Anti-dumping Investigation: Calculation of the Dumping Margin

An averaging group will consist of subject merchandise that is identical or virtually identical in all physical characteristics and that is sold to the United States at the same level of trade. In identifying sales to be included in an averaging group, the Secretary also will take into account, where appropriate, the region of the United States in which the merchandise is sold, and such other factors as the Secretary considers relevant. Before discussing the DGTR’s termination order, since the subject investigation is connected to the original anti-dumping investigation on imports of the subject goods from Vietnam, it would be relevant to first provide a brief background of this previous investigation. On 7 May 2021, the Directorate General of Trade Remedies (‘DGTR’) concluded the anti-dumping investigation concerning imports of ‘Plain Medium Density Fibre Board having thickness 6mm and above’ (‘subject goods’) produced by Kim Tin MDF Joint Stock Company, Vietnam (‘Kim Tin’) by terminating the investigation.

Some assert that any elimination of a subset of comparisons (i.e., denial of offsets) is a violation of the United States’ WTO obligations. In their view, an explicit prohibition of zeroing in all instances is necessary to ensure full compliance with WTO rulings and encourage other countries to comply with their commitments. Other commentators make more specific proposals for implementing the new practice in sunset reviews. One such proposal is for the Department to recalculate dumping margins without zeroing upon a showing by a respondent company that its individual dumping margin or the “all others” dumping margin would be zero or de minimis.

Analysis of Comments Received

Some of these parties explain that applying the new method to reviews that are pending as of the effective date would confuse interested parties in several different ways. These parties argue that, due to the complicated nature of this new policy, the Department is likely to face many complex and novel issues concerning its case-specific application. One commentator argues that while it may be appropriate to invoke section 123(g) of the URAA for purposes of modifying the Department’s regulations, the use of zeroing can be abandoned without the Department invoking its authority under section 123 because the Department can choose not to apply the zeroing method on a case-by-case basis. This party argues that Congress has purposefully imposed section 123 procedures only on amendments or modifications of regulations and written policy guidance.

• A number of commentators argue that the Department should state explicitly that it will grant offsets when the export price exceeds the normal value, and specifically eliminate the zeroing methodology.
• Other commentators argue that the statute prohibits the Department from implementing this new policy on entries covered by completed reviews because they all entered the United States before the effective date.
• One commentator suggests the Department should give renewed focus to the use of provisions addressing fictitious markets and sales that are outside the ordinary course of trade, should consider shortening the range of months from which the contemporaneous month may be selected, and should revise its model match criteria.
• The “average-to-transaction” method involves a comparison of the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions for comparable merchandise.

The domestic industry on the other hand contended, inter alia, that as per decisions of the WTO panels in Mexico-Beef and Rice and Ukraine-Ammonium Nitrate, the investigation against Kim Tin stood terminated. The domestic industry also cited the practice in other countries such as the European Union where the investigation against parties having de-minimis dumping margins was terminated. Some commentators argue that, because it only takes a simple programming modification to implement the final rule, the 60-day implementation period is too long even for a review for which the preliminary results have been issued. Several of these commentators argue that faster implementation will pose less litigation risk to the United States and result in a reduced litigation burden for all parties. Some parties argue that because the provision of offsets is an entirely administrative practice, the modification can be applied immediately, and there is no need for further delay.

Dumping in the GATT/WTO

The “transaction-to-transaction” method involves a comparison of the normal values of individual transactions with the export prices (or constructed export prices) of individual transactions for comparable merchandise. Other commentators argue that the statute prohibits the Department from implementing this new policy on entries covered by completed reviews because they all entered the United States before the effective date. The statute only permits the Department to abandon zeroing with respect to entries occurring on or after the date that USTR directs implementation, and which remain unliquidated at the time the Department implements its determination. Because entries covered by completed reviews entered prior to the effective date, the Department is prohibited from recalculating dumping margins for entries covered by those reviews. This commentator argues the Department should clarify that it will not recalculate dumping margins for completed reviews. Several commentators suggest that the effective date should be the date of the publication of the notice of the final rule.

The request concerns specific provisions of the US Tariff Act of 1930 and the Department of Commerce implementing regulation as well as US Department of Commerce methodology and its determinations in specific cases involving products imported from the EC. (2) The Secretary will use the transaction-to-transaction method only in unusual situations, such as when there are very few sales of subject merchandise and the merchandise sold in each market is identical or very similar or is custom-made. The modification in the methodology will apply to preliminary determinations issued after April 16, 2012. The DGTR’s Termination Order makes it clear that there where de-minimis margin has been determined against a particular party, the proper procedure is to seek a review under Rule 23 and not an original investigation under Rule 5.

