U.S.-China Trade
Eliminating Nonmarket Economy Methodology Would Lower Antidumping Duties for Some Chinese Companies Gao ID: GAO-06-231 January 10, 2006U.S. companies adversely affected by unfair imports may seek a number of relief measures, including antidumping (AD) duties. The Department of Commerce (Commerce) classifies China as a nonmarket economy (NME) and uses a special methodology that is commonly believed to produce AD duty rates that are higher than those applied to market economies. Commerce may stop applying its NME methodology if it finds that China warrants designation as a market economy. In light of increased concern about China's trade practices, the conference report on fiscal year 2004 appropriations requested that GAO review efforts by U.S. government agencies responsible for ensuring free and fair trade with that country. In this report, the last in a series, GAO (1) explains the NME methodology, (2) analyzes AD duties applied to China and compares them with duties applied to market economies, and (3) explains circumstances in which the United States would stop applying its NME methodology to China and evaluates the potential impact of such a step. Commerce agreed with our findings, commenting that our report provides timely and helpful information on the NME methodology and its application to China.
Commerce's methodology for calculating AD duties on nonmarket economy products differs from its market economy approach in that (1) since NME prices are unreliable, it uses price information from surrogate countries, like India, to construct the value of the imported products and (2) it limits eligibility for individual rates to companies that show their export activities are not subject to government control. Companies that do not meet the criteria or do not participate in Commerce investigations receive "country-wide" rates. China has been the most frequent target of U.S. AD actions. On 25 occasions, Commerce has applied duties to the same product from both China and one or more market economy. China (NME) duties were over 20 percentage points higher than those applied to market economies, on average. This is because average China country-wide rates were over 60 points higher than comparable market economy rates. Individual China company rates were similar to those assigned to market economy companies, on average. Commerce can declare China a market economy if the country meets certain criteria, thus ending the use of surrogate price information and country-wide rates in China AD actions. These changes would have a mixed impact. Duties would likely decline for Chinese companies not assigned individual rates. Individual company rates would likely diverge, with those that do not cooperate with Commerce receiving rates that are substantially higher than those that do cooperate. In any case, it appears that the actual trade impact of the NME methodology will decline as the portion of total export trade conducted by Chinese companies assigned individual rates increases and as the country-wide rates that largely account for the comparatively high average rates applied to China decline in importance.
GAO-06-231, U.S.-China Trade: Eliminating Nonmarket Economy Methodology Would Lower Antidumping Duties for Some Chinese Companies
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Report to Congressional Committees:
January 2006:
U.S.-China Trade:
Eliminating Nonmarket Economy Methodology Would Lower Antidumping
Duties for Some Chinese Companies:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-231]:
GAO Highlights:
Highlights of GAO-06-231, a report to congressional committees:
Why GAO Did This Study:
U.S. companies adversely affected by unfair imports may seek a number
of relief measures, including antidumping (AD) duties. The Department
of Commerce (Commerce) classifies China as a nonmarket economy (NME)
and uses a special methodology that is commonly believed to produce AD
duty rates that are higher than those applied to market economies.
Commerce may stop applying its NME methodology if it finds that China
warrants designation as a market economy.
In light of increased concern about China‘s trade practices, the
conference report on fiscal year 2004 appropriations requested that GAO
review efforts by U.S. government agencies responsible for ensuring
free and fair trade with that country. In this report, the last in a
series, GAO (1) explains the NME methodology, (2) analyzes AD duties
applied to China and compares them with duties applied to market
economies, and (3) explains circumstances in which the United States
would stop applying its NME methodology to China and evaluates the
potential impact of such a step.
Commerce agreed with our findings, commenting that our report provides
timely and helpful information on the NME methodology and its
application to China.
What GAO Found:
Commerce‘s methodology for calculating AD duties on nonmarket economy
products differs from its market economy approach in that (1) since NME
prices are unreliable, it uses price information from surrogate
countries, like India, to construct the value of the imported products
and (2) it limits eligibility for individual rates to companies that
show their export activities are not subject to government control.
Companies that do not meet the criteria or do not participate in
Commerce investigations receive ’country-wide“ rates.
China has been the most frequent target of U.S. AD actions. On 25
occasions, Commerce has applied duties to the same product from both
China and one or more market economy. China (NME) duties were over 20
percentage points higher than those applied to market economies, on
average. This is because average China country-wide rates were over 60
points higher than comparable market economy rates. Individual China
company rates were similar to those assigned to market economy
companies, on average.
Comparison of China and Market Economy Antidumping Rates for 25
Products (1985-2004):
[See PDF for image]
[End of figure]
Commerce can declare China a market economy if the country meets
certain criteria, thus ending the use of surrogate price information
and country-wide rates in China AD actions. These changes would have a
mixed impact. Duties would likely decline for Chinese companies not
assigned individual rates. Individual company rates would likely
diverge, with those that do not cooperate with Commerce receiving rates
that are substantially higher than those that do cooperate. In any
case, it appears that the actual trade impact of the NME methodology
will decline as the portion of total export trade conducted by Chinese
companies assigned individual rates increases and as the country-wide
rates that largely account for the comparatively high average rates
applied to China decline in importance.
What GAO Recommends:
www.gao.gov/cgi-bin/getrpt?GAO-06-231.
To view the full product, including the scope and methodology, click on
the link above. To view the database on antidumping case information
against Chinese companies, click on the following link:
http://www.gao.gov/cgi-bin/getrpt?GAO-06-652SP. For more information,
contact Loren Yager at (202) 512-4347 or yagerl@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Commerce Employs a Special Methodology to Calculate China AD Duties:
Commerce Has Applied AD Duties to China Frequently at Varied Rates:
Ceasing to Apply NME Methodology Would Have Mixed Results:
Concluding Observations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Additional Information on Duty Rates Applied to China and
Market Economy Countries:
Appendix III: Regression Analysis Results:
Appendix IV: Comments from the Department of Commerce:
GAO Comments:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Products Affected by AD Duty Orders against China, 1980-2004:
Table 2: Comparison of China, Market Economy AD Duty Rates,
Methodological Changes, and Potential Effects:
Table 3: Summary Data on China AD Duty Orders, 1980-2004:
Table 4: Average Duty Rates for 68 Orders against China, 1980-2004:
Table 5: Average Duty Rates for 25 Products with Orders against both
China and Market Economies, 1980-2004:
Table 6: Results of Multivariate Regression Analysis of Duty Rates on
Explanatory Variables for China, Country-Wide Rates, and Year:
Table 7: Results of Multivariate Regression Analysis of Duty Rates on
Explanatory Variables for China, Country-Wide Rates, and Individual
Products:
Table 8: Results of Multivariate Regression Analysis of Duty Rates on
Explanatory Variables for China, Country-Wide Rates, Adverse
Inferences, Other Facts Available, and Individual Products:
Figures:
Figure 1: Different Approaches to Determining AD Duty Rates:
Figure 2: U.S. AD Orders in Place by Country as of December 31, 2004:
Figure 3: Results of AD Petitions, 1980-2004:
Figure 4: AD Duty Rates Applied against Imported Polyethylene Retail
Carrier Bags (2004):
Figure 5: Differences between Overall Average Duty Rates--China and
Market Economies, 1980-2004:
Figure 6: Differences between China Country-Wide and Market Economy
All- Others Duty Rates, 1980-2004:
Figure 7: Differences between Average Individual Company Duty Rates--
China and Market Economy Countries, 1980-2004:
Figure 8: Average Number of Individual Rates per Case per Year, All
Orders against China, 1980-2004:
Figure 9: Average Country-Wide and Individual Rates, All Orders against
China, 1980-2004:
Abbreviations:
AD: antidumping:
HTS: Harmonized Tariff Schedule:
ITC: U.S. International Trade Commission:
NME: nonmarket economy:
WTO: World Trade Organization:
Letter January 10, 2006:
The Honorable Richard C. Shelby:
Chairman:
The Honorable Barbara A. Mikulski:
Ranking Minority Member:
Subcommittee on Commerce, Justice, and Science:
Committee on Appropriations:
United States Senate:
The Honorable Frank R. Wolf:
Chairman:
The Honorable Alan B. Mollohan:
Ranking Minority Member:
Subcommittee on Science, State, Justice, and
Commerce and Related Agencies:
Committee on Appropriations:
House of Representatives:
Imports from China have grown rapidly over the last decade, from a
total value of about $42 billion in 1995 to over $196 billion in
2004.[Footnote 1] While the prices of these Chinese goods are often
lower than U.S. prices and, therefore, benefit consumers, this growth
has presented a major challenge for U.S. producers that compete with
Chinese products in the U.S. market. Some U.S. companies adversely
affected by this growth have alleged that Chinese success in the U.S.
market has come partly as a result of unfair trade practices.
U.S. companies that are adversely affected by unfair imports from China
(or other countries) may avail themselves of a number of relief
measures, including antidumping (AD) duties. The United States has
classified China as a "nonmarket economy" (NME) country since
1981[Footnote 2] and employs a special NME methodology to calculate AD
duties on unfairly traded products from that country. This methodology
is commonly believed to result in duty rates that are significantly
higher than those applied to market economy countries.
In light of increased concern about China's trade practices, the
conference report on fiscal year 2004 appropriations legislation
requested that GAO monitor the efforts of U.S. government agencies
responsible for ensuring free and fair trade with that
country.[Footnote 3] In subsequent discussions with staff from the
House Appropriations Committee's Subcommittee on Science, State,
Justice, and Commerce and Related Agencies, we agreed to provide a
number of reports on import relief mechanisms and the manner in which
these mechanisms have been applied to China. To date, we have issued
three such reports, focusing on textile safeguards, safeguards
applicable to other products, and countervailing duties.[Footnote 4]
This fourth and final report on China import relief mechanisms focuses
on AD duties. In this report, we:
* explain the special methodology that the United States employs to
calculate AD duties on products from China and other NME countries,
* analyze the application of AD duties to China over the last 25 years
and compare the duty rates applied to Chinese products with the duty
rates applied to products from market economy countries, and:
* explain the circumstances in which the United States would stop using
its NME methodology to calculate AD duties on Chinese products and
evaluate the potential impact of this step.
To conduct our review, we examined applicable U.S. laws and regulations
and World Trade Organization (WTO) agreements, including relevant
portions of the agreement through which China acceded to WTO membership
in 2001. We reviewed scholarly literature and consulted with trade and
legal policy experts from the U.S. government, private sector trade
associations, consulting and law firms, and academic institutions, as
well as representatives of the WTO, the government of China, and other
governments. In order to analyze U.S. application of AD duties to China
and compare the duties applied to China with those applied to market
economy countries, we used information from the Department of Commerce
(Commerce) and the U.S. International Trade Commission (ITC), including
notices of Commerce determinations appearing in the Federal Register,
to construct a database on all U.S. antidumping investigations from
1980 through 2004. We verified this database to the official sources.
Our analyses focused on the 68 AD duty orders that Commerce issued
against Chinese products during this period and especially on the 25
cases in which Commerce also imposed duties on the same products from
market economy countries.[Footnote 5] We performed additional
(multivariate regression) analyses to determine the extent to which
duty rate variations could be attributed to differences between China
and these other countries, or to other factors, such as the type of
product involved. Appendix I contains a detailed description of our
scope and methodology.
