
private) is in the possession of the respondent company and/or 
government, that company or government will necessarily bear the burden 
of providing the necessary information, as is the case with most 
factual questions that Commerce must consider in the course of a 
countervailing duty proceeding.
---------------------------------------------------------------------------

    \294\ Id., 68 FR at 37129.
---------------------------------------------------------------------------

    Commerce's methodology does make an importance distinction between 
government-to-private sales and private-to-private sales, however, in 
that for the latter type of transaction, where a party has demonstrated 
the seller sold its ownership of all or substantially all of a company 
or its assets, retaining no control of the company or its assets, and 
the sale was an arm's-length transaction, the onus is on the petitioner 
to demonstrate based on the information provided by the respondent and 
government, in addition to information the petitioner might otherwise 
place on the record, that the transaction was not for fair market 
value.
    Commerce also disagrees that the standards articulated in Sec.  
351.526(b)(4), which includes the non-exhaustive factors Commerce may 
consider in analyzing market distortion's effect on the presumption of 
continued benefits, are overly broad and ill-defined and require a more 
detailed standard to define the level of ``severely distorted'' and 
what constitutes a ``properly functioning market.'' Commerce responded 
to similar concerns 20 years ago in the CIO Modification Notice, 
stating that ``[w]ith regard to the comment that the facts we have 
listed as potentially relevant are too broad, we disagree,'' because 
Commerce believed that it was ``important to leave room for flexibility 
in this analysis and not to circumscribe artificially or prematurely 
the nature of the factors that could be found to distort a market.'' 
\295\ Commerce explained that ``such distortions can be specific to the 
unique circumstances of particular countries or markets, and it is 
especially difficult for the Department to foresee at this time all of 
the factors that may be relevant to this analysis, particularly without 
obtaining more experience in this area.'' \296\ Therefore, Commerce 
stated that it intended ``that this analysis will be conducted on a 
case-by-case basis, and that we will be able to refine such analysis 
over time building on our accumulated experience.'' \297\
---------------------------------------------------------------------------

    \295\ Id. at 37135.
    \296\ Id.
    \297\ Id.
---------------------------------------------------------------------------

    Commerce acknowledged in the CIO Modification Notice that there are 
no perfect markets, and therefore Commerce must, on a case-by-case 
basis, focus only on distortions that might make a meaningful impact. 
Commerce explained that it recognized ``that perfect markets seldom 
exist outside of economics textbooks,'' and that it did not ``intend to 
`fail' a privatization merely because the broader environment in which 
it took place did not perfectly conform to some market paradigm.'' 
\298\ Instead, it explained that it would ``be balanced and realistic'' 
in its analysis, ``focusing on those severe distortions that would have 
a meaningful impact on the transaction in question.'' \299\
---------------------------------------------------------------------------

    \298\ Id.
    \299\ Id.
---------------------------------------------------------------------------

    Based on the 20 years of experience which Commerce has had in 
applying the factors set forth in the CIO Modification Notice, 
including the factors that can inform a market distortions analysis, 
Commerce finds that the analysis and stated expectations it set forth 
then remain sound and still applicable today. While the number of 
proceedings in which parties have attempted to make a market 
distortions claim during the intervening period have been relatively 
few, they have shown that the level of detail and particularity 
characterizing Commerce's list of broader market distortion factors 
continue to strike the appropriate balance between being too narrow 
(such that the factors are largely in applicable to the circumstances 
in a given country across the more than 20 countries for which Commerce 
currently maintains a CVD order) and too broad (such that parties are 
confused about the type of evidence that might be relevant in a given 
case). Accordingly, Commerce has concluded no further narrowing or 
broadening of the criteria in the regulation is necessary or 
appropriate at this time.

25. The Elimination of Sec.  351.502(e) is Not Economically Significant 
or Major

    One commenter to Commerce's Proposed Rule stated that while the 
proposed regulations were deemed significant for the purposes of E.O. 
12866, the elimination of Sec.  351.502(e) should also be considered 
economically significant because it is likely to result in ``an annual 
effect on the economy of $200 million or more (adjusted every 3 years 
by the Administrator of [the Office of Information and Regulatory 
Affairs (OIRA)] for changes in gross domestic product),'' the standard 
established in Executive Orders 12866 and 14094.\300\
---------------------------------------------------------------------------

    \300\ See E.O. 12866, ``Regulatory Planning and Review,'' 58 FR 
51735 (1993); and E.O. 14094, ``Modernizing Regulatory Review,'' 88 
FR 21879 (2023).
---------------------------------------------------------------------------

    In addition, that commenter also expressed a concern that Commerce 
did not address whether it regards the elimination of Sec.  351.502(e) 
as major for purposes of the Congressional Review Act (CRA),\301\ and 
asserted that it would be major because many farms and businesses could 
be impacted in substantial and predictable ways.
---------------------------------------------------------------------------

    \301\ See Congressional Review Act, 5 U.S.C. 801 (1996).
---------------------------------------------------------------------------

Response
    Commerce does not determine whether rules are significant under 
E.O. 12866 or major for purposes of the CRA. Such decisions are made by 
the Office of Management and Budget's (OMB) OIRA.
    OIRA determined that the Proposed Rule was significant but did not 
determine that it was either economically significant or major. Because 
OIRA determined that the Proposed Rule was significant, it went through 
interagency review pursuant to E.O. 12866, but because it was not 
determined to be economically significant no regulatory impact analysis 
was required and OMB's Circular A-4 was not implicated.
    To date, no party has provided any information to Commerce that 
would call into question these determinations. In particular, Commerce 
has been provided with no data that suggests that the elimination of 
Sec.  351.502(e) would cause any significant economic impact to 
American farmers and small business. This comports with OIRA's 
determinations in two of our recent regulatory packages which also 
addressed the calculation and application of AD and CVD duties to 
producers, exporters, and importers; the

[[Page 101755]]

same entities impacted by the Proposed Rule. In the Scope and 
Circumvention Regulations \302\ and more recently in the RISE 
Regulations,\303\ OIRA determined that both regulatory packages were 
significant but did not determine that they were economically 
significant or major.
---------------------------------------------------------------------------

    \302\ Regulations To Improve Administration and Enforcement of 
Antidumping and Countervailing Duty Laws, 85 FR 49472, 49492-49493 
(2020) (Scope and Circumvention Regulations).
    \303\ See RISE Final Rule, 89 at 29870-71.
---------------------------------------------------------------------------

25. Commerce Was Not Required to do an Analysis of Indirect Costs Under 
the RFA With Respect to the Elimination of Sec.  351.502(e)

    A commenter expressed concerns that Commerce did not engage in a 
more thorough Regulatory Flexibility Act (RFA) analysis, particularly 
involving indirect costs to small business entities, in its removal of 
Sec.  351.502(e).\304\ The commenter asserted that Commerce must 
quantify and consider indirect impacts on American small businesses and 
that the removal of the provision was not procedural in nature and 
would not lead to ``streamlined procedures,'' as asserted by Commerce, 
because certain procedures involving agricultural subsidies might now 
become more complex as a result of the proposed change.
---------------------------------------------------------------------------

    \304\ See Regulatory Flexibility Act, 5 U.S.C 601 (1980).
---------------------------------------------------------------------------

Response

    The RFA does not require an analysis of indirect costs. Commerce 
has certified to the Small Business Administration that the proposed 
regulations will not have a significant economic impact on a 
substantial number of small entities. As discussed above, the removal 
of the agricultural exception does not present a policy change with 
respect to the analysis of specificity for foreign government subsidy 
programs that are provided to the foreign agricultural sector. 
Commerce's treatment and the standard for both de jure and de facto 
specificity for foreign government subsidy programs within the 
agricultural sector remain identical before and after the removal of 
this provision. Thus, the specificity analysis of agricultural-related 
subsidy allegations will continue to be assessed within the statutory 
standard enacted under section 771(5)(D) of the Act and the change is 
procedural in nature. Even if the change were not technically 
procedural, in practice Commerce's analysis of agricultural subsidies 
has not changed since the regulation was issued, and therefore removing 
the provision would have no impact on any entity, large or small.

Summary of Changes From the Proposed to Final Rule

    Commerce has made the following changes to the proposed regulatory 
text:
    Commerce revised Sec.  351.104(a)(7) with two changes. First, 
Commerce replaced ``Commerce'' with ``the Department.'' Second, in 
response to comments regarding consistency within the regulation, 
Commerce is modifying the language to reflect that preliminary and 
final issues and decision memoranda issued in investigations and 
administrative reviews before the implementation of ACCESS may be cited 
in full in submissions before Commerce without placing the memoranda on 
the record.
    Commerce removed references to examples of units to which a cash 
deposit rate or assessment rate may be applied under Sec. Sec.  
351.107(c)(1) and 351.212(b)(ii).
    Commerce made several revisions to proposed 351.108. First, 
Commerce revised the title of Sec.  351.108 to clarify that the section 
applies to entities exporting merchandise from nonmarket economies in 
antidumping proceedings. Second, Commerce made substantive changes to 
Sec.  351.108(a) by adding paragraphs (a)(1), (2), and (3). The 
regulation at Sec.  351.108(a)(1) defines the nonmarket economy entity, 
paragraph (a)(2) defines the nonmarket economy entity rate, and 
paragraph (a)(3) details that if Commerce determines that an entity in 
a third country is owned or controlled by the non-market economy 
government and that entity exports subject merchandise from the 
nonmarket economy (directly or indirectly) to the United States, 
Commerce may determine to assign that entity the nonmarket economy 
entity rate. Third, Commerce added Sec.  351.108(b)(2) to detail 
Commerce's analysis when it determines that a nonmarket economy 
government controls an entity located in a third country that exports 
subject merchandise from the nonmarket economy to the United States. 
Fourth, Commerce clarified under Sec.  351.108(c) that it will rely on 
information provided in a separate rate application or certification 
when determining whether an entity is wholly owned by foreign entities 
incorporated and headquartered in a market economy. Fifth, Commerce 
added language to Sec.  351.108(d) to clarify that if no separate rate 
or certification is submitted timely, Commerce may apply the nonmarket 
economy entity rate to an entity's merchandise subject to the AD order. 
Commerce also made several smaller revisions to the language of 
proposed Sec.  351.108 to further clarify the terminology of the 
regulations. Lastly, as a result of these revisions, Commerce 
renumbered the paragraphs of Sec.  351.108(b)(1).
    Commerce added language to proposed Sec.  351.109(c)(v) to further 
clarify that it may select an additional respondent for examination if 
such a selection will not inhibit or impede the timely completion of 
that segment of the proceeding.
    Commerce modified proposed Sec.  351.301(b)(2) to further clarify 
that the submitter must provide a written explanation describing how 
the provided factual information rebuts, clarifies, or corrects the 
factual information on the record.
    Commerce also added language to proposed Sec.  351.301(c)(3) to 
clarify that in investigations, administrative reviews, new shipper 
reviews and changed circumstances reviews, Commerce may issue a 
schedule with alternative deadlines if it determines that parties do 
not have sufficient time to submit factual information on the record.
    Commerce made smaller revisions to Sec.  351.308(i)(2) to clarify 
that the Secretary will normally apply the highest calculated above de-
minimis countervailing duty rate if it finds that the application of an 
adverse inference is warranted.
    Commerce added paragraph (f)(4) to proposed Sec.  351.401. The 
regulation at Sec.  351.401(f)(4) provides exceptions to Commerce's 
treatment of affiliated parties as a single entity in AD proceedings. 
Commerce will normally not treat the parties as a single entity if the 
affiliated parties in question do not produce merchandise similar or 
identical to subject merchandise and are input suppliers, sellers of 
the foreign like product in the home market, or affiliated entities for 
which Commerce determines that treating those parties as a single 
entity would be otherwise inappropriate based on record information.
    Commerce modified proposed Sec.  351.404(g)(2) to clarify that the 
paragraph is applicable when the special rule for certain multinational 
corporations is applied.
    Commerce modified proposed Sec.  351.405(b)(3) to clarify that 
Commerce considers the criteria under paragraphs (b)(3)(i) through (iv) 
when selecting sources for selling, general and administrative expenses 
as well profit in calculating construct value.
    Commerce revised proposed Sec.  351.408(b). First, Commerce created 
a new paragraph (b)(1)(i) to clarify that it