Domestic industry

On 15 March 2006, the Chairman of the Appellate Body informed the DSB that it would not be able to circulate its report within the 60-day period due to the time required for completion and translation of the report, and that it estimated it would be circulated to WTO Members no later than 18 April 2006. In the EC’s view, these additional specific determinations appear to be inconsistent with the US obligations under the same WTO provisions mentioned above. (1) In an investigation or review, the Secretary will use the average-to-average method unless the Secretary determines another method is appropriate in a particular case. Some commentators urge the Department not to interpret section 129(c)(1) as precluding the agency from taking action that affects imports that entered before the date on which USTR directs the Department to implement. Instead, consistent with past representations to the WTO, the Department should find that section 129(c)(1) is ambiguous with respect to the treatment of such entries.

Subsequent to an application filed by the domestic industry, the DGTR initiated an original anti-dumping investigation concerning imports of the subject goods from Indonesia and Vietnam on 7 May 2015 (‘original investigation’). By Final Findings dated 5 May 2016, the DGTR recommended the imposition of definitive anti-dumping duty (‘ADD’) on imports of the subject goods from these countries. Two commentators representing interests or products from the Russian Federation note that Russia is in the process of joining the WTO, but is not yet a Member.

Anti-dumping Investigation: Calculation of the Dumping Margin

The purpose of the regulation is to describe in general terms the comparison methodologies available, and the default methodology to be employed in different contexts. Greater specificity as to when offsets will be provided under each comparison methodology is beyond the intended purpose of the regulation, and is unnecessary for purposes of adopting a methodology that is WTO-consistent. The Department has already made clear that its revised methodology for reviews will parallel the WTO-consistent methodology the Department currently applies in original investigations, and that offsets will be provided when using this methodology. The Department has been granting offsets in original investigations since 2007 without specific regulatory language directing it to do so. The Department has further explained, above, how assessment rates will be determined for individual importers.

• Some commentators argue that because the date of the preliminary results of review for a proceeding can be subject to circumstances in the individual proceeding, the methodology applied could differ among proceedings that were initiated on the same day, which they claim would result in arbitrary treatment.
• For reasons fully set forth in response to comments on the Effective Date of Implementation section of this notice, the Department finds this to be an adequate amount of time to permit parties and the Department to respond to novel and complex issues that arise as a result of implementing the modified regulations.
• This order also supports the understanding that invocation of Rule 14(c) of the AD Rules for termination of an investigation where a de-minimis dumping margin is determined, does not pertain to an individual party but a country which is under investigation, at least as far as India is concerned.
• It is also pertinent to note that DGTR in the Final Findings dated 5 May 2016 of the original investigation had not terminated the investigation against Kim Tin.
• However, as is the case with normal value, the Agreement recognizes that this transaction price may not be appropriate for purposes of comparison.

Another commentator points out that when the Proposed Modification for Reviews speaks of applying the new methodology pursuant to section 129, it only references disputes brought by the European Union, Japan and Mexico. This commentator contends, however, the Appellate Body’s finding in US-Zeroing (EC) makes clear that the United States’ obligations to remedy zeroing extend to reviews even though a Member may only have challenged the Department’s use of zeroing in the antidumping investigation. Thus, the Department must recalculate dumping margins and antidumping duty assessment rates for subsequent reviews of those orders. Other commentators urge the Department to apply the new methodology to reviews subject to all ongoing and future WTO proceedings in which zeroing is an issue before a panel or the Appellate Body. One commentator is concerned that the Department has not adequately explained why it is necessary to alter its current dumping calculation methodology in reviews from an A-T methodology to one using monthly weighted averages in both markets. Some request that the Department clarify whether it will grant offsets for negative dumping margins only against positive dumping margins found in the same month or apply negative dumping margins to offset positive dumping margins across the entire period of review (POR).

WTO Dispute Settlement

The Department’s regulations specifically describe three types of comparison methodologies that might be used to determine margins of dumping and antidumping duty assessment rates. Although the Final Modification for Reviews adopts the A-A method as the default method in reviews, the Department may determine to use any of the alternative comparison methodologies when deemed appropriate in a particular case. A number of commentators argue that the Department should state explicitly that it will grant offsets when the export price exceeds the normal value, and specifically eliminate the zeroing methodology. Some of these commentators suggest that the Department should clearly state that it will grant offsets equal to the full difference between normal value and export price when calculating dumping margins using the A-A comparison methodology in reviews. These commentators note that the proposed regulations do not explicitly state that the Department will provide offsets when calculating the dumping margin. Some commentators suggest that the Department include explicit text in the Final Modification for Reviews, the regulations, or both, that unequivocally eliminates zeroing regardless of the comparison methodology employed, and regardless of any case-specific circumstances.