We conducted our work from June 2005 through December 2005 in
accordance with generally accepted government auditing standards.
Results in Brief:
Commerce's special methodology for calculating the AD duties that it
applies to China and other NME countries differs from its usual (market
economy) approach in two key respects. First, since prices in NME
countries do not reliably reflect the fair value of the merchandise,
Commerce uses price information from surrogate countries (like India)
to construct the value of NME products--and thus provide an appropriate
basis for calculating AD duty rates--rather than relying entirely on
information from the exporting country itself. Second, Commerce
requires NME companies to demonstrate that their export activities are
not subject to government control in order to be considered eligible
for individually determined duty rates, rather than considering all
companies eligible for such rates, as it does in market economy cases.
NME companies that do not meet these criteria, or do not participate in
Commerce's investigations receive "country-wide" rates.
Over the last 25 years, the United States has applied AD duties against
China more often than against any other country. On 25 occasions,
Commerce applied duties to the same products from both China and at
least one market economy country. The duty rates assigned in these
cases varied greatly. On average, however, the rates applied to China
were over 20 percentage points higher than those applied to market
economy countries. This difference is attributable primarily to the
comparatively high country-wide duty rates applied to Chinese companies
not eligible for individual rates. These country-wide rates averaged
about 98 percent--over 60 percentage points higher than the average
duty rates assigned to market economy companies not receiving
individual rates. In contrast, when Commerce calculated individual
rates for Chinese companies, these rates were not substantially
different, on average, from those assigned to individual market economy
companies.
Commerce has administrative authority to declare China a market
economy, or find individual Chinese industries to be "market-oriented"
in character--provided that China overall or individual Chinese
industries meet certain criteria. Such a declaration would end
application of the NME methodology to China, in whole or in part. This
would (1) eliminate country-wide duty rates against China and (2)
eliminate use of surrogate country information to calculate AD duty
rates on Chinese products. These changes would have a mixed impact.
Eliminating country-wide rates would likely reduce duty rates applied
to companies not receiving individual rates. Individually determined
rates would likely diverge into two distinct groups, with companies
that do not cooperate in Commerce investigations receiving rates that
are substantially higher than those that do cooperate. The impact of
applying Chinese price information would likely vary by industry, and
AD rates applied against China would continue to vary widely, both
within and among cases. However, it appears that the significance of
the NME country-wide rates is declining as more Chinese companies
receive individual rates, although data that would permit
quantification of the potential trade impact of these changes is not
available. This suggests that the trade significance of the NME
methodology now applied to China will likewise decline over time.
Commerce provided written comments on a draft of this report, which are
reprinted in appendix IV. Overall, Commerce agreed with our findings.
In addition, Commerce, the Department of Homeland Security, and the
Office of the U.S. Trade Representative, provided technical comments.
We took these comments into consideration and made revisions throughout
the report as appropriate to make it more accurate and clear.
Background:
Dumping refers to a type of international price discrimination wherein
a foreign company sells merchandise in a given export market (for
example, the United States) at prices that are lower than the prices
that the company charges in its home market or other export markets.
When this occurs, and when the imports have been found to materially
injure, or threaten to materially injure, U.S. producers, U.S. law
permits application of antidumping duties to offset the price advantage
enjoyed by the imported product.[Footnote 6]
Any domestic industry that believes it is suffering material injury, or
is threatened with material injury, as a result of dumping by foreign
companies may file a petition requesting imposition of AD duties.
Interested domestic industries file petitions simultaneously with
Commerce and ITC. If Commerce determines that the petitioning parties
meet certain eligibility requirements,[Footnote 7] ITC determines
whether the domestic industry has suffered material injury as a result
of the alleged dumping (or is threatened with material injury).
[Footnote 8] While ITC is completing its work, Commerce conducts an
investigation to establish the duty rates, if any, that should be
applied.
To determine the duty rates to apply in an antidumping investigation,
Commerce identifies (1) the foreign product's export price entering the
U.S. market and (2) its "normal value."Commerce then compares these
prices to determine whether--and by how much--the product's export
price is less than its normal value. AD duty rates are based on these
differences, which are called dumping margins.[Footnote 9]
To establish a product's export price, Commerce generally refers to the
prices charged in actual sales of that product to purchasers in the
United States.[Footnote 10] To establish its normal value, Commerce
generally refers to the prices charged for the product in the exporting
company's home market. In the event that the product is not sold in the
exporter's home market, Commerce may refer to prices charged for the
product in another export market or construct a normal value based on
costs of production in the exporting country, together with selling,
general and administrative expenses, and profit.[Footnote 11] The two
agencies make preliminary and, after additional investigation, final
determinations as to whether injury has occurred (ITC) and the size of
the duty, if any, that should be imposed (Commerce). When warranted,
Commerce issues "duty orders" instructing Customs and Border Protection
to apply duties against imported products from the countries under
investigation. Both ITC and Commerce publish their decisions in the
Federal Register.
Since AD duties address unfair pricing practices, and pricing decisions
are generally made by individual companies, Commerce generally
calculates and assigns AD duty rates on an individual company basis. As
a result, AD investigations generally produce a number of individually
determined, company-specific rates, reflecting differences in the
extent to which companies have dumped their products--that is, exported
them at less:
than their normal value.[Footnote 12] In addition, AD duty orders also
generally specify a duty rate for other companies that have not been
assigned an individually determined rate.
In principle, Commerce bases its AD duty determinations on information
obtained from interested parties--including foreign producers and
exporters. Commerce obtains needed information from foreign companies
by sending them questionnaires and following up with additional
questions, as needed, and with on-site visits.[Footnote 13]
However, both U.S. law and WTO rules recognize that, in some cases,
officials charged with completing these investigations will be unable
to obtain sufficient information. In such cases, Commerce officials
apply facts available to complete their duty determinations.[Footnote
14] This may include secondary information, subject to corroboration
from independent sources.
Moreover, if Commerce finds that an interested party, such as a foreign
company under investigation, "has failed to cooperate by not acting to
the best of its ability to comply with a request for information" then,
in selecting among the facts available, Commerce may apply an inference
that is adverse to the interests of that party. In applying adverse
inferences, Commerce can use (among other things) information contained
in the petition filed by the domestic industry seeking imposition of AD
duties, the results of a prior review or determination in the case, or
any other information placed on the record.[Footnote 15]
This authority provides an incentive for foreign companies to provide
the information that Commerce needs to complete its work. For example,
in a 1993 case that involved two Brazilian companies, one company
attempted to cooperate in the investigation but nonetheless was unable
to provide the information that Commerce needed, while the other
declined to provide any information at all. Commerce used facts
available to determine that the first company should be subject to a
duty rate of 42 percent. For the second company, Commerce selected
adverse inferences from among the facts available and applied these to
calculate a duty rate of 109 percent.[Footnote 16]
Commerce Employs a Special Methodology to Calculate China AD Duties:
The methodology that Commerce employs in NME cases differs from
Commerce's usual (market economy) approach in two key ways. First,
rather than rely entirely on information from the exporting country
itself to establish a product's normal value, Commerce uses price
information from surrogate countries to construct these values. Second,
rather than consider all companies eligible for individually determined
duty rates, Commerce requires NME companies to meet certain criteria to
be considered eligible for such rates. Commerce generally employs
different approaches to calculate duty rates for companies that do and
do not meet these criteria.
AD Calculations for NME Products Employ Third Country Information:
In AD investigations involving products from NME countries, U.S. law
requires Commerce to use a special methodology to calculate duty rates
in view of the absence of meaningful home market prices and information
on production costs. When a product from China or another NME country
is the target of an AD investigation, Commerce officials use price
information and financial data from an appropriate market economy
country to construct a normal value for the product under
investigation.[Footnote 17] India is the most commonly used surrogate
for China.
To apply this methodology, Commerce (1) identifies and quantifies the
factors of production (e.g., various raw materials) used by the NME
producers, (2) identifies market prices for each factor in a surrogate
country; (3) multiplies volume times cost for each factor; and (4) adds
the results, together with a reasonable margin for selling, general and
administrative expenses, and profit (based on surrogate country
financial data), to produce a constructed normal value.[Footnote 18]
The dumping margin--and consequently the AD duty rate--is then
determined by comparing this normal value with the NME company's export
price to the United States.
NME Companies Must Meet Certain Criteria to Be Considered Eligible for
Individual Duty Rates:
While all companies from market economy countries are eligible for
individually determined or weighted average AD duty rates, companies
from China and other NME countries must pass a separate rates test to
be eligible for such rates. This test requires NME companies to meet
two closely related criteria: they must demonstrate that their export
activities are free from government control both in law and in
fact.[Footnote 19] To provide a basis for deciding whether companies
meet these criteria, Commerce requires these companies to submit
information regarding:
* whether there are restrictive stipulations associated with an
individual exporter's business and export licenses,
* any legislative enactments decentralizing control of companies,
* any other formal measures decentralizing government control of
companies,
* whether export prices are set by or subject to approval by the
government,
* whether the company has authority to negotiate and sign contracts,
* whether the company has autonomy in selecting its management, and:
* whether the company retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses.[Footnote 20]
Commerce Employs Different Approaches to Determine Duty Rates for
Eligible and Ineligible NME Companies:
As shown in figure 1, Commerce uses fundamentally different approaches
to calculate duty rates to be applied against companies that do and do
not pass the separate rates test.
Figure 1: Different Approaches to Determining AD Duty Rates:
[See PDF for image]
[End of figure]
Eligible NME Companies Receive Individually Determined or Weighted
Average Duty Rates:
As shown in figure 1, Commerce treats companies from China and other
NME countries that pass Commerce's separate rates test like market
economy countries when assigning duty rates. When practical, Commerce
fully investigates and establishes individually determined duty rates
for each eligible NME company, just as it does for each market economy
company. To the extent that fully investigated NME companies cooperate
with Commerce, they receive rates based on the information that they
provide. As explained in the background section of this report,
Commerce uses facts available, and may use adverse inferences, to
calculate duty rates when the companies under investigation cannot or
will not provide the information that Commerce needs.
In both NME and market economy cases, Commerce may limit the number of
companies it fully investigates when it is faced with a large number of
companies. In such situations, Commerce generally calculates individual
rates for the companies that account for the largest volume of the
subject merchandise.[Footnote 21] In market economy cases, Commerce
then calculates a weighted average of these rates and applies the
resulting "all others" rate to companies that it has not fully
investigated.[Footnote 22] Commerce does not routinely calculate
weighted average duty rates in NME cases. However, when the number of
NME companies eligible for individually determined rates exceeds the
number that Commerce can fully investigate, Commerce calculates a
weighted average rate and informs Customs of the companies entitled to
this rate.[Footnote 23]
Other NME Companies Receive Country-Wide Duty Rates:
In cases involving China or other NME countries, Commerce calculates a
country-wide duty rate for companies that could not (or did not attempt
to) pass Commerce's separate rates test. In NME cases, Commerce assumes
that all exporters and producers of a given product are subject to
common government control and that all of these companies should,
therefore, be subject to a single country-wide duty rate. Commerce
begins its NME antidumping investigations by requesting information
from the government of the country in question and from known producers
and exporters. If Commerce cannot identify all relevant producers and
exporters, or if one or more of the identified companies refuses to
cooperate in the investigation, Commerce relies on adverse inferences
to calculate a country-wide rate. Commerce then instructs Customs to
apply the country-wide rate against shipments from any company other
than those specifically listed as eligible for an individually
determined or weighted average rate.[Footnote 24]
Commerce Has Applied AD Duties to China Frequently at Varied Rates:
Over the last 25 years, the United States has applied AD duties against
Chinese products more often than against products from any other
country. While AD duty rates have varied widely, on average the rates
assigned to Chinese products have been higher than the rates assigned
to the same products from market economy countries. We found that this
is attributable primarily to the comparatively high country-wide rates
applied to Chinese companies not eligible for individually determined
or weighted average rates. When Commerce has calculated rates for
individual Chinese companies, the average rates assigned to these
companies have not been substantially different from those assigned to
market economy companies.