[[Page 101756]]

will measure economic comparability to determine whether countries are 
at a level of economic development comparable to the nonmarket economy 
at issue by placing a primary emphasis on per capita GDP. Second, 
Commerce added paragraph (b)(1)(ii) to provide that, where such 
additional analysis is needed, Commerce will consider additional 
factors in determining whether countries are at a level of economic 
development comparable to the nonmarket economy at issue. Commerce will 
provide its reasonings for relying on additional factors, where such 
analysis is needed. Third, Commerce also created a new paragraph 
(b)(1)(iii) to notify parties that an annual listing of comparable 
economies will be available on Commerce's website. Fourth, Commerce 
further clarified at Sec.  351.408(b)(2) that it will consider whether 
countries are a significant producer of merchandise comparable to 
subject merchandise consistent with the statutory directive under 
sections 773(c)(2)(A) and 773(c)(4)(B) of the Act. Lastly, Commerce 
included new language under Sec.  351.408(b)(3) to explain that 
Commerce will consider the totality of the information on the record in 
selecting a surrogate country if more than one economically comparable 
country produces comparable merchandise. That new paragraph provides 
that the additional criteria for consideration includes the 
availability, accessibility, and quality of data from those countries 
and the similarity of products manufactured in the potential surrogate 
countries in comparison to the subject merchandise.
    Commerce revised proposed Sec.  351.511(a)(2). Commerce removed 
references to competitively run government auctions from Sec.  
351.511(a)(2)(i) and placed those references instead in Sec.  
351.511(a)(2)(iii), as well as the proposed criteria for determining if 
auction prices are consistent with market principles.
    Commerce added a new Sec.  351.512(a)(2)(iii) that provides that 
Commerce may exclude certain prices from a particular country if 
Commerce finds that certain actions, including government laws or 
policies, likely impact such prices, and moved proposed Sec.  
351.512(a)(2)(iii) to a new Sec.  351.512(a)(2)(iv).
    Commerce also modified proposed Sec.  351.525(b)(iv)(A) and (B). 
With respect to Sec.  351.525(b)(iv)(A), Commerce added language to its 
attribution analysis to clarify that an input producer can supply, 
either directly or indirectly, a downstream producer. Under Sec.  
351.525(b)(iv)(B), Commerce deleted certain language under its 
primarily dedicated analysis. Specifically, Commerce deleted the phrase 
``regardless of whether the input is actually used for the production 
of subject merchandise.''
    Commerce also added language to proposed Sec.  351.526(b)(4) to 
provide a deadline to rebut the presumption of subsidy continuation 
notwithstanding a change in ownership. The regulation provides that 
information to rebut the presumption of subsidy continuation must be 
timely filed as part of the respondent's or government's initial 
questionnaire response.
    Lastly, Commerce also made minor modifications to Sec. Sec.  
351.502(e), 351.503(b)(3), 351.505(c)(2) and (e)(2), 351.509(b)(1), and 
351.511(a)(2)(iii)(C).

Classifications

Executive Order 12866

    The Office of Management and Budget has determined that this final 
rule is significant for purposes of Executive Order 12866.

Executive Order 13132

    This final rule does not contain policies with federalism 
implications as that term is defined in section 1(a) of Executive Order 
13132 of August 4, 1999, 64 FR 43255 (August 10, 1999)).

Paperwork Reduction Act

    This final rule does not contain a collection of information 
subject to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.

Regulatory Flexibility Act

    The Chief Counsel for Regulation 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 the rule would 
not have a significant economic impact on a substantial number of small 
business entities. A summary of the need for, objectives of, and legal 
basis for this rule is provided in the preamble of both the proposed 
rule and this final rule and is not repeated here. Comments received 
regarding this certification did not provide information that 
undermines the certification. Thus, a Final Regulatory Flexibility 
Analysis is not required and has not been prepared.

Congressional Review Act

    Pursuant to 5 U.S.C. 804(2), the Administrator of the Office of 
Information and Regulatory Affairs at the Office of Management and 
Budget has determined that this rule is not major.

List of Subjects in 19 CFR Part 351

    Administrative practice and procedure, Antidumping, Business and 
industry, Confidential business information, Countervailing duties, 
Freedom of information, Investigations, Reporting and recordkeeping 
requirements.

    Dated: December 9, 2024.
Ryan Majerus,
Deputy Assistant Secretary for Policy and Negotiations, performing the 
non-exclusive functions and duties of the Assistant Secretary for 
Enforcement and Compliance.

    For the reasons stated in the preamble, the U.S. Department of 
Commerce amends 19 CFR part 351 as follows:

PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES

0
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.


0
2. Revise the heading to subpart A to read as follows:

Subpart A--Scope, Definitions, the Record of Proceedings, Cash 
Deposits, Nonmarket Economy Antidumping Rates, All-Others Rate, and 
Respondent Selection

* * * * *

0
3. In Sec.  351.104, revise paragraphs (a)(2)(iii) and (a)(7) to read 
as follows:


Sec.  351.104   Record of proceedings.

    (a) * * *
    (2) * * *
    (iii) In no case will the official record include any document that 
the Secretary rejects as untimely filed or any unsolicited 
questionnaire response unless the response is a voluntary response 
accepted under Sec.  351.109(h) (see Sec.  351.302(d)).
* * * * *
    (7) Special rules for public versions of documents originating with 
the Department with no associated ACCESS barcode numbers. Public 
versions of documents originating with the Department in other segments 
or proceedings under paragraph (a)(6)(iii) through (xii) of this 
section but not associated with an ACCESS barcode number, including 
documents issued before the implementation of ACCESS, must be submitted 
on the record in their entirety to be considered by the Secretary in 
its analysis and determinations and are subject to the timing and 
filing restrictions of Sec.  351.301. Preliminary and final issues

[[Page 101757]]

and decision memoranda issued by the Secretary in investigations and 
administrative reviews and not associated with an ACCESS barcode 
number, including those issued before the implementation of ACCESS, 
pursuant to Sec. Sec.  351.205, 210 and 213 may be cited in full 
without placing the memoranda on the record.
* * * * *

0
4. Revise Sec.  351.107 to read as follows:


Sec.  351.107   Cash deposit rates; producer/exporter combination rates

    (a) Introduction. Sections 703(d)(1)(B), 705(d), 733(d)(1)(B), and 
735(c) of the Act direct the Secretary to order the posting of cash 
deposits, as determined in preliminary and final determinations of 
antidumping and countervailing duty investigations, and additional 
provisions of the Act, including section 751, direct the Secretary to 
establish a cash deposit rate in accordance with various reviews. This 
section covers the establishment of cash deposit rates and the 
instructions which the Secretary issues to U.S. Customs and Border 
Protection to collect those cash deposits.
    (b) In general. The Secretary will instruct U.S. Customs and Border 
Protection to suspend liquidation of merchandise subject to an 
antidumping duty or countervailing duty proceeding and apply cash 
deposit rates determined in that proceeding to all imported merchandise 
for which a cash deposit rate was determined by the Secretary in 
proportion to the estimated value of the merchandise as reported to 
U.S. Customs and Border Protection on an ad valorem basis.
    (c) Exceptions--(1) Application of cash deposit rates on a per-unit 
basis. If the Secretary determines that the information normally used 
to calculate an ad valorem cash deposit rate is not available or the 
use of an ad valorem cash deposit rate is otherwise not appropriate, 
the Secretary may instruct U.S. Customs and Border Protection to apply 
the cash deposit rate on a per-unit basis.
    (2) Application of cash deposit rates to producer/exporter 
combinations. The Secretary may instruct U.S. Customs and Border 
Protection to apply a determined cash deposit rate only to imported 
merchandise both produced by an identified producer and exported by an 
identified exporter if the Secretary determines that such an 
application is appropriate. Such an application is called a producer/
exporter combination.
    (i) Example. Exporter A exports to the United States subject 
merchandise produced by Producers W, X, and Y. In such a situation, the 
Secretary may establish a cash deposit rate applied to Exporter A that 
is limited to merchandise produced by Producers W, X, and Y. If 
Exporter A begins to export subject merchandise produced by Producer Z, 
that cash deposit rate would not apply to subject merchandise produced 
by Producer Z.
    (ii) In general. The Secretary will instruct U.S. Customs and 
Border Protection to apply a cash deposit rate to a producer/exporter 
combination or combinations when the cash deposit rate is determined as 
follows:
    (A) Pursuant to a new shipper review, in accordance with section 
751(a)(2)(B) of the Act and Sec.  351.214;
    (B) Pursuant to an antidumping investigation of merchandise from a 
nonmarket economy country, in accordance with sections 733 and 735 of 
the Act and Sec. Sec.  351.205 and 210, for merchandise exported by an 
examined exporter;
    (C) Pursuant to scope, circumvention, and covered merchandise 
segments of the proceeding, in accordance with Sec. Sec.  351.225(m), 
351.226(m) and 351.227(m), when the Secretary makes a segment-specific 
determination on the basis of a producer/exporter combination; and
    (D) Pursuant to additional segments of a proceeding in which the 
Secretary determines that the application of a cash deposit rate to a 
producer/exporter combination is warranted based on facts on the 
record.
    (3) Exclusion from an antidumping or countervailing duty order--(i) 
Preliminary determinations. In general, in accordance with sections 
703(b) and 733(b) of the Act, if the Secretary makes an affirmative 
preliminary antidumping or countervailing duty determination and the 
Secretary preliminarily determines an individual weighted-average 
dumping margin or individual net countervailable subsidy rate of zero 
or de minimis for an investigated exporter or producer, the exporter or 
producer will not be excluded from the preliminary determination or the 
investigation. However, the Secretary will not instruct U.S. Customs 
and Border Protection to suspend liquidation of entries or collect cash 
deposits on the merchandise produced and exported from the producer/
exporter combinations examined in the investigation and identified in 
the Federal Register, as the investigated combinations will not be 
subject to provisional measures under sections 703(d) or 733(d) of the 
Act.
    (ii) Final determinations. In general, in accordance with sections 
705(a), 735(a), 706(a), and 736(a) of the Act, if the Secretary makes 
an affirmative final determination, issues an antidumping or 
countervailing duty order and determines an individual weighted-average 
dumping margin or individual net countervailable subsidy rate of zero 
or de minimis for an investigated producer or exporter, the Secretary 
will exclude from the antidumping or countervailing duty order only 
merchandise produced and exported in the producer/exporter combinations 
examined in the investigation and identified in the Federal Register. 
An exclusion applicable to a producer/exporter combination shall not 
apply to resellers. Excluded producer/exporter combinations may include 
transactions in which the exporter is both the producer and exporter, 
transactions in which the producer's merchandise has been exported to 
the United States through multiple exporters individually examined in 
the investigation, and transactions in which the exporter has sourced 
from multiple producers identified in the investigation.
    (iii) Example. If during the period of investigation, Exporter A 
exports to the United States subject merchandise produced by Producer 
X, based on an examination of Exporter A the Secretary may determine 
that the dumping margins with respect to the examined merchandise are 
de minimis. In that case, the Secretary would normally exclude only 
subject merchandise produced by Producer X and exported by Exporter A. 
If Exporter A began to export subject merchandise produced by Producer 
Y, that merchandise would be subject to the antidumping duty order.
    (4) Certification requirements. If the Secretary determines that 
parties must maintain or provide a certification in accordance with 
Sec.  351.228, the Secretary may instruct U.S. Customs and Border 
Protection to apply a cash deposit requirement that is based on the 
facts of the case and effectuates the administration and purpose of the 
certification.
    (d) The antidumping duty order cash deposit hierarchies--(1) In 
general. If the Secretary has not previously established a combination 
cash deposit rate under paragraph (c)(2) of this section for the 
producer and exporter in question, the following will apply:
    (i) A market economy country proceeding. In a proceeding covering 
merchandise produced in a market economy country:
    (A) If the Secretary has established a current cash deposit rate 
for the exporter of the subject merchandise, the Secretary will 
instruct U.S. Customs and Border Protection to apply the cash deposit 
rate established for the exporter to entries of the subject 
merchandise;

