China & Vietnam AD Rates to Rise as ITA Decides to Change AD Calculation Methodology
The International Trade Administration will deduct export taxes and similar charges from export prices when calculating antidumping rates for non-market economy (NME) countries (i.e., China and Vietnam), it announced. The change to its methodology will be applied to AD investigations and administrative reviews initiated after June 19.
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The ITA’s change to its AD calculation methodology will raise AD rates for Chinese and Vietnamese companies. AD rates are calculated by determining the amount that the normal value (i.e., the price of the subject merchandise in China or Vietnam or a third country, or a constructed price in some cases) exceeds the price at which the merchandise was sold in the U.S. (export price or constructed export price). As this change will lower the export price, it will increase the amount by which normal value exceeds that export price, and therefore increase AD rates for China and Vietnam.
ITA Previously Said it Could Not Isolate Export Taxes in NMEs
The ITA said 19 USC 1677a(c)(2)(B) instructs it to reduce the export price or constructed export price used in the AD margin calculation by “amount, if included in such price, of any export tax, duty, or other charge imposed by the exporting country on the exportation of the subject merchandise to the U.S.”, other than export taxes, duties, or other charges levied on the export of merchandise to the U.S. specifically intended to offset a countervailable subsidy.
Until now the ITA has not applied that provision because “pervasive government intervention in NMEs precluded proper valuation of taxes paid by NME respondents to NME governments.” In a 1996 defense before the Court of International Trade of its non-application of the provision in an AD proceeding involving then-NME Russia, the ITA had said “attempts to isolate individual government interventions in this setting -- whether they be transfers from the government or from exporters to the government -- make no sense.”
ITA Now Says it can Identify and Measure China & Vietnam Subsidies and Taxes
However, the ITA said it has since changed its policy on applying CV duties to NMEs, arguing that the present-day economies of China and Vietnam are sufficiently dissimilar from Soviet-style economies that it can identify and measure benefits from the Chinese or Vietnamese governments to producers, including taxes.
Parties to Place Documentation on Record, AD Rates Reduced by Percent or Ratio
The ITA will reduce export price and constructed export price used in NME AD margin calculations by the amount of export taxes and similar charges, including value added taxes (VAT) not rebated upon export, in AD investigations and administrative reviews. According to the ITA, it anticipates that parties will place on the record copies of laws, regulations, other similar documents, or similarly publicly available information that identify the particular tax imposed on certain exports by China or Vietnam. The ITA said it will also consider evidence of whether the respondent was exempted from the export tax, duty, or other charge.
The ITA said that, in many cases, the export tax, VAT, duty, or other charge will be a fixed percentage of the price. In such cases, the ITA will adjust the export price or constructed export price downward by the same percentage, it said. In other instances where the tax or charge is a flat fee or nominal sum denominated in NME country currency, it said it will determine the ratio of the flat fee to the respondent’s export price or constructed export price as denominated in its domestic currency, then adjust the export price or constructed export price downward by the same ratio.
(See ITT’s Online Archives 11012725 for summary of the ITA’s proposal for this change in methodology. See ITT’s Online Archives 10082711 for summary of 14 proposed changes, including this one, to AD/CV practices that the Commerce Department previously announced in support of the President's National Export Initiative (NEI))