On September 10, the Court of Appeals for the Federal Circuit issued an opinion that should give importers greater certainty about what duty rate to declare when importing AD/CVD merchandise from non-market economies, like China and Vietnam.
The U.S. Department of Commerce (Commerce) is tasked with calculating duty rates for imports subject to antidumping and countervailing duties. These rates are specific to individual producers and exporters, and may take several forms, including:
- “combination rates” that are specific to paired producers and exporters;
- exporter rates that are for specific exporters, regardless of the producer’s identity; and
- producer rates, which are specific to particular producers, regardless of the exporter.
Further, in non-market economy cases, there is generally a “country-wide rate” that applies to goods exported by any and all companies that have not demonstrated their independence from the non-market economy’s government.
The case before the Federal Circuit involved the question of how the applicable rate should be determined when a non-market economy producer has its individual rate own rate, but the exporter does not. If goods are produced by a company with its own rate, but exported by a different company that has not shown its independence from the government, is the producer’s rate applied? Or the country-wide rate?
The Federal Circuit says it’s the latter. Although the Court found inherent ambiguity in Commerce’s regulations, it also found that the regulations were meant to establish the hierarchy described above – an exporter-specific rate is to be preferred above a producer-specific rate. Moreover, the country-wide rate in a non-market economy is an exporter-specific rate: it is the rate specific to all exporters that have not demonstrated their independence from the government of the exporting country.
As a result of this decision, in non-market economy cases, there will rarely if ever be a situation in which a producer’s own rate is applied, so long as the goods are exported by another party. There will either be a combination rate applicable, or the exporter’s rate (either its own rate or a country-wide rate) will control.