[[Page 101758]]

    (B) If the Secretary has not established a current cash deposit 
rate for the exporter, but the Secretary has established a current cash 
deposit rate for the producer of the subject merchandise, the Secretary 
will instruct U.S. Customs and Border Protection to apply the cash 
deposit rate established for the producer of the subject merchandise to 
entries of the subject merchandise; and
    (C) If the Secretary has not established a current cash deposit 
rate for either the producer or the exporter of the subject 
merchandise, the Secretary will instruct U.S. Customs and Border 
Protection to apply the all-others rate determined in the investigation 
to entries of the subject merchandise, pursuant to section 735(c) of 
the Act and Sec.  351.109(f).
    (ii) A nonmarket economy country proceeding. In a proceeding 
covering merchandise originating from a nonmarket economy country:
    (A) If the Secretary has established a current separate cash 
deposit rate for the exporter of the subject merchandise, the Secretary 
will instruct U.S. Customs and Border Protection to apply the cash 
deposit rate for the exporter to entries of the subject merchandise;
    (B) If the Secretary has not established a current separate cash 
deposit rate for an exporter of the subject merchandise, the Secretary 
will instruct U.S. Customs and Border Protection to apply the cash 
deposit rate determined by the Secretary for the nonmarket economy 
entity to entries of the subject merchandise, pursuant to Sec.  
351.108(b); and
    (C) If the entries of subject merchandise were resold to the United 
States through a third-country reseller, the Secretary will normally 
instruct U.S. Customs and Border Protection to apply the current 
separate cash deposit rate applicable to the nonmarket economy country 
exporter (or the applicable producer/exporter combination, if 
warranted) that supplied the subject merchandise to the reseller to 
those entries of the subject merchandise.
    (2) Exception. If the Secretary determines that an application of 
cash deposit rates other than that described in paragraph (d)(1) of 
this section to particular producers or exporters is warranted, the 
Secretary may instruct U.S. Customs and Border Protection to use an 
alternative methodology in applying those cash deposit rates to entries 
of subject merchandise.
    (e) The countervailing duty order cash deposit hierarchy--(1) In 
general. If the Secretary has not previously established a combination 
cash deposit rate under paragraph (c)(2) of this section for the 
producer and exporter in question and the exporter and producer have 
differing cash deposit rates, the following will apply:
    (i) If the Secretary has established current cash deposit rates for 
both the producer and the exporter of the subject merchandise, the 
Secretary will instruct U.S. Customs and Border Protection to apply the 
higher of the two rates to the entries of subject merchandise;
    (ii) If the Secretary has established a current cash deposit rate 
for the producer but not the exporter of the subject merchandise, the 
Secretary will instruct U.S. Customs and Border Protection to apply the 
producer's cash deposit rate to entries of subject merchandise;
    (iii) If the Secretary has established a current cash deposit rate 
for the exporter but not the producer of the subject merchandise, the 
Secretary will instruct U.S. Customs and Border Protection to apply the 
exporter's cash deposit rate to entries of subject merchandise; and
    (iv) If the Secretary has not established current cash deposit 
rates for either the producer or the exporter of the subject 
merchandise, the Secretary will instruct U.S. Customs and Border 
Protection to apply the all-others rate determined in the investigation 
pursuant to section 705(c)(5) of the Act and Sec.  351.109(f) to the 
entries of subject merchandise.
    (2) Exception. If the Secretary determines that an application of 
cash deposit rates other than that described in paragraph (e)(1) of 
this section to particular producers or exporters is warranted, the 
Secretary may instruct U.S. Customs and Border Protection to use an 
alternative methodology in applying those cash deposit rates to the 
entries of subject merchandise.
    (f) Effective dates for amended preliminary and final 
determinations and results of review upon correction of a ministerial 
error. If the Secretary amends an agency determination in accordance 
with sections 703, 705(e), 733 and 735(e) of the Act and Sec.  351.224 
(e) through (g):
    (1) If the Secretary amends a preliminary or final determination in 
an investigation for a ministerial error and the amendment increases 
the dumping margin or countervailing duty rate, the new cash deposit 
rate will be effective to entries made on or after the date of 
publication of the amended determination;
    (2) If the Secretary amends a preliminary or final determination in 
an investigation for a ministerial error and the amendment decreases 
the dumping margin or countervailing duty rate, the new cash deposit 
rate will be retroactive to the date of publication of the original 
preliminary or final determination, as applicable;
    (3) If the Secretary amends the final results of an administrative 
review pursuant to a ministerial error, the effective date of the 
amended cash deposit rate will be retroactive to entries following the 
date of publication of the original final results of administrative 
review regardless of whether the antidumping duty margin or 
countervailing duty rate increases or decreases; and
    (4) If the Secretary amends the final results of an investigation 
or administrative review pursuant to litigation involving alleged or 
disputed ministerial errors, the effective date of the amended cash 
deposit rate may differ from the effective dates resulting from the 
application of paragraphs (f)(1) through (3) of this section and 
normally will be identified in a Federal Register notice.

0
5. Add Sec.  351.108 to subpart A to read as follows:


Sec.  351.108  Rates for entities exporting merchandise from nonmarket 
economies in antidumping proceedings

    (a) Introduction--(1) The nonmarket economy entity. When the 
Secretary determines that a country is a nonmarket economy country in 
an antidumping proceeding pursuant to section 771(18) of the Act, the 
Secretary may determine that all entities located in that nonmarket 
economy country are subject to government control and thus part of a 
single, government-controlled entity, called the nonmarket economy 
entity.
    (2) The nonmarket economy entity rate. All merchandise from the 
nonmarket economy exported to the United States and subject to an 
antidumping proceeding by entities in the nonmarket economy determined 
by the Secretary on the basis of record information to be part of the 
government-controlled entity may be assigned the antidumping cash 
deposit or assessment rate applied to the government-controlled entity. 
That rate is called the nonmarket economy entity rate.
    (3) Entities in third countries owned or controlled by the 
nonmarket economy government. If a nonmarket economy government has 
direct ownership or control, in whole or in part, of an entity located 
in a third country and that entity exports subject merchandise to the 
United States, the Secretary may determine on the basis of record 
information that such an entity is part of the government-controlled 
entity and assign that entity the nonmarket economy entity rate.

[[Page 101759]]

    (b) Separate rates. An entity exporting merchandise to the United 
States from a nonmarket economy may receive its own rate, separate from 
the nonmarket economy entity rate, if the Secretary determines that the 
exporter has demonstrated that it operates certain activities 
sufficiently independent from nonmarket economy government control to 
justify the application of a separate rate. In determining whether an 
entity operates certain activities sufficiently independent from 
government control to receive a separate rate, the Secretary will 
normally consider the following:
    (1) Nonmarket economy government ownership and control in the 
nonmarket economy--(i) Government control through ownership. When a 
nonmarket economy government, at a national, provincial, or other 
level, holds an ownership share of an entity located in the nonmarket 
economy, either directly or indirectly, the level of ownership and 
other factors may indicate that the government exercises or has the 
potential to exercise control over an entity's general operations. No 
separate rate will be applied when the nonmarket economy government 
either directly or indirectly holds:
    (A) A majority ownership share (over fifty percent ownership) of an 
entity; or
    (B) An ownership interest in the entity of fifty percent or less 
and any one of the following criteria applies:
    (1) The government's ownership share provides it with a 
disproportionately larger degree of influence or control over the 
entity's production, commercial, and export decisions than the 
ownership share would normally entail, and the Secretary determines 
that the degree of influence or control is significant;
    (2) The government has the authority to veto the entity's 
production, commercial and export decisions;
    (3) Officials, employees, government-appointed or government-
controlled labor union members, representatives of the government, or 
their family members have been appointed as officers or managers of the 
entity, members of the board of directors, or other governing 
authorities in the entity that have the ability to make or influence 
production, commercial and export decisions for the entity; or
    (4) The entity is obligated by law or its foundational documents, 
such as articles of incorporation, or other de facto requirements to 
maintain one or more officials, employees, government-appointed or 
government-controlled labor union members, or representatives of the 
government as officers or managers, members of the board of directors, 
or other governing authorities in the entity that have the ability to 
make or influence production, commercial and export decisions for the 
entity.
    (ii) Absence of de jure government control. If an entity 
demonstrates that neither Sec.  351.108(b)(1)(i)(A) nor (B) applies to 
the entity, the entity must then demonstrate that the government has no 
control in law (de jure) of the entity's export activities. The 
following criteria may indicate the lack of government de jure control 
of the entity's export activities:
    (A) The absence of a legal requirement that one or more officials, 
employees, government-appointed or government-controlled labor union 
members, or representatives of the government serve as officers or 
managers of the entity, members of the board of directors, or other 
governing authorities in the entity that make or influence export 
activity decisions;
    (B) The absence of restrictive stipulations by the government 
associated with an entity's business and export licenses;
    (C) Legislative enactments decentralizing government control of 
entities; and
    (D) Other formal measures by the government decentralizing control 
of companies.
    (iii) Absence of de facto government control. If the entity 
demonstrates that Sec.  351.108(b)(1)(i)(A) and (B) and (b)(1)(ii) do 
not apply to the entity, the entity must then demonstrate that the 
government has no control in fact (de facto) of the entity's export 
activities. The following criteria may indicate de facto government 
control of the entity's export activities:
    (A) Whether the entity maintains or must maintain one or more 
officials, employees, representatives of the government, or their 
family members as officers or managers, members of the board of 
directors, or other governing authorities in the entity which have the 
ability to make or influence export activity decisions;
    (B) Whether export prices are set by or are subject to the approval 
of a government agency;
    (C) Whether the entity has authority to negotiate and sign 
contracts and other agreements without government involvement;
    (D) Whether the entity has autonomy from the government in making 
decisions regarding the selection of its management;
    (E) Whether the entity retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses; and
    (F) Whether there is any additional evidence on the record 
suggesting that the government has direct or indirect influence over 
the entity's export activities.
    (2) Nonmarket economy government ownership or control of an entity 
located in a third country. If the Secretary determines that a 
nonmarket economy government owns or controls, in whole or in part, an 
entity located in a third country, the Secretary may determine on the 
basis of record information that the entity should be assigned the 
nonmarket economy entity rate or that the entity should be granted a 
separate rate.
    (c) Entities wholly owned by foreign entities incorporated and 
headquartered in a market economy. In general, if the Secretary 
determines based on information submitted in a separate rate 
application or certification that an entity exporting merchandise 
subject to a nonmarket economy country antidumping proceeding is wholly 
owned by a foreign entity and both incorporated and headquartered in a 
market economy country or countries, then the Secretary will consider 
the entity independent from control of the nonmarket economy government 
and an analysis under paragraph (b) of this section will not be 
necessary.
    (d) Separate rate applications and certifications. In order to 
demonstrate separate rate eligibility, an entity subject to a nonmarket 
economy country antidumping proceeding will be required to timely 
submit a separate rate application, as made available by the Secretary, 
or a separate rate certification, as applicable. If no separate rate 
application or certification is timely submitted, the Secretary may 
apply the nonmarket economy entity rate to merchandise exported to the 
United States and subject to the nonmarket economy country antidumping 
proceeding. In filing a separate rate application or certification, the 
following applies:
    (1) In an antidumping investigation, the entity will normally file 
a separate rate application on the record of the investigation no later 
than twenty-one days following publication of the notice of initiation 
in the Federal Register;
    (2) In a new shipper review or an administrative review in which 
the entity has not been previously assigned a separate rate, the entity 
will normally file a separate rate application on the record no later 
than fourteen days following publication of the notice of initiation in 
the Federal Register. In both new shipper reviews and administrative 
reviews, documentary evidence of an entry of subject