China Has Been the Most Frequent Target of U.S. Antidumping Orders:
Over the last 25 years, Commerce has both considered and actually
applied AD duties against China more often than against any other
country. From 1980 through 2004, Commerce processed 1,046 AD petitions
and issued 455 AD duty orders. One hundred and ten of these petitions
(11 percent) and 68 of these orders (15 percent) focused on China--both
are the largest number against any U.S. trade partner.[Footnote 25]
The number of orders applied to China varied from year to year. For
example, Commerce issued no AD duty orders against China in 1998 but
issued 9 in 2003. Commerce had 272 orders in place as of December 31,
2004. Fifty-five of these (20 percent) apply to China. As figure 2
shows, this is also the highest percentage of any country. As shown in
table 1, these duty orders have targeted a wide variety of products but
have been concentrated in chemicals and plastics, metal products, and
agricultural products.
Figure 2: U.S. AD Orders in Place by Country as of December 31, 2004:
[See PDF for image]
Note: From 1980 through 2004 Commerce applied 68 orders against China.
Thirteen of these were revoked, leaving 55 in place as of the end of
2004.
[End of figure]
Table 1: Products Affected by AD Duty Orders against China, 1980-2004:
Type of product: Chemicals, plastics, pharmaceuticals;
Examples of affected products: Barium chloride; Polyethylene retail
carrier bags; Bulk aspirin;
Number of orders: 26.
Type of product: Steel, other metals;
Examples of affected products: Carbon steel butt-weld pipe fittings;
Chrome-plated lug nuts; Pure magnesium;
Number of orders: 20.
Type of product: Agricultural products;
Examples of affected products: Crawfish; Garlic; Honey;
Number of orders: 5.
Type of product: Other products;
Examples of affected products: Brake rotors; Hand tools; Cotton shop
towels; Automotive replacement glass windshields; Folding gift boxes;
Number of orders: 17.
Source: GAO AD database.
Note: Product categories based on the Harmonized Tariff Schedule of the
United States, Annotated. See appendix I for more information.
[End of table]
Moreover, petitions for AD duties against China have resulted in
application of duties more often than those against other countries. As
shown in figure 3, 62 percent of the petitions filed against China over
the last 25 years resulted in duty orders, while the equivalent figure
for all countries was about 43 percent.[Footnote 26]
Figure 3: Results of AD Petitions, 1980-2004:
[See PDF for image]
Note: Petitions may not result in an AD order for several reasons. For
example, if ITC does not find the domestic industry to be materially
injured, or threatened with material injury, or if Commerce does not
find that dumping has occurred, then the case is terminated. Also,
Commerce may suspend a case if the United States reaches an agreement
with the foreign government that would eliminate the impact of dumping
(e.g., restrictions on exports). In addition, the petitioners may
decide to withdraw their petition before ITC and Commerce have
completed their work.
[End of figure]
China, Market Economy Rates Varied Widely:
Over this 25 year period, Commerce issued duty orders against the same
products from China and at least one market economy country on 25
occasions.[Footnote 27] In 18 of these cases, Commerce calculated
individual rates for companies from China and at least one market
economy country. Fifteen of these cases involved more than one market
economy country. In all, the orders applying to these 25 products
contained a total of 243 individual, weighted average, and country-wide
duty rates. Appendix II provides detailed information on the rates
applied in each of these cases, as well as another 43 cases that we
identified wherein Commerce applied duty rates to China but not to any
market economy country.
These rates varied a great deal--both among the orders applied to
different products and within the orders applied to the same products.
Overall, these duty rates varied from zero to 218 percent for China and
from zero to about 244 percent for market economy countries. Figure 4
shows the extent to which duty rates applied to a single product can
vary.[Footnote 28]
Figure 4: AD Duty Rates Applied against Imported Polyethylene Retail
Carrier Bags (2004):
[See PDF for image]
Note: In addition to the five individual Chinese companies shown above,
two Chinese companies received de minimus rates and were excluded from
the order.
[End of figure]
Overall, China Rates Were Higher Than Market Economy Rates:
The average AD duty rates imposed on Chinese (NME) exporters over the
last 25 years have been significantly higher than those imposed on
market economy exporters of the same products. Taking all rates into
consideration (including those calculated for individual companies,
weighted averages of these rates, and country-wide rates applied to
China) the average rate applied to Chinese companies in the 25 cases we
examined was about 67 percent--over 20 percentage points higher than
the average rate of 44 percent applied to market economy companies. As
figure 5 shows, the overall average rates applied against China were
higher for 18 of the 25 products in which there were AD orders against
both China and at least one market economy.
Figure 5: Differences between Overall Average Duty Rates--China and
Market Economies, 1980-2004:
[See PDF for image]
[End of figure]
Difference in Average Rates Due Primarily to High China Country-Wide
Rates:
The difference between average China and average market economy duty
rates was due primarily to the fact that the NME country-wide duty
rates applied to China were substantially higher than the comparable
all-others duty rates applied against market economy countries. In
contrast, the individually determined duty rates assigned to Chinese
companies in these cases were not substantially different, on average,
from the individually determined rates assigned to market economy
companies.
Country-Wide Duty Rates Substantially Higher Than Market Economy All-
Others Rates:
On average, the country-wide rates applied to China in these 25 cases
were substantially higher than the comparable all-others rates applied
to market economy countries. The country-wide duty rates applied
against China averaged about 98 percent--over 60 percentage points
higher than the average 37 percent all-others duty rate applied to
market economy exporters of the same products. Figure 6 shows that the
China country-wide rate was higher than the market economy all-others
rate in 21 of 25 cases. As explained below, this difference was due
largely to the use of different methodologies to calculate country-wide
and all-others rates.
Figure 6: Differences between China Country-Wide and Market Economy All-
Others Duty Rates, 1980-2004:
[See PDF for image]
Note: In several cases, Commerce issued orders against several market
economy countries, and we calculated an average all-others rate for all
of the affected market economy countries.
[End of figure]
Country-wide rates were nearly always equal to or higher than the
highest individually determined rate applied to any Chinese company,
due to application of adverse inferences.[Footnote 29] According to
Commerce, NME country governments themselves have never provided the
information that Commerce needs to establish an appropriate country-
wide duty rate. In addition, Commerce officials stated that, in most
cases, participating NME companies have accounted for only a portion of
known exports to the U.S. market from their country, indicating that
others had not come forward. In most cases, therefore, Commerce has
used adverse inferences to determine country-wide rates. For example,
in its investigation of carbazole violet pigment, Commerce assigned
three fully investigated Chinese companies individually determined
rates of about 6, 27, and 45 percent. However, since other known
Chinese producers did not respond to Commerce's request for
information, Commerce used adverse inferences to determine that all
other Chinese producers should be subject to an NME country-wide rate
of about 218 percent.[Footnote 30]
In contrast, the comparable market economy all-others rates were lower
than the highest individual company rates assigned in any given case
(if more than one other individual rate was assigned).[Footnote 31]
This is because, as discussed earlier, Commerce generally calculates
all-others rates by averaging individually determined rates--excluding
those derived entirely through application of facts available and those
that are de minimis or zero. With regard to carbazole violet pigment,
for example, Commerce investigated not only China but also India.
Commerce assigned two fully investigated Indian companies rates of
about 10 and 50 percent and weight-averaged these rates to determine
that shipments from all other Indian producers should be subject to a
duty rate of about 27 percent.
Individual Company Rates in China and Market Economy Countries Not
Substantially Different on Average:
On average, there was little difference between the individually
determined rates applied to companies from China and those applied to
market economy companies. The average individually determined rate
applied to Chinese companies in these cases was 53 percent--a little
less than the average rate of 55 percent applied to market economy
companies.[Footnote 32] The median rate for Chinese companies was 42
percent--the same as the median rate for market economy companies.
Figure 7 displays the average individual company rates assigned to
Chinese and market economy companies in the 18 cases in which Commerce
assigned individual rates to both. As the figure shows, the rates
assigned to Chinese companies were higher than the market economy rates
in ten of these cases and lower in the other eight.
Figure 7: Differences between Average Individual Company Duty Rates--
China and Market Economy Countries, 1980-2004:
[See PDF for image]
[End of figure]
Our statistical analyses provided additional support for the importance
of the country-wide rates in accounting for the overall difference
between the duty rates applied to China and to market economy
countries. Using multivariate regression analysis, we found that a
number of variables, such as the type of product involved, accounted
for some of the overall variation in duty rates. However, after
accounting for the China country-wide rates there was no statistically
significant difference between the duty rates applied to China and
those applied to market economy countries. As explained in more detail
in appendix III, we found essentially the same results when we expanded
our analyses to include data on AD actions against NMEs other than
China.[Footnote 33]
Ceasing to Apply NME Methodology Would Have Mixed Results:
In certain circumstances, Commerce may stop using its NME methodology
in China cases--and thus begin applying its market economy methodology
to determine AD duty rates against that country. Such a step would lead
to important changes in the methods that Commerce employs to determine
China AD duty rates and in the duty orders resulting from these
proceedings. These changes would have mixed results. Eliminating
country-wide duty rates would likely reduce duty levels for Chinese
companies that are not assigned individually determined rates.
Individually determined rates would likely diverge into two distinct
groups, with companies that do not cooperate in Commerce investigations
receiving rates that are substantially higher than those assigned to
companies that do cooperate. The impact of applying Chinese price
information to calculate the normal value of Chinese products would
likely vary by industry. In any case, rates would continue to vary
widely based on the circumstances of each case. While trade data that
would permit analysis of the potential trade impact of these changes is
not available, it appears that the trade significance of country-wide
duty rates is declining.
Commerce May Stop Applying NME Methodology to China in Certain
Circumstances:
Commerce has administrative authority to reclassify China and other NME
countries as market economies or individual NME country industries as
market-oriented in character. Such reclassifications would end
Commerce's authority to apply its NME methodology to such countries or
industries. Also, China's WTO accession agreement specifies that
members may apply third-country information to calculate AD duty rates
against that country, but this provision expires in 2016.
