U.S. Government Action On Trade – Trade Remedies Regulations Update

Background

On July 12, 2024, the U.S. Department of Commerce's International Trade Administration, Enforcement and Compliance, issued a proposed rule and request for comments on Regulations Enhancing the Administration of the Antidumping and Countervailing Duty Trade Remedy Laws.¹ Commerce's proposed rule includes approximately 25 discrete changes that seek to ease Commerce's administrative burden, codify the agency's existing procedures and methodologies or create, or revise regulatory provisions relating to a variety of technical matters.

Easing Administrative Burden – Reduced and Streamlined Submissions

Certain parts of the proposed rule appear designed to ease Commerce's administration of AD/CVD proceedings. For example, revising 19 C.F.R. § 351.104(a)(7) aims to allow Commerce to cite administrative determinations without actually placing those same decisions on the administrative record of the proceeding in which Commerce is making a determination. This change and several others (such as requiring executive summaries and a table of contents for case briefs,²specific reference to material that is being rebutted/clarified/corrected,³and citation to ACCESS barcodes⁴where applicable – barcodes stamped on documents filed on Commerce's online docketing system) are designed to reduce administrative burdens on Commerce's case teams by either creating a regulatory basis purporting to establish that Commerce is not required to upload certain determinations, or in other instances by shifting the burden to the trade bar.

There are several key points here –

• With this rule, Commerce is saying that even if certain determinations are not yet published or otherwise available to the public, it may still rely on those decisions. This could allow a certain amount of streamlining across multicountry proceedings that have a staggered publication schedule.
• It may also be leveraged in the future to avoid putting long decision memoranda onto the docket of a particular segment. But that remains to be seen.
• Lastly, it is also important to note that as many parties are represented by firms with limited institutional knowledge of Commerce's policies and procedures, and others attempting to go pro se, these regulations both streamline filings with easy-to-digest summaries and citations that make documents easy to locate, and also elevate the expectation that parties involved in proceedings before E&C will have a higher level of awareness and sophistication.

Codification of Existing Practice

Other proposed changes under the rule appear to be codification of Commerce's existing practice, or modest revision thereof. These regulatory updates include a range of issue areas, such as:

• Codifying and updating Commerce's methodology for determining if an entity exporting merchandise from a non-market economy (NME) should receive an antidumping duty rate separate from that of the NME entity. New § 351.108 leans heavily on Commerce's existing practice for assessing whether an entity is de jure and de facto separate from the NME government for purposes of export determinations.
• Similarly, the "addition" of a new § 351.109 would address Commerce's methodologies for selecting respondents in investigations and administrative reviews, including the steps Commerce would take to determine the number of exporters or producers that is practicable to investigate or review for calculating the all-others rate in investigations and for calculating a rate for unexamined exporters and producers.

For trade practitioners, this category of updates is particularly interesting not because they are novel concepts. Rather the codification of longstanding practices shows maturation in Commerce's ongoing dialogue with Court of International Trade and Court of Appeals for the Federal Circuit. Relatedly, the timing of Commerce codifying these practices is significant. Even before the U.S. Supreme Court overturned 40 years of Chevron deference in its June 28^thLoper Bright Enterprises v. Raimondo ("Loper Bright") decision, Commerce was well-aware of the possible outcome. So, it should come as little surprise that as SCOTUS abrogated deference for agencies' interpretation of statutory ambiguity, Commerce has its eye on how it to assert that the courts should defer to it in a post-Loper Bright world. Accordingly, Commerce's response appears to be promulgating regulations either to elevate the weight of legal authority on which it makes its determinations or to increase the odds of receiving judicial deference – such as Auer deference, which would only apply in the context of ambiguous regulations.

Modification of Regulations

The lion's share of changes in the proposed rule are modification to the regulations on a wide range of technical issues. This includes:

- Revising § 351.107 to better describe how Commerce establishes and applies cash deposit rates, including explaining that some cash deposit rates are calculated on an ad valorem basis at importation, while others are calculated on a per-unit basis. A similar corresponding change to § 351.212(b) to clarify that entries may be assessed either on an ad valorem value or per-unit basis.

- Modify § 351.306(a)(3) to clarify that Commerce may share business proprietary information with U.S. Customs and Border Protection officials involved in negligence, gross negligence, or fraud investigations. This reflects that Commerce continues to work closely with CBP to administer trade remedies laws as well as to prevent evasion under the Enforce and Protect Act.

- Add provisions to § 351.308 to reflect that pursuant to section 776 of the Act, Commerce may apply partial or total facts available, may use previously calculated dumping margins and countervailable subsidy rates in separate segments of the same proceeding without the need to corroborate those margins or rates, may use the highest dumping margin available as adverse facts available. This is not new, but here again we see Commerce, which had not gotten around to updating the relevant regulatory provisions to reflect changes made to the statute in 2015, making these changes in a sort of mini-bus style regulatory update.

- In the context of its subsidy rules, Commerce has made various modifications to technical rules for how Commerce assesses certain programs such as contingent liabilities, policy loans, direct taxes, export subsidies, and when a foreign government provides more than adequate remuneration for goods.

• Some of these changes seem to add clarity, but it remains to be seen how Commerce will deploy other regulations such as provision of more than adequate remuneration for goods. Historically, Commerce has been reluctant to countervail that type of program, and it is not clear that the addition of this regulation is a watershed moment after which Commerce would be more eager to use this particular tool. It is possible that this could end up being in the vein of regulations on countervailing currency manipulation or labor, which although on the books Commerce has been reluctant to actually use.
• Commerce also revised regulations that cover groups of companies and situations where there is cross-ownership and Commerce must determine whether to attribute the subsidies received by an investigated company's cross-owned affiliate to the investigated company itself. This type of change reflects the reality that parties in Commerce proceedings often have complex organizational structures through which they are able to hide many types of support from foreign governments. Hopefully, these modifications will build some momentum for Commerce vigorously enforcing trade laws to maximize relief to American companies that have been adversely impacted by unfair trade.

Conclusion

With the steady movement toward an increasingly regulated trade framework, it is important for interested parties to remain vigilant for changes that can disrupt the trajectory of their industries and continuity of business. This Proposed Rule both reflects that trend and provides parties with an important opportunity to have their voices heard before additional regulations take effect. As the comment period ends on September 10, it is important that parties who will be affected by these regulatory changes consider commenting before the window closes.

Footnotes

1 Regulations Enhancing the Administration of the Antidumping and Countervailing Duty Trade Remedy Laws, 89 Fed. Reg. 57,286 (Dep't Commerce July 12, 2024) ("Proposed Rule").

2 Proposed Rule at 57,304.

3 Proposed Rule at 57,302.

4 Proposed Rule at 57,305.

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