[[Page 101760]]

merchandise for which liquidation was suspended during the period of 
review must accompany the separate rate application.
    (3) In an administrative review, if the entity has been previously 
assigned a separate rate in the proceeding, no later than fourteen days 
following publication of the notice of initiation in the Federal 
Register, the entity will instead file a certification on the record in 
which the entity certifies that it had entries of subject merchandise 
for which liquidation was suspended during the period of review and 
that it otherwise continues to meet the criteria for obtaining a 
separate rate. If the Secretary determined in a previous segment of the 
proceeding that certain exporters and producers should be treated as a 
single entity for purposes of the antidumping proceeding, then a 
certification filed under this paragraph must identify and certify that 
that the certification applies to all of the companies comprising that 
single entity.
    (e) Examined respondents and questionnaire responses. Entities that 
submit separate rate applications or certifications and are 
subsequently selected to be an examined respondent in an investigation 
or review by the Secretary must fully respond to the Secretary's 
questionnaires and participate in the antidumping proceeding in order 
to be eligible for separate rate status.

0
6. Add Sec.  351.109 to subpart A to read as follows:


Sec.  351.109   Selection of examined respondents; single-country 
subsidy rate; calculating an all-others rate; calculating rates for 
unexamined respondents; voluntary respondents.

    (a) Introduction. Sections 777A(c)(2) and 777A(e)(2)(A) of the Act 
provide that when the Secretary determines in an antidumping or 
countervailing duty investigation or administrative review that it is 
not practicable to determine individual dumping margins or 
countervailable subsidy rates for all potential respondents, the 
Secretary may determine individual dumping margins or countervailable 
subsidy rates for a reasonable number of exporters or producers using 
certain criteria set out in the Act. This section sets forth those 
criteria, describes the methodology the Secretary generally applies to 
select examined producers and exporters, and provides the means by 
which the Secretary determines the ``all-others rate'' set forth in 
sections 705(c)(5) and 735(c)(5) of the Act, separate rates in 
nonmarket economy antidumping proceedings, and review-specific margins 
or rates in administrative reviews. This section also addresses the 
treatment of voluntary respondents in accordance with section 782(a) of 
the Act.
    (b) Examining each known exporter or producer when practicable. In 
an investigation or administrative review, the Secretary will 
determine, where practicable, an individual weighted-average dumping 
margin or individual countervailable subsidy rate for each known 
exporter or producer of the subject merchandise.
    (c) Limiting exporters or producers examined--(1) In general. If 
the Secretary determines in an investigation or administrative review 
that it is not practicable to determine individual dumping margins or 
countervailable subsidy rates because of the large number of exporters 
or producers involved in the investigation or review, the Secretary may 
determine individual margins or rates for a reasonable number of 
exporters or producers, In accordance with sections 777A(c)(2) and 
777A(e)(2)(A) of the Act, the Secretary will normally limit the 
examination to either a sample of exporters or producers that the 
Secretary determines is statistically valid based on record information 
or exporters and producers accounting for the largest volume of the 
subject merchandise from the exporting country that the Secretary 
determines can be reasonably examined.
    (2) Limiting examination to the largest exporters or producers. In 
general, if the Secretary determines to limit the number of exporters 
or producers for individual examination, otherwise known as 
respondents, based on the largest volume of the subject merchandise 
from the exporting country that the Secretary determines can be 
reasonably examined, the Secretary will apply the following 
methodology:
    (i) Selecting the data source to determine the largest exporters or 
producers of subject merchandise. The Secretary will normally select 
respondents based on data for entries of subject merchandise made 
during the relevant time period derived from U.S. Customs and Border 
Protection. If the Secretary determines that the use of the U.S. 
Customs and Border Protection data source is not appropriate based on 
record information, the Secretary may use another reasonable means of 
selecting potential respondents in an investigation or review 
including, but not limited to, the use of quantity and value 
questionnaire responses derived from a list of possible exporters of 
subject merchandise.
    (ii) Selecting the largest exporters or producers of subject 
merchandise based on volume or value. The Secretary will normally 
select the largest exporters or producers based on the volume of 
imports of subject merchandise. However, the Secretary may determine at 
times that volume data are unreliable or inconsistent, depending on the 
product at issue. In those situations, the Secretary may instead select 
the largest exporters of subject merchandise based on the value of the 
imported products instead of the volume of the imported products.
    (iii) Determining whether the number of exporters or producers is 
too large to make individual examination of each known exporter or 
producer of subject merchandise practicable. The Secretary will 
determine on a case-specific basis whether the number of exporters or 
producers is too large to make individual examination of each known 
exporter or producer of subject merchandise practicable based on the 
potential exporters or producers identified in a petition, the 
exporters or producers identified in the data source considered in 
paragraph (c)(1) of this provision, or the exporters or producers for 
which an administrative review is requested. In determining whether the 
number of exporters or producers is too large to make individual 
examination of each known exporter or producer of subject merchandise 
practicable, the Secretary will normally consider:
    (A) The amount of resources and detailed analysis which will be 
necessary to examine each potential respondent's information;
    (B) The current and future workload of the office administering the 
antidumping or countervailing duty proceeding; and
    (C) The Secretary's overall current resource availability.
    (iv) Determining the number of exporters or producers that can be 
reasonably examined. In determining the number of exporters or 
producers (respondents) that can be reasonably examined on a case-
specific basis, the Secretary will normally:
    (A) Consider the total and relative volumes (or values) of entries 
of subject merchandise during the relevant period for each potential 
respondent derived from the data source considered in paragraph (c)(2) 
of this section;
    (B) Rank the potential respondents by the total volume (or values) 
of entries into the United States during the relevant period; and
    (C) Determine the number of exporters or producers the Secretary 
can reasonably examine, considering resource availability and statutory 
requirements, and select the exporters or producers with the largest 
volume (or

[[Page 101761]]

values) of entries consistent with that number.
    (v) Selecting additional respondents for examination. Once the 
Secretary has determined the number of exporters or producers that can 
be reasonably examined and has selected the potential respondents for 
examination, the Secretary will issue questionnaires to those selected 
exporters or producers. If a potential respondent does not respond to 
the questionnaires or elects to withdraw from participation in the 
segment of the proceeding soon after filing questionnaire responses, or 
the Secretary otherwise determines early in the segment of the 
proceeding that a selected exporter or producer is no longer 
participating in the investigation or administrative review or that the 
exporter's or producer's sales of subject merchandise are not bona 
fide, the Secretary may select the exporter or producer with the next 
largest volume or value of entries to replace the respondents initially 
selected by the Secretary for examination if the Secretary determines 
that such a selection will not inhibit or impede the timely completion 
of that segment of the proceeding.
    (d) Waiver for certain selected respondents. The Secretary may 
waive individual examination of an exporter or producer selected to be 
an examined respondent if both the selected respondent and the 
petitioner file waiver requests for that selected respondent no later 
than five days after the Secretary has selected respondents. If the 
Secretary provides such a waiver and previously selected the waived 
respondent in accordance with paragraph (c)(2) of this section, the 
Secretary may select the respondent with the next largest volume or 
value of entries for examination to replace the initially selected 
respondent.
    (e) Single country-wide subsidy rate. In accordance with 
777A(e)(2)(B) of the Act, in limiting exporters or producers examined 
in countervailing duty proceedings, including countervailing duty 
investigations under sections 703(d)(1)(A)(ii) and 705(c)(5)(B) of the 
Act, the Secretary may determine, in the alternative, a single country-
wide subsidy rate to be applied to all exporters and producers.
    (f) Calculating the all-others rate. In accordance with sections 
705(c)(1)(B), 705(c)(5), 735(c)(1)(B)(i), and 735(c)(5) of the Act, if 
the Secretary makes an affirmative antidumping or countervailing duty 
determination, the Secretary will determine an estimated all-others 
rate as follows:
    (1) In general. (i) For an antidumping proceeding involving a 
market economy country, the all-others rate will normally equal the 
weighted average of the estimated weighted-average dumping margins 
established for the individually investigated exporters or producers, 
excluding any zero and de minimis margins and any margins determined 
entirely under section 776 of the Act.
    (ii) For a countervailing duty proceeding, the all-others rate will 
normally equal the weighted average of the countervailable subsidy 
rates established for the individually investigated exporters and 
producers, excluding any zero and de minimis countervailable subsidy 
rates and any rates determined entirely under section 776 of the Act.
    (2) Exceptions to the general rules for calculating the all-others 
rate. The Secretary may determine not to apply the general rules 
provided in paragraph (f)(1) of this section:
    (i) If the Secretary determines that only one individually 
investigated exporter or producer has a calculated weighted-average 
dumping margin or countervailable subsidy rate that is not zero, de 
minimis, or determined entirely under section 776 of the Act, the 
Secretary may apply that weighted-average dumping margin or 
countervailable subsidy rate as the all-others rate.
    (ii) If the Secretary determines that weight-averaging calculated 
dumping margins or countervailable subsidy rates established for 
individually investigated exporters or producers could result in the 
inadvertent release of proprietary information among the individually 
investigated exporters or producers, the Secretary may apply the 
following analysis:
    (A) First, the Secretary will calculate the weighted-average 
dumping margin or countervailable subsidy rate for the individually 
investigated exporters or producers using their reported data, 
including business proprietary data;
    (B) Second, the Secretary will calculate both a simple average of 
the individually investigated exporters' or producers' dumping margins 
or countervailable subsidy rates and a weighted- average dumping margin 
or countervailable subsidy rate using the individually investigated 
exporters' or producers' publicly-ranged data; and
    (C) Third, the Secretary will compare the two averages calculated 
in paragraph (f)(2)(ii)(B) of this section with the weighted-average 
margin or rate determined in paragraph (f)(2)(ii)(A) of this section. 
The Secretary will apply, as the all-others rate, the average 
calculated in paragraph (f)(2)(ii)(B) of this section which is 
numerically the closest to the margin or rate calculated in paragraph 
(f)(2)(ii)(A) of this section.
    (iii) If the estimated weighted average dumping margins or 
countervailable subsidy rates established for all individually 
investigated exporters and producers are zero, de minimis, or 
determined entirely under section 776 of the Act, the Secretary may use 
any reasonable method to establish an all-others rate for exporters and 
producers not individually examined, including averaging the estimated 
weighted average dumping margins or countervailable subsidy rates 
determined for the individually investigated exporters and producers.
    (3) A nonmarket economy country entity rate is not an all-others 
rate. The all-others rate determined in a market economy antidumping 
investigation or countervailing duty investigation may not be increased 
in subsequent segments of a proceeding. The rate determined for a 
nonmarket economy country entity determined in an investigation is not 
an all-others rate and may be modified in subsequent segments of a 
proceeding if selected for examination.
    (g) Calculating a rate for unexamined exporters and producers. In 
determining a separate rate in an investigation or administrative 
review covering a nonmarket economy country pursuant to Sec.  
351.108(b), a margin for unexamined exporters and producers in an 
administrative review covering a market economy country, or a 
countervailable subsidy rate for unexamined exporters and producers in 
a countervailing duty administrative review, the Secretary will 
normally apply the methodology set forth in paragraphs (f)(1) and (2) 
of this section. If the Secretary determines that weight-averaging 
calculated dumping margins or countervailable subsidy rates established 
for individually investigated exporters or producers could result in 
the inadvertent release of proprietary information among the 
individually examined exporters or producers, then the Secretary may 
establish a separate rate, review-specific margin, or countervailable 
subsidy rate using a reasonable method other than the weight-averaging 
of dumping margins or countervailable rates, such as the use of a 
simple average of the calculated dumping margins or countervailable 
subsidy rates.
    (h) Voluntary respondents--(1) In general. If the Secretary limits 
the number of exporters or producers to be individually examined under 
sections 777A(c)(2) or 777A(e)(2)(A) of the Act, the Secretary may 
choose to examine voluntary respondents (exporters or producers, other 
than those initially