Commerce Has Administrative Authority to Change China's NME Status:
Commerce has the authority to reclassify China as a market economy
country, in whole or in part. As we explained in more detail in a prior
report,[Footnote 34] U.S. trade law authorizes Commerce to determine
whether countries should be accorded NME or market economy status and
specifies a number of criteria for Commerce to apply in making such
determinations.[Footnote 35] Countries classified as NMEs may ask for a
review of their status at any time.[Footnote 36] China has actively
sought market economy status among its trading partners, and a number
of them have designated China as a market economy. However, Commerce
informed us that Chinese officials have not yet officially requested a
determination as to whether their country merits reclassification under
the criteria specified in U.S. law. In April 2004, the United States
and China established a Structural Issues Working Group under the
auspices of the U.S.-China Joint Commission on Commerce and Trade. This
group is examining structural and operational issues related to China's
economy that may give rise to bilateral trade frictions, including
issues related to China's desire to be classified as a market
economy.[Footnote 37]
Commerce also has the authority to designate individual NME industries
as market oriented in character, but has denied all such requests to
date. Commerce determined in a 1992 case against China that, short of
finding that an entire country merits designation as a market economy,
it could find specific industries within such countries to be market
oriented in character.[Footnote 38] Commerce officials noted that on
several occasions Chinese industries responding to antidumping duty
petitions have requested designation as market-oriented industries. To
date, Commerce has denied such requests--primarily on the grounds that
the Chinese companies in question submitted information that was
insufficient or was provided too late in Commerce's process to allow an
informed decision.
China's WTO Commitment Allowing the Use of Third-Country Information
Expires in 2016:
When joining the WTO, China agreed that other WTO members could use
third-country information to calculate normal values in antidumping
actions against Chinese companies. Specifically, China's WTO accession
agreement provides that in determining price comparability in
antidumping investigations WTO members may use "a methodology that is
not based on a strict comparison with domestic prices or costs in
China."[Footnote 39] However, the accession agreement also specifies
that this provision will expire 15 years after the date of the
agreement--that is, by the end of 2016.[Footnote 40]
After 2016, the ability of WTO members to continue using third-country
information in AD calculations involving China would be governed by
generally applicable WTO rules, according to officials at the Office of
the U.S. Trade Representative. These rules recognize that when dumping
investigations involve products from a country that "has a complete or
substantially complete monopoly of its trade and where all domestic
prices are fixed by the state," importing country authorities may have
difficulty making the price comparisons through which AD duty rates are
normally established. In such situations, importing countries may "find
it necessary to take into account the possibility that a strict
comparison with domestic prices in such a country may not always be
appropriate."[Footnote 41] WTO rules do not provide any specific
guidance about how this provision should be implemented; such decisions
appear to be left up to individual members.
Transition to Market Economy Methodology Would Bring Significant
Procedural Changes:
Ending application of the NME methodology to China would bring two
significant procedural changes in AD duty investigations against
Chinese products. First, such a step would eliminate NME country-wide
duty rates from China AD orders. Commerce would instead assign an
individually determined rate to every relevant Chinese producer or
exporter. If the number of companies involved were too great to allow
full investigation of all relevant companies, Commerce would apply an
all-others rate--a weighted average of the individually determined
rates to all other Chinese companies (excluding those rates based
entirely on facts available or that are de minimis or zero). However,
Commerce would retain its authority to use facts available to determine
the rates that it applies to individual Chinese companies. Second,
transition to the market economy methodology would end Commerce's use
of surrogate country information to calculate the normal value of
Chinese products. Application of the market economy methodology would
generally require Commerce to set the normal value of Chinese products
equal to their sales price in China. If the product were not sold in
China, Commerce could refer to prices charged for the product in
another export market or construct the product's normal value, or it
could continue to construct the product's normal value--using factor
prices from the Chinese companies under investigation rather than from
surrogate countries.
Eliminating Country-Wide Rates Would Likely Reduce Duty Levels for
Companies Not Assigned Individually Determined Rates:
The elimination of country-wide duty rates against China would likely
reduce the duty rates applied to some Chinese companies. If Commerce
applied its market economy approach to China, duty rates for companies
not receiving individually determined rates would, in most cases, no
longer be determined by applying facts available. Rather, Commerce
would, for the most part, determine these rates by averaging the rates
applied to fully investigated Chinese companies, with some exclusions.
The default rate for uninvestigated Chinese companies would move, in
most cases, from being the highest rate found to the average rate found
among companies that cooperate in Commerce investigations.
Though not predictive, available evidence suggests that the all-others
rates that Commerce would apply to China under the market economy
methodology would be significantly lower than the country-wide rates
currently applied to that country. As already shown, China country-wide
rates have generally been significantly higher than the all-others
rates that Commerce has assigned to market economy sources of the same
products. As shown in table 2, the average country-wide rate for the 25
cases in which Commerce assigned duties to both China and one or more
market economies was 98 percent, while the average market economy all-
others rate was 37 percent. The average rate assigned to individual
Chinese companies was 53 percent, and Commerce calculates all-others
rates by weight averaging individually determined rates, excluding
those that are derived entirely through application of facts available
and those that are de minimis or zero.
Table 2: Comparison of China, Market Economy AD Duty Rates,
Methodological Changes, and Potential Effects:
Average China (NME) rates;
Overall [A]: 67%;
Group [A]: 98%; (Country-wide);
Individual rates[B]: All: 53%;
Individual rates[B]: Cooperative: 51%;
Individual rates[B]: Adverse inferences: (Rarely applied)[C].
Average market economy rates;
Overall [A]: 44%;
Group [A]: 37%; (All others);
Individual rates[B]: All: 55%;
Individual rates[B]: Cooperative: 16%;
Individual rates[B]: Adverse inferences: 77%.
Change from NME to market economy methodology for China companies;
Overall [A]: Chinese price information replaces surrogate price
information;
Group [A]: Country-wide rates eliminated, uninvestigated companies
receive all others rate;
Individual rates[B]: All: Separate rates test eliminated.
Potential effect on average China rates;
Overall [A]: Effect unknown but likely to vary by industry;
Group [A]: Rates likely to be significantly lower;
Individual rates[B]: All: Rates likely to fall into two distinct
groups;
Individual rates[B]: Cooperative: Rates likely to be relatively low for
cooperative companies;
Individual rates[B]: Adverse inferences: Rates likely to be relatively
high for uncooperative companies.
Source: GAO analysis of Commerce data.
[A] Averages based on 25 products with comparable China and market
economy cases (1985-2004).
[B] Averages based on subset of 18 products with comparable China and
market economy cases in which individual rates were applied. However,
averages are nearly identical for full group of 25 products.
[C] Commerce applied adverse inferences only three times, for an
average rate of 78 percent.
[End of table]
Individually Determined Rates Would Vary, Depending Upon Cooperation:
A simple comparison of the average individually determined duty rates
calculated under the NME and market economy methodologies suggests that
a change in methodology would not result in any significant overall
change in duty rates applied to individual Chinese companies. For the
comparable cases, individual AD duty rates for Chinese companies
averaged 53 percent and were not substantially different from
individual market economy company rates, which averaged 55 percent.
However, a more detailed examination of the data indicates that the
impact of a change in methodology on individual Chinese company duty
rates would depend on the extent to which Commerce applies adverse
inferences to calculate these rates. The rates assigned to individual
companies under the market economy methodology fell into two distinct
groups, depending on whether the companies cooperated with Commerce
investigations. In the 25 cases that we examined in detail, about half
of the fully investigated market economy companies cooperated with
Commerce. On average, Commerce assigned a duty rate of about 17 percent
to these companies.[Footnote 42] Commerce found the other half of the
fully investigated companies uncooperative and, therefore, applied
adverse inferences to determine the duty rates to be applied to these
companies. On average, Commerce assigned a duty rate of about 77
percent to these uncooperative market economy companies.[Footnote 43]
Though not predictive, this suggests that a change from the NME
methodology for China would result in a significant number of
(cooperative) companies receiving relatively low rates, while another
significant group of (uncooperative) companies would receive relatively
high rates.[Footnote 44] Our regression analysis confirmed the
importance of adverse inferences as a determinant of variation in duty
rates. As explained in appendix III, we found that application of
adverse inferences tends to increase duty rates by a large margin.
Impact of Applying Chinese Price Information Would Vary By Industry and
Is Likely to Decline over Time:
The impact of using Chinese price information on China AD duty rates
would likely vary from one industry to another under the market economy
methodology. Chinese prices are widely viewed as distorted to varying
degrees. Where prices for key inputs are artificially low, relying on
Chinese price information would produce an artificially low normal
value. The result would be an AD duty that is lower than would be
obtained by applying surrogate country input prices. Conversely, where
Chinese prices are artificially high, AD duty rates may be higher if
based on Chinese prices. To the extent that Chinese economic reforms
bring Chinese prices more into line with world markets, the impact of
abandoning the use of surrogate country information can be expected to
decline. At any point in time, however, the probable effect of such a
methodological change in an individual industry investigation would
depend on the particular facts applying to that industry. The net
impact of changing the source of price information on overall China
duty rates cannot be estimated with confidence.
Duty Rates Will Continue to Display Great Variation:
Our multivariate regression analyses suggest that, regardless of
changes in methodology, there will continue to be a great deal of
variation among the AD duty rates applied to products from China and
other countries. Our analyses showed that application of country-wide
duty rates to China largely explained the difference between the
overall average duty rates applied to China and to market economy
countries. Eliminating these rates would likely have a substantial
overall reducing effect on China rates. However, a number of other
factors, such as the type of product involved, also helped to account
for differences among rates overall, and these factors will continue to
have an impact on duty rates, regardless of whether Commerce applies
country-wide rates to China. Furthermore, even after taking these
factors into account, our analyses still explained only about half of
the total variation in duty rates.[Footnote 45] This means that about
half of the:
variation in duty rates is attributable either to idiosyncratic factors
or to systematic factors that we did not capture in any of our
variables.[Footnote 46]
Trade Significance of Country-Wide Rates Appears to Be Declining:
Available evidence suggests that the volume of trade affected by
country-wide rates is declining and that, consequently, the trade
impact of China duty orders will in the future depend increasingly on
the magnitude of the individually determined rates. Commerce officials
observed that in the early 1980s it was not unusual for China AD duty
investigations to produce only a country-wide rate. However, as the
Chinese economy has evolved, individual Chinese companies have become
more likely to request--and receive--individually determined or
weighted average rates. Since 1980, Commerce has applied country-wide
rates alone in only 15 of 68 Chinese AD orders, and the last of these
occasions was in 1995. The majority of all Chinese AD orders (about 78
percent), and all such orders issued over the last 10 years, have
included at least one individual company rate.
Neither Commerce nor Customs and Border Protection maintain trade data
that would permit analysis of changes over time in the relative volume
or value of products imported into the United States under the country-
wide or various individual duty rates listed in AD duty orders.