If the imposition of anti-dumping duties is based on a finding of material injury, as opposed to threat of material injury or material retardation of the establishment of a domestic industry, anti-dumping duties may be collected as of the date provisional measures were imposed. If provisional duties were collected in an amount greater than the amount of the final duty, or if the imposition of duties is based on a finding of threat of material injury or material retardation, a refund of provisional duties is required. Article 10.6 provides for retroactive application of final duties to a date not more than 90 days prior to the application of provisional measures in certain exceptional circumstances involving a history of dumping, massive dumped imports, and potential undermining of the remedial effects of the final duty.

This additional calculation will effectively repeat the first calculation performed at the exporter or producer level; however, in this case, the export transactions involved in the calculation will be limited to those involving merchandise imported by the individual importer. The monthly, weighted-average export prices of those transactions will be compared to monthly normal values, and the results will be aggregated with offsets being provided for non-dumped comparisons. Those offsets will be provided on an importer-specific basis in the aggregation, regardless of the month, model, level of trade, etc. for the other comparison(s) found to have been dumped. With respect to the potential for masked dumping as a reason not to prefer the use of A-A comparisons in reviews, the Department does not agree that the potential for masked dumping means that A-A comparisons are unsuitable as the default basis for determining the weighted-average dumping margins and antidumping duty assessment rates in reviews.

The Department may also rely on past dumping margins that were not affected by the WTO-inconsistent methodology, such as dumping margins recalculated pursuant to Section 129 proceedings, dumping margins determined based on the use of adverse facts available, and dumping margins where no offsets were denied because all comparison results were positive. If the dumping margins determined in a manner not found to be WTO-inconsistent in these disputes indicate that dumping continued with the discipline of the order in place, those dumping margins alone can form the basis for a determination that dumping will continue or recur if the order were to be revoked. Additionally, if dumping margins decline over the five-year sunset period, or if there are no dumping margins during the five-year sunset period, decreased volumes may provide another basis to determine that dumping is likely to continue or recur if the discipline of the order is removed. Some commentators argue that the Proposed Modification for Reviews does not sufficiently account for the many sunset reviews currently pending where past dumping margins were based on zeroing.

The Agreement also provides specific rules on the adjustment to be made if the comparison of normal value is to a constructed export price. In those circumstances, allowance must be made for costs, including duties and taxes, incurred between the importation of the product and the resale to the first independent purchaser, as well as for profits accruing. The DGTR in the instant investigation has not treated de-minimis dumping margin as termination of investigation against Kim Tin. It is also pertinent to note that DGTR in the Final Findings dated 5 May 2016 of the original investigation had not terminated the investigation against Kim Tin. Thus, the domestic industry had the option of filing a review application under Rule 23 for either a mid-term review or a sunset review if the existing ADD were due to expire. Several parties request clarification as to which circumstances would trigger the use of an alternative comparison methodology, and whether zeroing would be used in the alternative calculation methodology.

Some other commentators argue that any dumping margins with present effects should be revised and applied prospectively from the effective date. The Department finds the commentator’s request that it commit to implementing “as applied” findings of inconsistency through a section 129 proceeding in certain sunset reviews to be beyond the scope of this section 123 determination. See Implementation through Section 129 Proceedings and Application to Completed Reviews section of this notice. The purpose of this Final Modification for Reviews is not to address or fix how the Final Modification for Reviews is to be applied in the specific proceedings that were challenged, but rather is to address the broad elements of the prior practice that were found WTO-inconsistent. The Department has addressed the inconsistencies found with respect to sunset reviews by including a modification of the methodology that will be applied in future sunset reviews.

When applying the average-to-average method in an investigation, the Secretary normally will calculate weighted averages for the entire period of investigation. However, when normal values, export prices, or constructed export prices differ significantly over the course of the period of investigation, the Secretary may calculate weighted averages for such shorter period as the Secretary deems appropriate. When applying the average-to-average method in a review, the Secretary normally will calculate weighted averages on a monthly basis and compare the weighted-average monthly export price or constructed export price to the weighted-average normal value for the contemporaneous month. Some commentators claim that implementing the new methodology in reviews that have already been initiated would be unfair to all parties who base decisions on whether to request and/or participate in reviews on the application of certain standard methodologies. Some commentators argue that because the date of the preliminary results of review for a proceeding can be subject to circumstances in the individual proceeding, the methodology applied could differ among proceedings that were initiated on the same day, which they claim would result in arbitrary treatment.