[[Page 101762]]

selected for individual examination) in accordance with section 782(a) 
of the Act.
    (2) Acceptance of voluntary respondents. The Secretary will 
determine, as soon as practicable, whether to examine a voluntary 
respondent individually. A voluntary respondent accepted for individual 
examination under paragraph (h)(1) of this section will be subject to 
the same filing and timing requirements as an exporter or producer 
initially selected by the Secretary for individual examination under 
sections 777A(c)(2) or 777A(e)(2)(A) of the Act, and, where applicable, 
the use of the facts available under section 776 of the Act and Sec.  
351.308.
    (3) Requests for voluntary treatment. (i) An interested party 
seeking treatment as a voluntary respondent must so indicate by 
including as a title on the first page of the first submission, 
``Request for Voluntary Respondent Treatment.''
    (ii) If multiple exporters or producers seek voluntary respondent 
treatment and the Secretary determines to examine a voluntary 
respondent individually, the Secretary will select voluntary 
respondents in the chronological order in which complete requests were 
filed correctly on the record.
    (4) Timing of voluntary respondent submissions. The deadlines for 
voluntary respondent submissions will generally be the same as the 
deadlines for submissions by individually investigated respondents. If 
there are two or more individually investigated respondents with 
different deadlines for a submission, such as when one respondent has 
received an extension and the other has not, voluntary respondents will 
normally be required to file their submissions with the Secretary by 
the earliest deadline of the individually investigated respondents.

0
7. In Sec.  351.204:
0
a. Revise the section heading and paragraphs (a), (c), and (d); and
0
b. Remove paragraph (e).
    The revisions read as follows:


Sec.  351.204   Period of investigation; requests for exclusions from 
countervailing duty orders based on investigations conducted on an 
aggregate basis.

    (a) Introduction. Because the Act does not specify the precise 
period of time that the Secretary should examine in an antidumping or 
countervailing duty investigation, this section sets forth rules 
regarding the period of investigation (``POI''). In addition, this 
section covers exclusion requests in countervailing duty investigations 
conducted on an aggregate basis.
* * * * *
    (c) Limiting exporters or producers examined and voluntary 
respondents. Once the Secretary has initiated the antidumping or 
countervailing duty investigation, the Secretary may determine that it 
is not practicable to examine each known exporter or producer. In 
accordance with Sec.  351.109(c), the Secretary may select a limited 
number of exporters or producers to examine. Furthermore, in accordance 
with section 782(a) of the Act and Sec.  351.109(h), the Secretary may 
determine to examine voluntary respondents.
    (d) Requests for exclusions from countervailing duty orders based 
on investigations conducted on an aggregate basis. When the Secretary 
conducts a countervailing duty investigation on an aggregate basis 
under section 777A(e)(2)(B) of the Act, the Secretary will consider and 
investigate requests for exclusion to the extent practicable. An 
exporter or producer that desires exclusion from an order must submit:
    (1) A certification by the exporter or producer that it received 
zero or de minimis net countervailable subsidies during the period of 
investigation;
    (2) If the exporter or producer received a countervailable subsidy, 
calculations demonstrating that the amount of net countervailable 
subsidies received was de minimis during the period of investigation;
    (3) If the exporter is not the producer of subject merchandise, 
certifications from the suppliers and producers of the subject 
merchandise that those persons received zero or de minimis net 
countervailable subsidies during the period of investigation; and
    (4) A certification from the government of the affected country 
that the government did not provide the exporter (or the exporter's 
supplier) or producer with more than de minimis net countervailable 
subsidies during the period of investigation.

0
8. In Sec.  351.212 revise paragraph (b)(1) to read as follows:


Sec.  351.212  Assessment of antidumping and countervailing duties; 
provisional measures deposit cap; interest on certain overpayments and 
underpayments.

* * * * *
    (b) * * *
    (1) Antidumping Duties--(i) In general. If the Secretary has 
conducted a review of an antidumping duty order under Sec.  351.213 
(administrative review), Sec.  351.214 (new shipper review), or Sec.  
351.215 (expedited antidumping review), the Secretary normally will 
calculate an assessment rate for each importer of subject merchandise 
covered by the review by dividing the dumping margin found on the 
subject merchandise examined by the estimated entered value of such 
merchandise for normal customs duty purposes on an ad valorem basis. If 
the resulting assessment rate is not zero or de minimis, the Secretary 
will then instruct U.S. Customs and Border Protection to assess 
antidumping duties by applying the assessment rate to the entered value 
of the merchandise.
    (ii) Assessment on a per-unit basis. If the Secretary determines 
that the information normally used to calculate an ad valorem 
assessment rate is not available or the use of an ad valorem rate is 
otherwise not appropriate, the Secretary may instruct U.S. Customs and 
Border Protection to assess duties on a per-unit basis.
* * * * *

0
9. In Sec.  351.213, revise paragraph (f) to read as follows:


Sec.  351.213   Administrative review of orders and suspension 
agreements under section 751(a)(1) of the Act.

* * * * *
    (f) Limiting exporters or producers examined and voluntary 
respondents. Once the Secretary has initiated an antidumping or 
countervailing duty administrative review, the Secretary may determine 
that it is not practicable to examine each known exporter or producer. 
In accordance with Sec.  351.109(c), the Secretary may select a limited 
number of exporters or producers to examine. Furthermore, in accordance 
with section 782(a) of the Act and Sec.  351.109(h), the Secretary may 
determine to examine voluntary respondents.
* * * * *

0
10. In Sec.  351.214, revise the section heading and paragraphs (l)(1) 
introductory text and (l)(3)(iii) to read as follows:


Sec.  351.214   New shipper reviews under section 751(a)(2)(B) of the 
Act; expedited reviews in countervailing duty proceedings.

* * * * *
    (l) * * *
    (1) Request for review. If, in a countervailing duty investigation, 
the Secretary limited the number of exporters or producers to be 
individually examined under section 777A(e)(2)(A) of the Act, an 
exporter that the Secretary did not select for individual examination 
or that the Secretary did not accept as a voluntary respondent (see 
Sec.  351.109(h)) may request a review under this paragraph

[[Page 101763]]

(l). An exporter must submit a request for review within 30 days of the 
date of publication in the Federal Register of the countervailing duty 
order. A request must be accompanied by a certification that:
* * * * *
    (3) * * *
    (iii) The Secretary may exclude from the countervailing duty order 
in question any exporter for which the Secretary determines an 
individual net countervailable subsidy rate of zero or de minimis (see 
Sec.  351.107(c)(3)(ii)), provided that the Secretary has verified the 
information on which the exclusion is based.
* * * * *

0
11. In Sec.  351.301, revise paragraphs (b)(2), (c)(1), and (c)(3)(i) 
and (ii) to read as follows:


Sec.  351.301   Time limits for submission of factual information.

* * * * *
    (b) * * *
    (2) If the factual information is being submitted to rebut, 
clarify, or correct factual information on the record, the submitter 
must provide a written explanation identifying the information which is 
already on the record that the factual information seeks to rebut, 
clarify or correct, including the name of the interested party that 
submitted the information and the date on which the information was 
submitted. The submitter must also provide a written explanation 
describing how the factual information provided under this paragraph 
rebuts, clarifies, or corrects the factual information already on the 
record.
    (c) * * *
    (1) Factual information submitted in response to questionnaires. 
During a proceeding, the Secretary may issue to any person 
questionnaires, which includes both initial and supplemental 
questionnaires. The Secretary will not consider or retain in the 
official record of the proceeding unsolicited questionnaire responses, 
except as provided under Sec.  351.109(h)(2), or untimely filed 
questionnaire responses. The Secretary will reject any untimely filed 
or unsolicited questionnaire response and provide, to the extent 
practicable, written notice stating the reasons for rejection (see 
Sec.  351.302(d)).
* * * * *
    (3) * * *
    (i) Antidumping and countervailing duty investigations. (A) All 
submissions of factual information to value factors of production under 
Sec.  351.408(c) in an antidumping investigation are due no later than 
60 days before the schedule date of the preliminary determination.
    (B) All submissions of factual information to measure the adequacy 
of remuneration under Sec.  351.511(a)(2) in a countervailing duty 
investigation are due no later than 45 days before the scheduled date 
of the preliminary determination.
    (C) If the Secretary determines that interested parties will not 
have sufficient time to submit factual information under the deadlines 
set forth in paragraph (c)(3)(i)(A) or (B) because of circumstances 
unique to a given segment of a proceeding, the Secretary may issue a 
schedule with alternative deadlines for parties to submit factual 
information on the record.
    (ii) Administrative reviews, new shipper reviews, and changed 
circumstances reviews. (A) All submissions of factual information to 
value factors under Sec.  351.408(c) or to measure the adequacy of 
remuneration under Sec.  351.511(a)(2) in administrative reviews, new 
shipper reviews and changed circumstances reviews are due no later than 
60 days before the scheduled date of the preliminary results of review.
    (B) If the Secretary determines that interested parties will not 
have sufficient time to submit factual information under the deadlines 
set forth in paragraph (c)(3)(ii)(A) of this section because of 
circumstances unique to a given segment of a proceeding, the Secretary 
may issue a schedule with alternative deadlines for parties to submit 
factual information on the record.
* * * * *

0
12. In Sec.  351.302, revise paragraph (d)(1)(ii) to read as follows:


Sec.  351.302   Extension of time limits; return of untimely filed or 
unsolicited material.