However, as figure 8 shows, the average number of Chinese companies
assigned individually determined rates (or assigned a weighted average
rate) has been growing, though there continues to be variation from
year to year. For example, in 2004 Commerce placed duties on six
Chinese products and in doing so assigned individually determined or
weighted average rates to 53 Chinese companies. Anecdotal evidence
suggests that along with this rise in company interest in obtaining
individual rates has come an increase in the volume of trade covered by
these rates. For example, in one recent case Commerce fully
investigated and assigned individually determined rates to four
companies accounting for more than 90 percent of Chinese exports to the
U.S. market. Commerce then assigned a weighted average of these rates
to 9 additional companies, leaving only a very small portion of all
Chinese exports to be covered by the country-wide rate. [Footnote 47]
Figure 8: Average Number of Individual Rates per Case per Year, All
Orders against China, 1980-2004:
[See PDF for image]
Notes: This table includes only the companies assigned individually
determined or weighted average rates in initial AD duty orders. Other
companies may be assigned such rates in subsequent reviews of these
orders. The annual figures are the number of individual companies
granted such rates divided by the number of AD duty orders. Commerce
did not issue any individual company duty orders against China in 1980,
1981, 1982, 1985, 1987, 1988, 1989, or 1998. In the tapered roller
bearings cases, Commerce originally put an order in place in 1987, but
amended it in 1990. We use the information from the 1990 amendment in
the above graphic.
[End of figure]
Concluding Observations:
On average, Commerce's application of its NME methodology has produced
AD duties on Chinese products that are substantially higher than those
applied to the same products from market economy countries. Changing
China's NME status--and thus eliminating the application of this
methodology--would have a variety of impacts. The duty rates applied to
companies that do not receive individual rates would likely decline.
Chinese companies that cooperate in Commerce investigations may also
receive comparatively low rates. However, the impact of these lower
rates on overall China averages may be offset, to some extent, by
application of adverse inferences to assign relatively high rates to
individual Chinese companies that do not cooperate in Commerce
investigations.
The net effect of these changes cannot be predicted. Such a prediction
would require knowledge of price distortions in diverse Chinese
industries, changes in these distortions over time, pricing decisions
by Chinese companies in reaction to these changes, and decisions by
U.S. companies about whether they should seek relief. Nonetheless,
while the NME methodology is applied, it appears that the actual trade
impact of using this methodology will decline as the portion of total
export trade conducted by Chinese companies assigned individual rates
increases, and as the country-wide rates that largely account for the
comparatively high average rates applied to China decline in
importance.
Agency Comments and Our Evaluation:
The Department of Commerce provided written comments on a draft of this
report. These comments are reprinted in appendix IV. Overall, Commerce
agreed with our findings, observing that the report provided timely and
helpful information on the NME methodology and its application to
China.
Commerce identified a small number of apparent errors in our database.
We re-examined our data, making corrections when necessary, and updated
our analyses; these corrections did not have any significant impact on
our findings. Commerce also made a number of technical comments,
focusing primarily on our description of its NME methodology. We took
these comments into consideration and made changes throughout the
report to insure its clarity and accuracy. We also made a number of
technical corrections suggested by the Department of Homeland Security
and the Office of the U.S. Trade Representative.
We are sending copies of this report to the Secretaries of Commerce and
Homeland Security, the International Trade Commission, the U. S. Trade
Representative, appropriate congressional committees, and other
interested parties. We also will make copies available to others upon
request. In addition, the report will be available at no charge on the
GAO Web site at [Hyperlink, http://www.gao.gov].
If you or any of your staff have any questions about this report,
please contact me at 202-512-4347 or [Hyperlink, yagerl@gao.gov].
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. GAO staff who
made major contributions to this report are listed in appendix V.
Signed by:
Loren Yager:
Director, International Affairs and Trade:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To address our objectives, we examined and summarized applicable U.S.
laws and regulations, as well as relevant World Trade Organization
(WTO) agreements. These included the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994--commonly
known as the "antidumping agreement"--and China's WTO accession
agreement. We conducted a literature search and reviewed relevant
scholarly and legal analyses and Department of Commerce (Commerce)
determinations.[Footnote 48] In order to corroborate and broaden our
understanding, we consulted with trade and legal policy experts from
the U.S. government, private sector trade associations, consulting
firms, academic institutions, law firms with broad experience in trade
actions involving China, as well as representatives of the WTO, the
government of China, and other governments concerned about Chinese
trade practices, including the European Union and Canada.
In order to analyze the application of antidumping (AD) duties to China
and compare duty rates applied to China with those applied to market
economy countries (our second objective) and to evaluate the potential
impact of ceasing to apply the nonmarket economy (NME) methodology to
China (our third objective), we collected information from the
Department of Commerce and the International Trade Commission,
including notices of Commerce determinations appearing in the Federal
Register. We used this information to construct a database on all U.S.
AD investigations from 1980 through 2004. In addition to information on
the countries and products involved and the status of each
investigation, our database included the duty rates applied upon
completion of each new antidumping investigation against China during
this period, as well as the duty rates applied against any producers of
the same products from other countries. We verified this database to
the official sources and found the data to be sufficiently reliable for
the purposes of this report. This database is accessible on-line at
www.gao.gov/cgi-bin/getrpt?GAO-06-652SP. We verified this database to
the official sources and found the data to be sufficiently reliable for
the purposes of this report.
Our analyses focused on the 68 cases during this time period wherein
Commerce imposed AD duties on Chinese products, and especially on the
subset of 25 cases in which Commerce imposed duties against a similar
product from one or more market economy countries.[Footnote 49]
Specifically, the 25 cases included all market economy cases that had
the same product name and were initiated within 1 year of an AD
investigation against China. In all, we assembled data on 303 company-
specific, weighted average, and country-wide duty rate determinations
on Chinese products, and an additional 168 duty rate determinations on
market economy products. Appendix II provides additional analyses of
this data.
As part of our examination, we also performed multivariate regression
analyses to determine the extent to which duty rate variations could be
attributed to differences between China and these other countries, or
to other factors, such as the type of product involved. Appendix III
provides more information on these analyses and their results.
In addition to comparing China and market economies, we also collected
information on duty rates that Commerce applied to products from other
NME countries at the same time as it applied them to similar products
from either China or a market economy. Appendix III provides
information on the results of our analyses of this data.
We did not collect or analyze information on duty rates applied against
market economy countries in cases where no parallel action was taken
against China or any other NME country. Therefore, our analyses of
market economy duty rates are specific to the sample of market economy
orders in which a corresponding NME order was also in effect. Inclusion
of other market economy product duty rates may have produced different
results. However, we determined that the appropriate comparison between
China and market economy countries was between the 25 similar products.
We found through our regression analyses (discussed in app. III) that
the product being investigated does help explain the variation among
rates and it is, therefore, important to make an appropriate
comparison. In addition, duty rates for the 43 remaining orders against
China alone followed a similar pattern as those contained in the 25
cases where we drew comparisons with market economy duty rates. The
average country-wide rate for these 43 orders against China was higher
than the country-wide rate for the 25 orders (118 percent compared to
98 percent), and the average individual rate was lower (41 percent
compared to 53 percent) for the 18 orders with individual rates. These
results were consistent with our findings that the country-wide rates
tend to be significantly higher than individual rates.
In order to group specific products subject to AD orders into groups of
similar products, we used the Harmonized Tariff Schedule (HTS)
classifications for each product, as reported in the Federal Register
announcement of the order. The HTS is the official U.S. classification
of goods imported into the United States and includes 99 chapters
covering all goods imports. In addition, the HTS chapters are grouped
into larger sections that cover broad types of related products. The
categories we used in this report are based on these HTS sections and
chapters. Specifically, the category "Chemicals, plastics,
pharmaceuticals" comprises HTS chapters 28 through 40 (which includes
all chapters under the section "Chemical or allied industries"). The
category "Steel, other metals" comprises HTS chapters 72 through 81
(which includes most chapters under the section "Base metals and
articles of base metals" except those chapters covering articles of
base metals). The category "Agricultural products" comprises HTS
chapters 1 through 24 (which includes all chapters under the sections
"Live animals; animal products," "Vegetable products," "Animal or
vegetable fats, etc.," and "Prepared foodstuffs, beverages, spirits,
and vinegar; tobacco and manufactured tobacco substitutes"). The
category "Other products" comprises all other HTS chapters.
We conducted our work from June 2005 through December 2005 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Additional Information on Duty Rates Applied to China and
Market Economy Countries:
This appendix provides additional information on the antidumping (AD)
duty rate data that we assembled for this report and provides some
additional analytical information, including brief discussions of
variation in the duty rates applied to China over time, Department of
Commerce (Commerce) determinations on whether Chinese companies should
be considered eligible for individual rates, and duty rates applied to
selected market economy countries.
Duty Rates Imposed on China:
The overall average duty rate for all 68 orders against China from 1980
through 2004 was 65 percent. This was the result of 72 country-wide
rates (on 68 products) with an average duty of 111 percent and 158
individual company rates with an average duty of 44 percent.[Footnote
50] These rates ranged from zero to about 384 percent (see table 3). In
our analysis, we identified 25 orders against China in which there was
also an order against a market economy country on the same product put
in place within 1 year from the order against China. Table 3 shows
overall average duty rates from the 25 orders against China that were
matched to market economy cases and the 43 orders in which no market
economy order was identified. Table 4 at the end of this appendix
provides information on each of the 68 orders against China, and table
5 provides comparative information for each of the 25 cases in which
duties were also applied against market economy producers.
Table 3: Summary Data on China AD Duty Orders, 1980-2004:
25 orders matched to similar market economy orders;
Type of rate: Individual company rates;
Number of rates: 50;
Mean (%): 52;
Minimum (%): 0;
Maximum (%): 162.
Type of rate: Country-wide rate;
Number of rates: 25;
Mean (%): 98;
Minimum (%): 3;
Maximum (%): 218.
Total;
Number of rates: 75;
Mean (%): 67;
Minimum (%): 0;
Maximum (%): 218.
43 orders not matched to similar market economy orders;
Type of rate: Individual company rates;
Number of rates: 108;
Mean (%): 41;
Minimum (%): 0;
Maximum (%): 292.
Type of rate: Country-wide rate;
Number of rates: 47;
Mean (%): 118;
Minimum (%): 1;
Maximum (%): 384.
Type of rate: Total;
Number of rates: 155;
Mean (%): 64;
Minimum (%): 0;
Maximum (%): 384.
All 68 orders;
Type of rate: Individual company rates;
Number of rates: 158;
Mean (%): 44;
Minimum (%): 0;
Maximum (%): 292.
Type of rate: Country-wide rate;
Number of rates: 72;
Mean (%): 111;
Minimum (%): 1;
Maximum (%): 384.
Type of rate: Grand total;
Number of rates: 230;
Mean (%): 65;
Minimum (%): 0;
Maximum (%): 384.
Source: GAO AD database.
Note: The overall average individual duty rates listed in this table
for the "matching" orders are for the 25 products with both China and
market economy orders. However, only 18 of these products had
individual rates imposed on both China and at least one other market
economy. We use these 18 products for our comparison of individual
company duty rates imposed on China and market economies, rather than
the 25 products, in the rest of the report. The average individual
company duty rate imposed on China for these 18 products is 53 percent,
rather than 52 percent.
[End of table]
About 78 percent (53 AD orders) of the 68 AD orders included not only
country-wide rates but also individually calculated rates for at least
one Chinese company. Of these, about 54 percent (37 orders) included
company-specific rates that were lower than the country-wide rates
imposed in the same cases. With regard to nonmalleable cast iron pipe
fittings, for example, two Chinese companies submitted detailed
information and met Commerce's criteria for assignment of individually
determined rates. Other Chinese pipe fitting companies, however, did
not provide any information. Commerce assigned the two cooperating
companies duty rates of between 6 and 8 percent--a fraction of the 76
percent country-wide duty rate applied in this case.[Footnote 51]
Only 15 orders issued against China during this period included just a
country-wide rate. Most of these orders date from the period before
1991 when Commerce had not yet begun applying its separate rates test.
