ITA Interim Final Rule Removes Regulation Concerning Treatment of Subcontractors in AD Duty Proceedings
The International Trade Administration has issued an interim final rule, effective March 28, 2008, which removes a regulation in 19 CFR 315.401 governing the treatment of subcontractors1 for purposes of determining export price, constructed export price, fair value, and normal value in antidumping duty proceedings.
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The ITA seeks public comments on this interim final rule no later than April 28, 2008.
Regulation Used to Analyze Manufacturer Price When Subcontractor Used
The ITA is removing 19 CFR 351.401(h), which stated that the Secretary of Commerce will not consider a toller or subcontractor to be a manufacturer or producer where the toller or subcontractor does not acquire ownership, and does not control the relevant sale of the subject merchandise, which the ITA states was intended to ensure that its analysis focused on the producer/manufacturer setting the price of subject merchandise when the manufacture of such merchandise is subcontracted to another company.
CIT Interpretation of Regulation Necessitated its Removal
The regulation has been interpreted by the Court of International Trade as having the unintended effect of bestowing the status of "foreign manufacturer" or "producer" upon parties in the U.S. that otherwise would have assumed the status of purchasers of subject merchandise. This interpretation could restrict the ITA's exercise of its discretion and could require the ITA to identify the incorrect entity as the seller of subject merchandise, which would adversely affect the ITA's AD determinations.
The ITA notes that it is not replacing this regulation with a new regulation. Instead, the ITA is returning to a case-by-case adjudication, until additional experience allows it to gain greater understanding of the problem.
1Note that the title of the ITA's notice refers to subcontractors as "tolling operations."
-comments due by April 28, 2008
ITA contact - Michael Rill (202) 482-3058
ITA Notice (FR Pub 03/28/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-6499.pdf