* * * * *
    (d) * * *
    (1) * * *
    (ii) Unsolicited questionnaire responses, except as provided for 
voluntary respondents under Sec.  351.109(h)(2).
* * * * *

0
13. In Sec.  351.306, revise paragraph (a)(3) to read as follows:


Sec.  351.306   Use of business proprietary information.

    (a) * * *
    (3) An employee of U.S. Customs and Border Protection directly 
involved in conducting an investigation regarding negligence, gross 
negligence, or fraud relating to an antidumping or countervailing duty 
proceeding;
* * * * *

0
14. In Sec.  351.308, add paragraphs (g) through (i) to read as 
follows:


Sec.  351.308   Determinations on the basis of the facts available.

* * * * *
    (g) Partial or total facts available. In accordance with section 
776(a) of the Act, if the Secretary determines to apply facts 
available, regardless of the use of an adverse inference under section 
776(b) of the Act, the Secretary may apply facts available to only a 
portion of its antidumping or countervailing duty analysis and 
calculations, referred to as partial facts available, or to all of its 
analysis and calculations, referred to as total facts available, as 
appropriate on a case-specific basis.
    (h) Segment-specific dumping and countervailable subsidy rates. If 
the Secretary has determined dumping margins or countervailable subsidy 
rates in separate segments of the same proceeding in which the 
Secretary is applying facts available, in accordance with section 
776(c)(2) of the Act the Secretary may apply those margins or rates as 
facts available without being required to conduct a corroboration 
analysis.
    (i) Selection of adverse facts available. If the Secretary 
determines to apply adverse facts available, in accordance with 
sections 776(d)(1), (2), and (3) of the Act, the following applies:
    (1) In an antidumping proceeding, the Secretary may use a dumping 
margin from any segment of the proceeding as adverse facts, including 
the highest dumping margin available. The Secretary may use the highest 
dumping margin available if the Secretary determines that such an 
application is warranted after evaluating the situation that resulted 
in an adverse inference;
    (2) In a countervailing duty segment of the proceeding, in 
accordance with the hierarchy set forth in paragraph (j) of this 
section, the Secretary may use a countervailing subsidy rate applied to 
the same or similar program in a countervailing duty proceeding 
involving the same country or, if there is no same or similar program, 
use a countervailing subsidy rate from a proceeding that the Secretary 
determines is reasonable to use. The Secretary will normally apply the 
highest calculated above-de minimis countervailing duty rate available 
if the Secretary determines that such an application is warranted after 
evaluating the situation that resulted in an adverse inference; and
    (3) In applying adverse facts available, the Secretary will not be 
required to:
    (i) Estimate what a countervailable subsidy or dumping margin would 
have

[[Page 101764]]

been if an interested party that was found to have failed to cooperate 
under section 776(b)(1) of the Act had cooperated; or
    (ii) Demonstrate that the countervailable subsidy rate or dumping 
margin used by the Secretary as adverse facts available reflects an 
alleged ``commercial reality'' of the interested party.
* * * * *

0
15. In Sec.  351.309, revise paragraphs (c)(2) and (d)(2) to read as 
follows:


Sec.  351.309   Written argument.

* * * * *
    (c) * * *
    (2) The case brief must present all arguments that continue in the 
submitter's view to be relevant to the Secretary's final determination 
or final results, including any arguments presented before the date of 
publication of the preliminary determination or preliminary results. As 
part of the case brief, parties are requested to provide the following:
    (i) A table of contents listing each issue;
    (ii) A table of authorities, including statutes, regulations, 
administrative cases, dispute panel decisions and court holdings cited; 
and
    (iii) A public executive summary for each argument raised in the 
brief. Executive summaries should be no more than 450 words in length, 
not counting supporting citations.
    (d) * * *
    (2) The rebuttal brief may respond only to arguments raised in case 
briefs, should identify the arguments raised in case briefs, and should 
identify the arguments to which it is responding. As part of the 
rebuttal brief, parties are requested to provide the following:
    (i) A table of contents listing each issue;
    (ii) A table of authorities, including statutes, regulations, 
administrative cases, dispute panel decisions and court holdings cited; 
and
    (iii) A public executive summary for each argument raised in the 
rebuttal brief. Executive summaries should be no more than 450 words in 
length, not counting supporting citations.
* * * * *

0
16. In Sec.  351.401, revise paragraph (f) to read as follows:


Sec.  351.401   In general.

* * * * *
    (f) Treatment of affiliated parties in antidumping proceedings--(1) 
In general. In an antidumping proceeding under this part, the Secretary 
will normally treat two or more affiliated parties as a single entity 
if the Secretary concludes that there is a significant potential for 
manipulation of prices, production, or other export decisions.
    (2) Significant potential for manipulation. In identifying a 
significant potential for the manipulation of price, production or 
other export decisions, the factors the Secretary may consider for all 
affiliated parties include:
    (i) The level of common ownership;
    (ii) The extent to which managerial employees or board members of 
one firm sit on the board of directors of an affiliated firm; and
    (iii) Whether operations are intertwined, such as through the 
sharing of sales and export information; involvement in production, 
pricing, and other commercial decisions; the sharing of facilities or 
employees; or significant transactions between the affiliated parties.
    (3) Additional considerations for affiliated parties with access to 
production facilities in determining the significant potential for 
manipulation. In determining whether there is a significant potential 
for manipulation, if the Secretary determines that affiliated parties 
have, or will have, access to production facilities for similar or 
identical products, the Secretary shall consider if any of those 
facilities would require substantial retooling in order to restructure 
manufacturing priorities.
    (4) Exceptions. If the following affiliated parties do not produce 
similar or identical products to the subject merchandise or export 
subject merchandise to the United States, the Secretary will normally 
not treat those parties as part of a single entity for purposes of the 
Secretary's calculations under this provision:
    (i) Input suppliers;
    (ii) Sellers of the foreign like product in the home market; and
    (iii) Affiliated entities for which the Secretary determines that 
treating those parties as a single entity would be otherwise 
inappropriate based on record information.
* * * * *

0
17. In Sec.  351.404, add paragraph (g) to read as follows:


Sec.  351.404   Selection of the market to be used as the basis for 
normal value.

* * * * *
    (g) Special rule for certain multinational corporations. In the 
course of an antidumping investigation, if the Secretary determines 
that the factors listed in section 773(d) of the Act are present, the 
Secretary will apply the special rule for certain multinational 
corporations and determine the normal value of the subject merchandise 
by reference to the normal value at which the foreign like product is 
sold in substantial quantities from one or more facilities outside the 
exporting country. In making a determination under this provision, the 
following will apply:
    (1) Interested parties alleging that the Secretary should apply the 
special rule for certain multinational corporations must submit the 
allegation in accordance with the filing requirements set forth in 
Sec.  351.301(c)(2)(i).
    (2) If the Secretary determines that the non-exporting country at 
issue is a nonmarket economy country and, in accordance with Sec.  
351.408, normal value would be determined using a factors of production 
methodology if the special rule for certain multinational corporations 
was applied, the Secretary will not apply the special rule for certain 
multinational corporations.

0
18. In Sec.  351.405, revise paragraph (a) and add paragraph (b)(3) to 
read as follows:


Sec.  351.405   Calculation of normal value based on constructed value.

    (a) Introduction. In certain circumstances, the Secretary may 
determine normal value by constructing a value based on the cost of 
manufacturing, selling, general and administrative expenses and profit. 
The Secretary may use constructed value as the basis for normal value 
when: neither the home market nor a third country market is viable; 
sales below the cost of production are disregarded; sales outside the 
ordinary course of trade or sales for which the prices are otherwise 
unrepresentative are disregarded; sales used to establish a fictitious 
market are disregarded; no contemporaneous sales of comparable 
merchandise are available; or in other circumstances where the 
Secretary determines that home market or third country prices are 
inappropriate. (See section 773(e) and (f) of the Act.) This section 
clarifies the meaning of certain terms and sets forth certain 
information which the Secretary will normally consider in determining a 
constructed value.
    (b) * * *
    (3) Under section 773(e)(2)(B)(iii) of the Act, the Secretary will 
normally consider the following criteria in selecting sources for 
selling, general and administrative expenses, as well as profit, in 
calculating constructed value:
    (i) The similarity of the potential surrogate companies' business 
operations and products to the examined producer's or exporter's 
business operations and products;
    (ii) The extent to which the financial data of the surrogate 
company reflects

[[Page 101765]]

sales in the home market and does not reflect sales to the United 
States;
    (iii) The contemporaneity of the surrogate company's data to the 
period of investigation or review; and
    (iv) The extent of similarity between the customer base of the 
surrogate company and the customer base of the examined producer or 
exporter.

0
19. In Sec.  351.408, revise paragraph (b) to read as follows:


Sec.  351.408   Calculation of normal value of merchandise from 
nonmarket economy countries.

* * * * *
    (b) Selecting surrogate countries--(1) Determining comparable 
economies. The Secretary is directed by sections 773(c)(2)(B) and 
773(c)(4)(A) of the Act to select surrogate countries which are at a 
level of economic development comparable to that of the nonmarket 
economy country at issue.
    (i) Measuring economic comparability. In determining whether market 
economy countries are at a level of economic development comparable to 
the nonmarket economy at issue, the Secretary will place primary 
emphasis on per capita gross domestic product (GDP).
    (ii) Additional considerations in determining economic 
comparability. When the Secretary determines that such an analysis is 
warranted, the Secretary may consider additional factors in determining 
whether certain market economy countries are at a level of economic 
development comparable to the nonmarket economy at issue. If the 
Secretary considers additional factors in its analysis, the Secretary 
will identify those factors and provide the reason it considered those 
factors along with the list of comparable market economies issued under 
paragraph (b)(1)(iii) of this section.
    (iii) Annual listing of comparable economies. On an annual basis, 
the Secretary will determine market economies comparable to individual 
nonmarket economies and list those market economies on the Secretary's 
website.
    (2) Determining significant producers of comparable merchandise. In 
selecting a surrogate country from those countries which the Secretary 
determines are economically comparable, the Secretary will consider, in 
accordance with section 773(c)(2)(A) and (c)(4)(B) of the Act, those 
countries that are significant producers of merchandise comparable to 
the subject merchandise.
    (3) Selecting between surrogate countries which are economically 
comparable and significant producers of comparable merchandise. If more 
than one economically comparable country produces comparable 
merchandise, the Secretary will consider the totality of the 
information on the record in selecting a surrogate country. Among the 
criteria the Secretary may consider in selecting a surrogate country 
are the availability, accessibility, and quality of data from those 
countries and the similarity of products manufactured in the potential 
surrogate countries in comparison to the subject merchandise.
* * * * *

0
20. In Sec.  351.502:
0
a. Revise paragraphs (d) and (e); and
0
b. Remove paragraphs (f) and (g).
    The revisions read as follows:


Sec.  351.502   Specificity of domestic subsidies.

* * * * *
    (d) Disaster relief. The Secretary will not regard disaster relief 
including pandemic relief as being specific under section 771(5A)(D) of 
the Act if such relief constitutes general assistance available to 
anyone in the area affected by the disaster.
    (e) Employment assistance. The Secretary will not regard employment 
assistance programs as being specific under section 771(5A)(D) if such 
assistance is provided solely with respect to employment of general 
categories of workers such as those based on age, gender, disability, 
long-term unemployment, veteran, rural or urban status and is available 
to everyone hired within those categories without any industry or 
enterprise restrictions.