However, from 1991 through 1995 Commerce issued six orders that
contained only a country-wide rate. In most of these cases, Chinese
companies failed to respond to Commerce requests for information. For
example, in one case Commerce solicited information through both the
Chinese government and the relevant Chinese industry association.
However, the industry association responded that no Chinese producer or
exporter wanted to participate in Commerce's investigation. Commerce,
therefore, used facts available to establish a country-wide duty rate
of about 156 percent.[Footnote 52]
In 12 of the 68 orders, all the individual rates issued were equal to
the country-wide rate. In some cases, Commerce specified an individual
rate for one company and then used this rate as "facts available" to
establish a country-wide duty rate at the same level.[Footnote 53] For
example, in its investigation of refined brown aluminum oxide from
China, Commerce requested information from the government of China and
more than 20 Chinese companies. Only one of these companies responded.
Commerce found that this company qualified for its own duty rate and
determined that this rate should be about 135 percent. Commerce
determined that the failure of the other companies to provide requested
information justified application of an adverse inference to determine
the country-wide rate. Since the rate established for the lone
cooperating company was higher than any of the rates suggested in the
petition requesting imposition of duties on this product, Commerce set
the country-wide rate equal to the rate applied to the one cooperating
company--135 percent.[Footnote 54]
Duty Rates against China Have Fluctuated over Time:
We found that there was a slight tendency for duty rates applied
against Chinese products to rise over the period of our analysis, as
well as to fluctuate over time. As figure 9 shows, individual company
and country-wide duty rates tended to be larger from 1992-2004 than
from 1980-1991. In addition, the individual company rates demonstrate a
cyclical pattern over time. In our regression analysis, we found that
there was a small positive trend in AD duty rates against China over
time that was statistically significant. This result is consistent with
research that has shown that overall U.S. AD margins have increased
over time.[Footnote 55]
Figure 9: Average Country-Wide and Individual Rates, All Orders against
China, 1980-2004:
[See PDF for image]
Note: Commerce did not issue any new AD duty orders against China in
1980, 1981, 1982, 1985, 1987, 1988, 1989, or 1998. In the tapered
roller bearings cases, Commerce put an order in place in 1987 but
amended it in 1990. We use 1990 information in the above graphic.
[End of figure]
Average Duty Rates on 68 Orders against China and Subset of 25 Orders
Matched to Market Economy Orders:
Table 4 shows the duty rates on the 68 orders imposed on China between
1980 and 2004. Table 5 then shows the duty rates on the 25 orders
imposed on China in which we also found matching orders imposed on
market economies.
Table 4: Average Duty Rates for 68 Orders against China, 1980-2004:
Year and product: (1983) Cotton shop towels;
Average (all rates) (%): 35;
Average country-wide rate (%): 36;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 34;
Individual company rates: Minimum (%): 30;
Individual company rates: Maximum (%): 37.
Year and product: (1983) Greig polyester cotton print cloth;
Average (all rates) (%): 22;
Average country-wide rate (%): 22.
Year and product: (1984) Barium chloride;
Average (all rates) (%): 15;
Average country-wide rate (%): 15;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 15;
Individual company rates: Minimum (%): 15;
Individual company rates: Maximum (%): 15.
Year and product: (1984) Chloropicrin;
Average (all rates) (%): 58;
Average country-wide rate (%): 58;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 58;
Individual company rates: Minimum (%): 58;
Individual company rates: Maximum (%): 58.
Year and product: (1984) Potassium permanganate;
Average (all rates) (%): 40;
Average country-wide rate (%): 40;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 40;
Individual company rates: Minimum (%): 40;
Individual company rates: Maximum (%): 40.
Year and product: (1986) Iron construction castings;
Average (all rates) (%): 12;
Average country-wide rate (%): 12.
Year and product: (1986) Paint brushes;
Average (all rates) (%): 127;
Average country-wide rate (%): 127.
Year and product: (1986) Porcelain-on-steel cookware;
Average (all rates) (%): 67;
Average country-wide rate (%): 67.
Year and product: (1986) Steel wire nails;
Average (all rates) (%): 6;
Average country-wide rate (%): 6.
Year and product: (1986) Wax candles;
Average (all rates) (%): 54;
Average country-wide rate (%): 54;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 54;
Individual company rates: Minimum (%): 54;
Individual company rates: Maximum (%): 54.
Year and product: (1990) Industrial nitrocellulose;
Average (all rates) (%): 78;
Average country-wide rate (%): 78;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 78;
Individual company rates: Minimum (%): 78;
Individual company rates: Maximum (%): 78.
Year and product: (1990) Tapered roller bearings;
Average (all rates) (%): 3;
Average country-wide rate (%): 3;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 3;
Individual company rates: Minimum (%): 1;
Individual company rates: Maximum (%): 5.
Year and product: (1991) Chrome-plated lug nuts;
Average (all rates) (%): 42;
Average country-wide rate (%): 42;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 42;
Individual company rates: Minimum (%): 42;
Individual company rates: Maximum (%): 42.
Year and product: (1991) Hand tools;
Average (all rates) (%): 36;
Average country-wide rate (%): 36.
Year and product: (1991) Oscillating fans and ceiling fans;
Average (all rates) (%): 1;
Average country-wide rate (%): 1;
Individual company rates: Number of rates: 8;
Individual company rates: Average (%): 1;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 2.
Year and product: (1991) Silicon metal;
Average (all rates) (%): 139;
Average country-wide rate (%): 139.
Year and product: (1991) Sparklers;
Average (all rates) (%): 59;
Average country-wide rate (%): 76;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 54;
Individual company rates: Minimum (%): 2;
Individual company rates: Maximum (%): 94.
Year and product: (1991) Sulfur chemicals;
Average (all rates) (%): 28;
Average country-wide rate (%): 28.
Year and product: (1991) Tungsten ore concentrates;
Average (all rates) (%): 151;
Average country-wide rate (%): 151.
Year and product: (1992) Carbon steel butt-weld pipe fittings;
Average (all rates) (%): 114;
Average country-wide rate (%): 183;
Individual company rates: Number of rates: 6;
Individual company rates: Average (%): 102;
Individual company rates: Minimum (%): 35;
Individual company rates: Maximum (%): 155.
Year and product: (1992) Sulfanilic acid;
Average (all rates) (%): 52;
Average country-wide rate (%): 85;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 19;
Individual company rates: Minimum (%): 19;
Individual company rates: Maximum (%): 19.
Year and product: (1993) Compact ductile iron waterworks;
Average (all rates) (%): 127;
Average country-wide rate (%): 127.
Year and product: (1993) Ferrosilicon;
Average (all rates) (%): 138;
Average country-wide rate (%): 138.
Year and product: (1993) Helical spring lock washers;
Average (all rates) (%): 89;
Average country-wide rate (%): 129;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 70;
Individual company rates: Minimum (%): 70;
Individual company rates: Maximum (%): 70.
Year and product: (1994) Cased pencils;
Average (all rates) (%): 14;
Average country-wide rate (%): 45;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 6;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 17.
Year and product: (1994) Garlic;
Average (all rates) (%): 377;
Average country-wide rate (%): 377.
Year and product: (1994) Paper clips;
Average (all rates) (%): 73;
Average country-wide rate (%): 127;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 55;
Individual company rates: Minimum (%): 46;
Individual company rates: Maximum (%): 61.
Year and product: (1994) Sebacic acid;
Average (all rates) (%): 98;
Average country-wide rate (%): 243;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 61;
Individual company rates: Minimum (%): 44;
Individual company rates: Maximum (%): 85.
Year and product: (1994) Silicomanganese;
Average (all rates) (%): 150;
Average country-wide rate (%): 150.
Year and product: (1995) Furfuryl alcohol;
Average (all rates) (%): 46;
Average country-wide rate (%): 45;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 47;
Individual company rates: Minimum (%): 44;
Individual company rates: Maximum (%): 50.
Year and product: (1995) Glycine;
Average (all rates) (%): 156;
Average country-wide rate (%): 156.
Year and product: (1995) Pure magnesium 1;
Average (all rates) (%): 108;
Average country-wide rate (%): 108.
Year and product: (1996) Manganese metal;
Average (all rates) (%): 33;
Average country-wide rate (%): 143;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 6;
Individual company rates: Minimum (%): 1;
Individual company rates: Maximum (%): 12.
Year and product: (1996) Polyvinyl alcohol 1;
Average (all rates) (%): 78;
Average country-wide rate (%): 117;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 58;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 117.
Year and product: (1997) Brake rotors;
Average (all rates) (%): 10;
Average country-wide rate (%): 43;
Individual company rates: Number of rates: 6;
Individual company rates: Average (%): 5;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 16.
Year and product: (1997) Collated roofing nails;
Average (all rates) (%): 39;
Average country-wide rate (%): 118;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 0;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 0.
Year and product: (1997) Coumarin;
Average (all rates) (%): 87;
Average country-wide rate (%): 161;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 51;
Individual company rates: Minimum (%): 31;
Individual company rates: Maximum (%): 70.
Year and product: (1997) Crawfish;
Average (all rates) (%): 133;
Average country-wide rate (%): 202;
Individual company rates: Number of rates: 5;
Individual company rates: Average (%): 120;
Individual company rates: Minimum (%): 92;
Individual company rates: Maximum (%): 157.
Year and product: (1997) Melamine dinnerware;
Average (all rates) (%): 2;
Average country-wide rate (%): 7;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 1;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 3.
Year and product: (1997) Persulfates;
Average (all rates) (%): 55;
Average country-wide rate (%): 119;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 34;
Individual company rates: Minimum (%): 32;
Individual company rates: Maximum (%): 35.
Year and product: (1999) Mushrooms;
Average (all rates) (%): 155;
Average country-wide rate (%): 199;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 144;
Individual company rates: Minimum (%): 121;
Individual company rates: Maximum (%): 162.
Year and product: (2000) Apple juice;
Average (all rates) (%): 19;
Average country-wide rate (%): 52;
Individual company rates: Number of rates: 7;
Individual company rates: Average (%): 14;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 28.
Year and product: (2000) Bulk aspirin;
Average (all rates) (%): 57;
Average country-wide rate (%): 144;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 14;
Individual company rates: Minimum (%): 11;
Individual company rates: Maximum (%): 17.
Year and product: (2000) Creatine;
Average (all rates) (%): 47;
Average country-wide rate (%): 154;
Individual company rates: Number of rates: 6;
Individual company rates: Average (%): 30;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 58.
Year and product: (2000) Synthetic indigo;
Average (all rates) (%): 96;
Average country-wide rate (%): 130;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 80;
Individual company rates: Minimum (%): 80;
Individual company rates: Maximum (%): 80.
Year and product: (2001) Certain hot-rolled carbon steel flat products;
Average (all rates) (%): 76;
Average country-wide rate (%): 91;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 73;
Individual company rates: Minimum (%): 64;
Individual company rates: Maximum (%): 91.
Year and product: (2001) Foundry coke products;
Average (all rates) (%): 109;
Average country-wide rate (%): 215;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 83;
Individual company rates: Minimum (%): 49;
Individual company rates: Maximum (%): 106.
Year and product: (2001) Honey;
Average (all rates) (%): 72;
Average country-wide rate (%): 184;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 45;
Individual company rates: Minimum (%): 26;
Individual company rates: Maximum (%): 57.
Year and product: (2001) Pure magnesium 2;
Average (all rates) (%): 165;
Average country-wide rate (%): 306;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 25;
Individual company rates: Minimum (%): 25;
Individual company rates: Maximum (%): 25.
Year and product: (2001) Steel concrete reinforcing bars;
Average (all rates) (%): 133;
Average country-wide rate (%): 133;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 133;
Individual company rates: Minimum (%): 133;
Individual company rates: Maximum (%): 133.
Year and product: (2002) Automotive replacement glass windshields;
Average (all rates) (%): 37;
Average country-wide rate (%): 125;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 8;
Individual company rates: Minimum (%): 4;
Individual company rates: Maximum (%): 12.
Year and product: (2002) Certain folding gift boxes;
Average (all rates) (%): 58;
Average country-wide rate (%): 165;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 5;
Individual company rates: Minimum (%): 2;
Individual company rates: Maximum (%): 9.
Year and product: (2002) Folding metal tables and folding metal chairs;
Average (all rates) (%): 28;
Average country-wide rate (%): 71;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 7;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 14.
Year and product: (2003) Barium carbonate;
Average (all rates) (%): 58;
Average country-wide rate (%): 81;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 34;
Individual company rates: Minimum (%): 34;
Individual company rates: Maximum (%): 34.
Year and product: (2003) Certain malleable iron pipe fittings;
Average (all rates) (%): 31;
Average country-wide rate (%): 111;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 11;
Individual company rates: Minimum (%): 7;
Individual company rates: Maximum (%): 16.
Year and product: (2003) Cut to length carbon steel plate;
Average (all rates) (%): 62;
Average country-wide rate (%): 129;
Individual company rates: Number of rates: 5;
Individual company rates: Average (%): 49;
Individual company rates: Minimum (%): 17;
Individual company rates: Maximum (%): 129.
Year and product: (2003) Ferrovanadium;
Average (all rates) (%): 40;
Average country-wide rate (%): 67;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 13;
Individual company rates: Minimum (%): 13;
Individual company rates: Maximum (%): 13.
Year and product: (2003) Lawn and garden steel fence posts;
Average (all rates) (%): 6;
Average country-wide rate (%): 16;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 2;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 7.
Year and product: (2003) Non-malleable cast iron pipe fittings;
Average (all rates) (%): 30;
Average country-wide rate (%): 76;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 7;
Individual company rates: Minimum (%): 6;
Individual company rates: Maximum (%): 7.
Year and product: (2003) Polyvinyl alcohol 2;
Average (all rates) (%): 52;
Average country-wide rate (%): 98;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 7;
Individual company rates: Minimum (%): 7;
Individual company rates: Maximum (%): 7.
Year and product: (2003) Refined brown aluminum oxide;
Average (all rates) (%): 135;
Average country-wide rate (%): 135;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 135;
Individual company rates: Minimum (%): 135;
Individual company rates: Maximum (%): 135.
Year and product: (2003) Saccharin;
Average (all rates) (%): 288;
Average country-wide rate (%): 330;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 274;
Individual company rates: Minimum (%): 249;
Individual company rates: Maximum (%): 292.
Year and product: (2004) Carbazole violet pigment 23;
Average (all rates) (%): 74;
Average country-wide rate (%): 218;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 26;
Individual company rates: Minimum (%): 6;
Individual company rates: Maximum (%): 45.
Year and product: (2004) Certain color television receivers;
Average (all rates) (%): 27;
Average country-wide rate (%): 78;
Individual company rates: Number of rates: 5;
Individual company rates: Average (%): 17;
Individual company rates: Minimum (%): 5;
Individual company rates: Maximum (%): 26.
Year and product: (2004) Hand trucks;
Average (all rates) (%): 105;
Average country-wide rate (%): 384;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 35;
Individual company rates: Minimum (%): 26;
Individual company rates: Maximum (%): 46.
Year and product: (2004) Ironing tables;
Average (all rates) (%): 99;
Average country-wide rate (%): 158;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 80;
Individual company rates: Minimum (%): 9;
Individual company rates: Maximum (%): 158.
Year and product: (2004) Polyethylene retail carrier bags;
Average (all rates) (%): 27;
Average country-wide rate (%): 78;
Individual company rates: Number of rates: 8;
Individual company rates: Average (%): 21;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 41.
Year and product: (2004) Tetrahydrofurfuryl alcohol;
Average (all rates) (%): 137;
Average country-wide rate (%): 137;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 137;
Individual company rates: Minimum (%): 137;
Individual company rates: Maximum (%): 137.
Year and product: Total;
Average (all rates) (%): 65;
Average country-wide rate (%): 111;
Individual company rates: Number of rates: 158;
Individual company rates: Average (%): 44;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 292.
Source: GAO AD database.
Note: The average (all rates) is calculated as the average of the
country-wide rate and each of the individual company rates that
Commerce issued in its order.
[End of table]
Table 5: Average Duty Rates for 25 Products with Orders against both
China and Market Economies, 1980-2004:
Product and year: Carbazole violet pigment 23 (2004);
Country and number of orders: China;
Average: (all rates) (%): 74;
Average country-wide or all-others rate (%): 218;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 26;
Individual company rates: Minimum (%): 6;
Individual company rates: Maximum (%): 45.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 29;
Average country-wide or all-others rate (%): 27;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 30;
Individual company rates: Minimum (%): 10;
Individual company rates: Maximum (%): 50.
Product and year: Carbon steel butt-weld pipe fittings (1992);
Country and number of orders: China;
Average: (all rates) (%): 114;
Average country-wide or all-others rate (%): 183;
Individual company rates: Number of rates: 6;
Individual company rates: Average (%): 102;
Individual company rates: Minimum (%): 35;
Individual company rates: Maximum (%): 155.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 25;
Average country-wide or all-others rate (%): 39;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 21;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 51.
Product and year: Certain hot-rolled carbon steel flat products (2001);
Country and number of orders: China;
Average: (all rates) (%): 76;
Average country-wide or all-others rate (%): 91;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 73;
Individual company rates: Minimum (%): 64;
Individual company rates: Maximum (%): 91.
Country and number of orders: Market economies (7);
Average: (all rates) (%): 24;
Average country-wide or all-others rate (%): 23;
Individual company rates: Number of rates: 11;
Individual company rates: Average (%): 25;
Individual company rates: Minimum (%): 3;
Individual company rates: Maximum (%): 48.
Product and year: Chrome-plated lug nuts (1991);
Country and number of orders: China;
Average: (all rates) (%): 42;
Average country-wide or all-others rate (%): 42;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 42;
Individual company rates: Minimum (%): 42;
Individual company rates: Maximum (%): 42.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 8;
Average country-wide or all-others rate (%): 7;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 9;
Individual company rates: Minimum (%): 6;
Individual company rates: Maximum (%): 11.
Product and year: Collated roofing nails (1997);
Country and number of orders: China;
Average: (all rates) (%): 39;
Average country-wide or all-others rate (%): 118;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 0;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 0.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 22;
Average country-wide or all-others rate (%): 3;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 28;
Individual company rates: Minimum (%): 3;
Individual company rates: Maximum (%): 40.
Product and year: Ferrosilicon (1993);
Country and number of orders: China;
Average: (all rates) (%): 138;
Average country-wide or all- others rate (%): 138;
Individual company rates: Number of rates: 0.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 27;
Average country-wide or all-others rate (%): 23;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 29;
Individual company rates: Minimum (%): 3;
Individual company rates: Maximum (%): 89.
Product and year: Ferrovanadium (2003);
Country and number of orders: China;
Average: (all rates) (%): 40;
Average country-wide or all- others rate (%): 67;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 13;
Individual company rates: Minimum (%): 13;
Individual company rates: Maximum (%): 13.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 116;
Average country-wide or all-others rate (%): 116;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 116;
Individual company rates: Minimum (%): 116;
Individual company rates: Maximum (%): 116.
Product and year: Furfuryl alcohol (1995);
Country and number of orders: China;
Average: (all rates) (%): 46;
Average country-wide or all-others rate (%): 45;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 47;
Individual company rates: Minimum (%): 44;
Individual company rates: Maximum (%): 50.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 10;
Average country-wide or all-others rate (%): 10;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 10;
Individual company rates: Minimum (%): 8;
Individual company rates: Maximum (%): 12.
Product and year: Helical spring lock washers (1993);
Country and number of orders: China;
Average: (all rates) (%): 89;
Average country-wide or all-others rate (%): 129;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 70;
Individual company rates: Minimum (%): 70;
Individual company rates: Maximum (%): 70.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 32;
Average country-wide or all-others rate (%): 32;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 32;
Individual company rates: Minimum (%): 32;
Individual company rates: Maximum (%): 32.
Product and year: Honey (2001);
Country and number of orders: China;
Average: (all rates) (%): 72;
Average country-wide or all-others rate (%): 184;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 45;
Individual company rates: Minimum (%): 26;
Individual company rates: Maximum (%): 57.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 36;
Average country-wide or all-others rate (%): 30;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 38;
Individual company rates: Minimum (%): 27;
Individual company rates: Maximum (%): 55.
Product and year: Industrial nitrocellulose (1990);
Country and number of orders: China;
Average: (all rates) (%): 78;
Average country-wide or all-others rate (%): 78;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 78;
Individual company rates: Minimum (%): 78;
Individual company rates: Maximum (%): 78.
Country and number of orders: Market economies (6);
Average: (all rates) (%): 37;
Average country-wide or all-others rate (%): 37;
Individual company rates: Number of rates: 6;
Individual company rates: Average (%): 37;
Individual company rates: Minimum (%): 4;
Individual company rates: Maximum (%): 66.
Product and year: Iron construction castings (1986);
Country and number of orders: China;
Average: (all rates) (%): 12;
Average country-wide or all-others rate (%): 12;
Individual company rates: Number of rates: 0.
Country and number of orders: Market economies (3);
Average: (all rates) (%): 11;
Average country-wide or all-others rate (%): 12;
Individual company rates: Number of rates: 10;
Individual company rates: Average (%): 11;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 59.
Product and year: Melamine institutional dinnerware (1997);
Country and number of orders: China;
Average: (all rates) (%): 2;
Average country-wide or all-others rate (%): 7;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 1;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 3.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 18;
Average country-wide or all-others rate (%): 6;
Individual company rates: Number of rates: 6;
Individual company rates: Average (%): 22;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 53.
Product and year: Polyethylene retail carrier bags (2004);
Country and number of orders: China;
Average: (all rates) (%): 27;
Average country-wide or all-others rate (%): 78;
Individual company rates: Number of rates: 8;
Individual company rates: Average (%): 21;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 41.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 81;
Average country-wide or all-others rate (%): 44;
Individual company rates: Number of rates: 10;
Individual company rates: Average (%): 88;
Individual company rates: Minimum (%): 2;
Individual company rates: Maximum (%): 123.