0
21. In Sec.  351.503, add paragraph (b)(3) to read as follows:


Sec.  351.503   Benefit.

* * * * *
    (b) * * *
    (3) Contingent liabilities and assets. For the provision of a 
contingent liability or asset not otherwise addressed under a specific 
rule identified under paragraph (a) of this section, the Secretary will 
treat the balance or value of the contingent liability or assets as an 
interest-free provision of funds and will calculate the benefit using, 
where appropriate, either a short-term or long-term commercial interest 
rate.
* * * * *

0
22. In Sec.  351.505, add paragraph (a)(6)(iii) and revise paragraphs 
(b), (c), and (e) to read as follows:


Sec.  351.505   Loans.

    (a) * * *
    (6) * * *
    (iii) Initiation standard for government-owned policy banks. An 
interested party will normally meet the initiation threshold for 
specificity under paragraph (a)(6)(ii)(A) of this section with respect 
to section 771(5A)(D) of the Act if the party can sufficiently allege 
that the government-owned policy bank provides loans pursuant to 
government policies or directives and loan distribution information for 
the bank is not reasonably available. A policy bank is a government-
owned special purpose bank.
    (b) Time of receipt of benefit. The Secretary normally will 
consider a benefit as having been received in the year in which the 
firm otherwise would have had to make a payment on the comparable 
commercial loan.
    (c) Allocation of benefit to a particular time period--(1) Short-
term loans. The Secretary will allocate (expense) the benefit from a 
short-term loan to the year(s) in which the firm is due to make 
interest payments on the loan.
    (2) Long-term loans. The Secretary normally will calculate the 
subsidy amount to be assigned to a particular year by calculating the 
difference in interest payments for that year, i.e., the difference 
between the interest paid by the firm in that year on the government-
provided loan and the interest the firm would have paid on the 
comparable commercial benchmark loan.
* * * * *
    (e) Contingent liability interest-free loans--(1) Treatment as 
loans. In the case of an interest-free loan for which the repayment 
obligation is contingent upon the company taking some future action or 
achieving some goal in fulfillment of the loan's requirements, the 
Secretary normally will treat any balance on the loan outstanding 
during a year as an interest-free, short-term loan in accordance with 
paragraphs (a), (b), and (c)(1) of this section. However, if the event 
upon which repayment of the loan depends will occur at a point in time 
more than one year after the receipt of the contingent liability loan, 
the Secretary will use a long-term interest rate as the benchmark in 
accordance with paragraphs (a), (b), and (c)(2) of this section.
    (2) Treatment as grants. If at any point in time the Secretary 
determines that the event upon which repayment depends is not a viable 
contingency or the loan recipient has met the contingent action or goal 
and the government has not taken meaningful action to collect 
repayment, the Secretary will treat the outstanding balance of the loan 
as a grant received in the year in which this condition manifests 
itself.

[[Page 101766]]


0
23. In Sec.  351.509, revise paragraph (a)(1) and (b)(1) to read as 
follows:


Sec.  351.509  Direct taxes.

    (a) * * *
    (1) Exemption or remission of taxes. In the case of a program that 
provides for a full or partial exemption or remission of a direct tax 
(for example, an income tax), or a reduction in the base used to 
calculate a direct tax, a benefit exists to the extent that the tax 
paid by a firm as a result of the program is less than the tax the firm 
would have paid in the absence of the program, including as a result of 
being located in an area designated by the government as being outside 
the customs territory of the country.
    (b) * * *
    (1) Exemption or remission of taxes. In the case of a full or 
partial exemption or remission of a direct tax, the Secretary normally 
will consider the benefit as having been received on the date on which 
the recipient firm would otherwise have had to pay the taxes associated 
with the exemption or remission. For all exemptions or remissions 
related to income taxes, this date will be the date on which the firm 
filed its tax return.
* * * * *

0
24. In Sec.  351.510, revise paragraph (a)(1) to read as follows:


Sec.  351.510  Indirect taxes and import charges (other than export 
programs).

    (a) * * *
    (1) Exemption or remission of taxes. In the case of a program other 
than an export program that provides for the full or partial exemption 
or remission of an indirect tax or an import charge, a benefit exists 
to the extent that the taxes or import charges paid by a firm as a 
result of the program are less than the taxes the firm would have paid 
in the absence of the program, including as a result of being located 
in an area designated by the government as being outside the customs 
territory of the country.
* * * * *

0
25. In Sec.  351.511, revise paragraphs (a)(2)(i) and (iii) to read as 
follows:


Sec.  351.511   Provision of goods or services.

    (a) * * *
    (2) * * *
    (i) In general. The Secretary will normally seek to measure the 
adequacy of remuneration by comparing the government price to a market-
determined price for the good or service resulting from actual 
transactions in the country in question. Such a price could include 
prices stemming from actual transactions between private parties or 
actual imports. In choosing such transactions or sales, the Secretary 
will consider product similarity; quantities sold or imported; and 
other factors affecting comparability.
* * * * *
    (iii) World market price unavailable. If there is no world market 
price available to purchasers in the country in question, the Secretary 
will normally measure the adequacy of remuneration by assessing whether 
the government price is consistent with market principles. In making an 
assessment of whether a government price is consistent with market 
principles under this provision, the Secretary may assess such factors 
as costs (including rates of return sufficient to ensure future 
operations), the government's price setting methodology, possible price 
discrimination, or a government price derived from actual sales from 
competitively run government auctions if the government auction:
    (A) Uses competitive bid procedures that are open without 
restriction on the use of the good or service;
    (B) Is open without restriction to all bidders, including foreign 
enterprises, and protects the confidentiality of the bidders;
    (C) Accounts for the substantial majority of the actual government 
provision of the good or service in the jurisdiction in question; and
    (D) Determines the winner based solely on price.
* * * * *

0
26. Revise Sec.  351.512 to read as follows:


Sec.  351.512  Purchase of goods.

    (a) Benefit--(1) In general. In the case where goods are purchased 
by the government from a firm, in accordance with section 771(5)(E)(iv) 
of the Act a benefit exists to the extent that such goods are purchased 
for more than adequate remuneration.
    (2) Adequate remuneration defined--(i) In general. The Secretary 
will normally seek to measure the adequacy of remuneration by comparing 
the price paid to the firm for the good by the government to a market-
determined price for the good based on actual transactions, including 
imports, between private parties in the country in question, but if 
such prices are not available, then to a world market price or prices 
for the good.
    (ii) Actual market-determined prices unavailable. If there are no 
market-determined domestic or world market prices available, the 
Secretary may measure the adequacy of remuneration by analyzing any 
premium in the request for bid or government procurement regulations 
provided to domestic suppliers of the good or use any other methodology 
to assess whether the price paid to the firm for the good by the 
government is consistent with market principles.
    (iii) Exclusion of certain prices. In measuring the adequacy of 
remuneration under this section, the Secretary may exclude certain 
prices from a particular country from its analysis if the Secretary 
determines that interested parties have demonstrated, with sufficient 
information, that certain actions, including government laws or 
policies, such as price or production mandates or controls, likely 
impact such prices.
    (iv) Use of ex-factory or ex-works price. In measuring adequate 
remuneration under paragraph (a)(2)(i) or (ii) of this section, the 
Secretary will use an ex-factory or ex-works comparison price and price 
paid to the firm for the good by the government in order to measure the 
benefit conferred to the recipient within the meaning of section 
771(5)(E) of the Act. The Secretary will, if necessary, adjust the 
comparison price and the price paid to the firm by the government to 
remove all delivery charges, import duties, and taxes to derive an ex-
factory or ex-works price.
    (3) Exception when the government is both a provider and purchaser 
of the good. When the government is both a provider and a purchaser of 
the good, such as electricity, the Secretary will normally measure the 
benefit to the recipient firm by comparing the price at which the 
government provided the good to the price at which the government 
purchased the same good from the firm.
    (b) Time of receipt of benefit. In the case of the purchase of a 
good, the Secretary normally will consider a benefit as having been 
received as of the date on which the firm receives payment for the 
purchased good.
    (c) Allocation of benefit to a particular time period. In the case 
of the purchase of a good, the Secretary will normally allocate 
(expense) the benefit to the year in which the benefit is considered to 
have been received under paragraph (b) of this section. However, if the 
Secretary considers this purchase to be for or tied to capital assets 
such as land, buildings, or capital equipment, the benefit will 
normally be allocated over time as defined in Sec.  351.524(d)(2).

0
27. Revise Sec.  351.521 to read as follows:

[[Page 101767]]

Sec.  351.521  Indirect taxes and import charges on capital goods and 
equipment (export programs).

    (a) Benefit--(1) Exemption or remission of taxes and import 
charges. In the case of a program determined to be an export subsidy 
that provides for the full or partial exemption or remission of an 
indirect tax or an import charge on the purchase or import of capital 
goods and equipment, a benefit exists to the extent that the taxes or 
import charges paid by a firm as a result of the program are less than 
the taxes the firm would have paid in the absence of the program, 
including as a result of being located in an area designated by the 
government as being outside the customs territory of the country.
    (2) Deferral of taxes and import charges. In the case that the 
program provides for a deferral of indirect taxes or import charges, a 
benefit exists to the extent that appropriate interest charges are not 
collected. Normally, a deferral of indirect taxes or import charges 
will be treated as a government-provided loan in the amount of the 
taxes deferred, according to the methodology described in Sec.  
351.505. The Secretary will use a short-term interest rate as the 
benchmark for tax deferrals of one year or less. The Secretary will use 
a long-term interest rate as the benchmark for tax deferrals of more 
than one year.
    (b) Time of receipt of benefit--(1) Exemption or remission of taxes 
and import charges. In the case of a full or partial exemption or 
remission of an indirect tax or import charge, the Secretary normally 
will consider the benefit as having been received at the time the 
recipient firm otherwise would be required to pay the indirect tax or 
import charge.
    (2) Deferral of taxes and import charges. In the case of the 
deferral of an indirect tax or import charge of one year or less, the 
Secretary normally will consider the benefit as having been received on 
the date on which the deferred tax becomes due. In the case of a multi-
year deferral, the Secretary normally will consider the benefit as 
having been received on the anniversary date(s) of the deferral.
    (c) Allocation of benefit to a particular time period. The 
Secretary normally will allocate (expense) the benefit of a full or 
partial exemption, remission or deferral of taxes or import charges 
described in paragraph (a) of this section to the year in which the 
benefit is considered to have been received under paragraph (b) of this 
section.


Sec.  351.522  [Removed and Reserved]

0
28. Remove and reserve Sec.  351.522.


0
29. In Sec.  351.525:
0
a. Revise paragraphs (b)(1) and (b)(6)(iii), (iv), (v), and (vi);
0
b. Add paragraphs (b)(6)(vii) and (b)(8) and (9);
0
c. Revise paragraph (c); and
0
d. Add paragraph (d).
    The revisions and additions read as follows:


 Sec.  351.525  Calculation of ad valorem subsidy rate and attribution 
of subsidy to a product.

* * * * *
    (b) * * *
    (1) In general. In attributing a subsidy to one or more products, 
the Secretary will apply the rules set forth in paragraphs (b)(2) 
through (9) of this section. The Secretary may determine to limit the 
number of cross-owned corporations examined under this section based on 
record information and resource availability.
* * * * *
    (6) * * *
    (iii) Holding or parent companies. If the firm that received a 
subsidy is a holding company, including a parent company with its own 
business operations, the Secretary will attribute the subsidy to the 
consolidated sales of the holding company and its subsidiaries.
    (iv) Input producer--(A) In general. If there is cross-ownership 
between an input producer that supplies, either directly or indirectly, 
a downstream producer and production of the input product is primarily 
dedicated to production of the downstream products, the Secretary will 
attribute subsidies received by the input producer to the combined 
sales of the input and downstream products produced by both 
corporations (excluding the sales between the two corporations).
    (B) Primarily dedicated. In determining whether the input product 
is primarily dedicated to production of the downstream product, the 
Secretary will determine, as a threshold matter, whether the input 
could be used in the production of a downstream product including 
subject merchandise. The Secretary may also consider the following 
factors, which are not in hierarchical order: whether the input is a 
link in the overall production chain; whether the input provider's 
business activities are focused on providing the input to the 
downstream producer; whether the input is a common input used in the 
production of a wide variety of products and industries; whether the 
downstream producers in the overall production chain are the primary 
users of the inputs produced by the input producer; whether the inputs 
produced by the input producer are primarily reserved for use by the 
downstream producer until the downstream producer's needs are met; 
whether the input producer is dependent on the downstream producers for 
the purchases of the input product; whether the downstream producers 
are dependent on the input producer for their supply of the input; the 
coordination, nature and extent of business activities between the 
input producer and the downstream producers whether directly between 
the input producer and the downstream producers or indirectly through 
other cross-owned corporations; and any other factor deemed relevant by 
the Secretary based upon the case-specific facts.
    (v) Providers of utility products. If there is cross-ownership 
between a corporation providing electricity, natural gas or other 
similar utility product and a producer of subject merchandise, the 
Secretary will attribute subsidies received by that provider to the 
combined sales of that provider and the sales of products sold by the 
producer of subject merchandise if at least one of the following two 
conditions are met:
    (A) A substantial percentage, normally defined as 25 percent or 
more, of the production of the cross-owned utility provider is provided 
to the producer of subject merchandise, or
    (B) The producer of subject merchandise purchases a substantial 
percentage, normally defined as 25 percent or more, of its electricity, 
natural gas, or other similar utility product from the cross-owned 
provider.
    (vi) Transfer of subsidy between corporations with cross-ownership. 
If a cross-owned corporation received a subsidy and transferred the 
subsidy to a producer of subject merchandise, the Secretary will only 
attribute the subsidy to products produced by the recipient of the 
transferred subsidy. When the cross-owned corporation that transferred 
the subsidy could fall under two or more of the paragraphs under 
paragraph (b)(6) of this section the transferred subsidy will be 
attributed solely under this paragraph.
    (vii) Cross-ownership defined. Cross-ownership exists between two 
or more corporations when one corporation can use or direct the 
individual assets of the other corporation(s) in essentially the same 
ways it can use its own assets. Normally, this standard will be met 
when there is a majority voting ownership interest between two 
corporations or through common

[[Page 101768]]

ownership of two (or more) corporations.
* * * * *
    (8) Attribution of subsidies to plants or factories. The Secretary 
will not tie or attribute a subsidy on a plant- or factory-specific 
basis.
    (9) General standard for finding tying. A subsidy will normally be 
determined to be tied to a product or market when the authority 
providing the subsidy was made aware of, or otherwise had knowledge of, 
the intended use of the subsidy and acknowledged that intended use of 
the subsidy prior to, or concurrent with, the bestowal of the subsidy.
    (c) Trading companies--(1) In general. Benefits from subsidies 
provided to a trading company that exports subject merchandise shall be 
cumulated with benefits from subsidies provided to the firm which is 
producing subject merchandise that is sold through the trading company, 
regardless of whether the trading company and the producing firm are 
affiliated.
    (2) The individually examined respondent exports through trading 
company. To cumulate subsidies when the trading company is not 
individually examined as a respondent, the Secretary will pro-rate the 
subsidy rate calculated for the trading company by using the ratio of 
the producer's total exports of subject merchandise to the United 
States sold through the trading company divided by producer's total 
exports of subject merchandise to the United States and add the 
resultant rate onto the producer's calculated subsidy rate.
    (3) The individually examined respondent is a trading company. To 
cumulate subsidies when the trading company is individually examined as 
a respondent, the Secretary will pro-rate the subsidy rate calculated 
for the producer(s) by the ratio of the producer's sales of subject 
merchandise to the United States purchased or sourced by the trading 
company to total sales to the United States of subject merchandise from 
all selected producers sourced by the respondent trading company and 
add the resultant rates to the trading company's calculated subsidy 
rate.
    (d) Ad valorem subsidy rate in countries with high inflation. For 
countries experiencing an inflation rate greater than 25 percent per 
annum during the relevant period, the Secretary will normally adjust 
the benefit amount (numerator) and the sales data (denominator) to 
account for the rate of inflation during the relevant period of 
investigation or review in calculating the ad valorem subsidy rate.

0
30. Revise Sec.  351.526 to read as follows:


Sec.  351.526  Subsidy extinguishment from changes in ownership.

    (a) In general. The Secretary will normally presume that non-
recurring subsidies continue to benefit a recipient in full over an 
allocation period determined consistent with Sec. Sec.  351.507(d), 
351.508(c)(1), or 351.524, notwithstanding an intervening change in 
ownership.
    (b) Rebutting the presumption of subsidy continuation 
notwithstanding a change in ownership. (1) An interested party may 
rebut the presumption in paragraph (a) of this section by demonstrating 
with sufficient evidence that, during the allocation period, a change 
in ownership occurred in which the seller sold its ownership of all or 
substantially all of a company or its assets, retaining no control of 
the company or its assets, and
    (i) In the case of a government-to-private sale, that the sale was 
an arm's-length transaction for fair market value, or
    (ii) In the case of a private-to-private sale, that the sale was an 
arm's-length transaction, unless a party demonstrates that the sale was 
not for fair market value.
    (2) Arm's-length. In determining whether the evidence presented in 
paragraph (b)(1) of this section demonstrates that the transaction was 
conducted at arm's length, the Secretary will be guided by the SAA, 
which defines an arm's-length transaction as a transaction negotiated 
between unrelated parties, each acting in its own interest, or between 
related parties such that the terms of the transaction are those that 
would exist if the transaction had been negotiated between unrelated 
parties.
    (3) Fair Market Value. (i) In determining whether the evidence 
presented by parties pursuant to paragraph (b)(1) of this section 
demonstrates that the transaction was for fair market value, the 
Secretary will determine whether the seller, including in the case of a 
privatization through the government in its capacity as seller, acted 
in a manner consistent with the normal sales practices of private, 
commercial sellers in that country, taking into account evidence 
regarding whether the seller failed to maximize its return on what it 
sold.
    (ii) In making the determination under paragraph (b)(3)(i) of this 
section, the Secretary may consider information regarding comparable 
benchmark prices as well as information regarding the process through 
which the sale was made. The following is a non-exhaustive list of 
specific considerations that the Secretary may find to be relevant in 
this regard:
    (A) Objective analysis. Whether the seller performed or obtained an 
objective analysis in determining the appropriate sales price and, if 
so, whether it implemented the recommendations of such objective 
analysis for maximizing its return on the sale, including in regard to 
the sales price recommended in the analysis;
    (B) Artificial barriers to entry. Whether the seller-imposed 
restrictions on foreign purchasers or purchasers from other industries, 
overly burdensome or unreasonable bidder qualification requirements, or 
any other restrictions that artificially suppressed the demand for, or 
the purchase price of, the company;
    (C) Highest bid. Whether the seller accepted the highest bid, 
reflecting the full amount that the company or its assets (including 
the value of any subsidy benefits) were actually worth under the 
prevailing market conditions and whether the final purchase price was 
paid through monetary or close equivalent compensation; and
    (D) Committed investment. Whether there were price discounts or 
other inducements in exchange for promises of additional future 
investment that private, commercial sellers would not normally seek 
(for example, retaining redundant workers or unwanted capacity) and, if 
so, whether such committed investment requirements were a barrier to 
entry or in any way distorted the value that bidders were willing to 
pay for what was being sold.
    (4) Deadline to rebut the presumption under paragraph (b)(1) of 
this section. The Secretary will normally not consider information 
submitted by a respondent or government on the record to be sufficient 
to rebut the presumption of subsidy continuation under paragraph (b)(1) 
of this section unless that submitted information is timely filed as 
part of the respondent's or government's initial questionnaire 
response.
    (5) Market distortion. Information presented under paragraphs 
(b)(2) and (3) of this section notwithstanding, the Secretary will not 
find the presumption in paragraph (a) of this section to be rebutted if 
an interested party has demonstrated that, at the time of the change in 
ownership, the broader market conditions necessary for the transaction 
price to accurately reflect the subsidy benefit were not present or 
were severely distorted by government action or inaction such that the 
transaction price was meaningfully

[[Page 101769]]

different from what it would otherwise have been absent the distortive 
government action or inaction. In assessing such claims, the Secretary 
may consider, among other things, the following factors:
    (i) Fundamental conditions. Whether the fundamental requirements 
for a properly functioning market are sufficiently present in the 
economy in general as well as in the particular industry or sector, 
including, for example, free interplay of supply and demand, broad-
based and equal access to information, sufficient safeguards against 
collusive behavior, and effective operation of the rule of law; and
    (ii) Legal and fiscal incentives. Whether the government has used 
the prerogatives of government in a special or targeted way that makes 
possible or otherwise significantly distorts the terms of a change in 
ownership in a way that a private seller could not. Examples of such 
incentives include, but are not limited to, the following:
    (A) Special tax or duty rates that make the sale more attractive to 
potential purchasers;
    (B) Regulatory exemptions particular to the privatization (or to 
privatizations generally) affecting worker retention or environmental 
remediation; or
    (C) Subsidization or support of other companies to an extent that 
severely distorts the normal market signals regarding company and asset 
values in the industry in question.
    (c) Subsidy benefit extinguishment--(1) In general. If the 
Secretary determines that any evidence presented by interested parties 
under paragraph (b) of this section rebuts the presumption under 
paragraph (a) of this section, the full amount of pre-transaction 
subsidy benefits, including the benefit of any concurrent subsidy 
meeting the criteria in paragraph (c)(2) of this section, will be found 
to be extinguished and therefore not countervailable. Absent such a 
finding, the Secretary will not find that a change in ownership 
extinguishes subsidy benefits.
    (2) Concurrent subsidies. For purposes of paragraph (c)(1) of this 
section, concurrent subsidies are those subsidies given to facilitate 
or encourage or that are otherwise bestowed concurrent with a change in 
ownership. The Secretary will normally consider the value of a 
concurrent subsidy to be fully reflected in the fair market value price 
of an arm's-length change in ownership and, therefore, to be fully 
extinguished in such a transaction under paragraph (c)(1) of this 
section, if the following criteria are met:
    (i) The nature and value of the concurrent subsidies are fully 
transparent to all potential bidders and, therefore, reflected in the 
final bid values of the potential bidders,
    (ii) The concurrent subsidies are bestowed prior to the sale, and
    (iii) There is no evidence otherwise on the record demonstrating 
that the concurrent subsidies are not fully reflected in the 
transaction price.

[FR Doc. 2024-29245 Filed 12-10-24; 8:45 am]
BILLING CODE 3510-DS-P`