Product and year: Polyvinyl alcohol 1 (1996);
Country and number of orders: China;
Average: (all rates) (%): 78;
Average country-wide or all-others rate (%): 117;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 58;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 117.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 63;
Average country-wide or all-others rate (%): 48;
Individual company rates: Number of rates: 6;
Individual company rates: Average (%): 68;
Individual company rates: Minimum (%): 19;
Individual company rates: Maximum (%): 77.
Product and year: Polyvinyl alcohol 2 (2003);
Country and number of orders: China;
Average: (all rates) (%): 52;
Average country-wide or all-others rate (%): 98;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 7;
Individual company rates: Minimum (%): 7;
Individual company rates: Maximum (%): 7.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 103;
Average country-wide or all-others rate (%): 54;
Individual company rates: Number of rates: 5;
Individual company rates: Average (%): 123;
Individual company rates: Minimum (%): 39;
Individual company rates: Maximum (%): 144.
Product and year: Porcelain-on-steel cooking ware (1986);
Country and number of orders: China;
Average: (all rates) (%): 67;
Average country-wide or all-others rate (%): 67;
Individual company rates: Number of rates: 0.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 15;
Average country-wide or all-others rate (%): 17;
Individual company rates: Number of rates: 8;
Individual company rates: Average (%): 15;
Individual company rates: Minimum (%): 2;
Individual company rates: Maximum (%): 57.
Product and year: Potassium permanganate (1984);
Country and number of orders: China;
Average: (all rates) (%): 40;
Average country-wide or all-others rate (%): 40;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 40;
Individual company rates: Minimum (%): 40;
Individual company rates: Maximum (%): 40.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 5;
Average country-wide or all-others rate (%): 5;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 5;
Individual company rates: Minimum (%): 5;
Individual company rates: Maximum (%): 5.
Product and year: Preserved mushrooms (1999);
Country and number of orders: China;
Average: (all rates) (%): 155;
Average country-wide or all-others rate (%): 199;
Individual company rates: Number of rates: 4;
Individual company rates: Average (%): 144;
Individual company rates: Minimum (%): 121;
Individual company rates: Maximum (%): 162.
Country and number of orders: Market economies (3);
Average: (all rates) (%): 86;
Average country-wide or all-others rate (%): 57;
Individual company rates: Number of rates: 7;
Individual company rates: Average (%): 98;
Individual company rates: Minimum (%): 6;
Individual company rates: Maximum (%): 244.
Product and year: Silicomanganese 1 (1994);
Country and number of orders: China;
Average: (all rates) (%): 150;
Average country-wide or all-others rate (%): 150;
Individual company rates: Number of rates: 0.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 41;
Average country-wide or all-others rate (%): 18;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 65;
Individual company rates: Minimum (%): 65;
Individual company rates: Maximum (%): 65.
Product and year: Silicon metal (1991);
Country and number of orders: China;
Average: (all rates) (%): 139;
Average country-wide or all- others rate (%): 139;
Individual company rates: Number of rates: 0.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 58;
Average country-wide or all-others rate (%): 50;
Individual company rates: Number of rates: 3;
Individual company rates: Average (%): 63;
Individual company rates: Minimum (%): 9;
Individual company rates: Maximum (%): 93.
Product and year: Steel concrete reinforcing bars (2001);
Country and number of orders: China;
Average: (all rates) (%): 133;
Average country-wide or all-others rate (%): 133;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 133;
Individual company rates: Minimum (%): 133;
Individual company rates: Maximum (%): 133.
Country and number of orders: Market economies (4);
Average: (all rates) (%): 57;
Average country-wide or all-others rate (%): 37;
Individual company rates: Number of rates: 12;
Individual company rates: Average (%): 64;
Individual company rates: Minimum (%): 17;
Individual company rates: Maximum (%): 102.
Product and year: Sulfanilic acid (1992);
Country and number of orders: China;
Average: (all rates) (%): 52;
Average country-wide or all- others rate (%): 85;
Individual company rates: Number of rates: 1;
Individual company rates: Average (%): 19;
Individual company rates: Minimum (%): 19;
Individual company rates: Maximum (%): 19.
Country and number of orders: Market economies (1);
Average: (all rates) (%): 115;
Average country-wide or all-others rate (%): 115;
Individual company rates: Number of rates: 0.
Product and year: Sulfur chemicals (1991);
Country and number of orders: China;
Average: (all rates) (%): 28;
Average country-wide or all-others rate (%): 28;
Individual company rates: Number of rates: 0.
Country and number of orders: Market economies (2);
Average: (all rates) (%): 75;
Average country-wide or all-others rate (%): 75;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 75;
Individual company rates: Minimum (%): 50;
Individual company rates: Maximum (%): 100.
Product and year: Tapered roller bearings (1987);
Country and number of orders: China;
Average: (all rates) (%): 3;
Average country-wide or all-others rate (%): 3;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 3;
Individual company rates: Minimum (%): 1;
Individual company rates: Maximum (%): 5.
Country and number of orders: Market economies (3);
Average: (all rates) (%): 54;
Average country-wide or all-others rate (%): 65;
Individual company rates: Number of rates: 2;
Individual company rates: Average (%): 36;
Individual company rates: Minimum (%): 36;
Individual company rates: Maximum (%): 37.
Product and year: Total;
Country and number of orders: China;
Average: (all rates) (%): 67;
Average country-wide or all-others rate (%): 98;
Individual company rates: Number of rates: 50;
Individual company rates: Average (%): 52;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 162.
Country and number of orders: Market economies (54);
Average: (all rates) (%): 44;
Average country-wide or all-others rate (%): 37;
Individual company rates: Number of rates: 114;
Individual company rates: Average (%): 48;
Individual company rates: Minimum (%): 0;
Individual company rates: Maximum (%): 244.
Source: GAO AD database.
Notes:
The average (all rates) is calculated as the average of the country-
wide rate and each of the individual company rates that Commerce issued
in its order.
The overall average individual duty rates listed in this table are for
the 25 products with both China and market economy orders. However,
only 18 of these products had individual rates imposed on both China
and at least one other market economy. We use these 18 products for our
comparison of individual company duty rates imposed on China and market
economies, rather than the 25 products, in the rest of the report. The
average individual company duty rate imposed on China for these 18
products is 53 percent and for market economies it is 55 percent.
[End of table]
[End of section]
Appendix III: Regression Analysis Results:
In order to examine the difference between duty rates applied to China
and those applied to market economy countries, we performed
multivariate regression analyses on the cases in which the Department
of Commerce (Commerce) applied duties to both China and at least one
market economy country. These involved 25 different products, affected
by 25 duty orders against China, and 54 duty orders against market
economies. Multivariate regression analysis makes it possible to
examine the simultaneous effect of several different factors on the
duty rates and to determine the extent to which these factors, taken
together, explain variation in these rates. To determine whether our
analytical results for China held true for all nonmarket economy (NME)
countries, we also identified six instances in which Commerce applied
duties to a nonmarket economy other than China, and at least one market
economy country, and reran our analyses using data for all 31 products.
Table 6 shows the results of our multivariate regression analysis of
variation in the dependent variable (the antidumping [AD] duty rate)
attributable to the following independent variables:
* China (a variable indicating whether the AD duty rate is for China or
not):
* the country-wide rate (a variable indicating whether the AD duty rate
is a country-wide rate), and:
* year (a variable indicating the year in which the duty went into
affect).
We also included a constant term. The regression involved 25 products
covered by 25 orders against China and 54 orders against market
economies and included a total of 243 duty rates (the dependent
variable) from these 79 orders.
The results show that the variable for China as the target country had
a coefficient of 3.002 percent, indicating that duty rates against
China tended to be about 3 percentage points higher than those against
market economies, on average. However, this coefficient is not
statistically significant, meaning that there was no statistically
significant difference between the rates assigned to China and market
economy countries, when the other factors in the regression are
included. The coefficient for the country-wide rate, on the other hand,
shows that there is a 52 percentage point difference between country-
wide rates against China and other rates. This result is statistically
significant at above the 99 percent level. The variable for the year of
the order is also statistically significant, but it has a small
coefficient.[Footnote 56] The adjusted R-square measure shows that
about 15 percent of the overall variation in duty rates is explained by
the independent variables included here.
Table 6: Results of Multivariate Regression Analysis of Duty Rates on
Explanatory Variables for China, Country-Wide Rates, and Year:
Dependent variable = AD duty rate.
Independent variable: China;
Unstandardized coefficients: (B): 3.002;
Standard error: 7.511;
Standardized coefficients (Beta): .028;
t-statistic: .400;
Significance of t-statistic: .690.
Independent variable: Year;
Unstandardized coefficients: (B): 2.095;
Standard error: .497;
Standardized coefficients (Beta): .252;
t-statistic: 4.218;
Significance of t-statistic: .000.
Independent variable: Country-wide rate;
Unstandardized coefficients: (B): 52.050;
Standard error: 11.398;
Standardized coefficients (Beta): .316;
t-statistic: 4.567;
Significance of t-statistic: .000.
Source: GAO analysis of Commerce data.
Note: R-square = 0.164; Adjusted R-square = 0.154; Observations = 243.
[End of table]
We then included additional variables for product groups, such as
agriculture and steel, and, in separate regressions, individual product
variables for each type of product. The additional variables generally
improved the overall "fit" of the regression; the adjusted R-square
measure with the individual product variables included showed that the
regression explained between 24 and 31 percent of the overall variation
in duty rates across the sample compared with 15 percent in the
regression above. Also, certain types of products, such as agriculture
products, tended to have higher duty rates relative to other types.
Table 7 shows the regression results when individual product variables
are included. Once again the coefficient for China is insignificant,
while the coefficient for the country-wide rate is significant at the
99 percent level. Some coefficients for individual products are
significant (e.g., carbon steel butt-weld pipe fittings), but many are
not. The overall adjusted R-square measure shows that this regression
model explains about 31 percent of total variation in the duty rates.
Table 7: Results of Multivariate Regression Analysis of Duty Rates on
Explanatory Variables for China, Country-Wide Rates, and Individual
Products:
[See PDF for table]
Source: GAO analysis of Commerce data.
Note: R-square = 0.386; Adjusted R-square = 0.309; Observations = 243.
[End of table]
In order to examine the effect of applying adverse inferences and facts
available (other than adverse inferences) on the duty rates, we added
additional variables indicating when Commerce used these approaches.
The results show that application of adverse inferences is a
significant variable and has a large effect on the duty rates, but that
application of facts available (other than adverse inferences) is not.
When adverse inferences are introduced, this results in the country-
wide rate variable becoming insignificant (see table 8). However, this
is likely due to the fact that the adverse inferences variable is
highly correlated with the country-wide rate. Therefore, it is not
surprising that the country-wide rate is no longer significant since
the adverse inferences variable is already accounting for much of the
variation. In addition, the variable for China once again becomes
significant. As we discuss in the body of this report, Commerce uses
adverse inferences in very few determinations for Chinese companies
granted their own rates. Adverse inferences were applied in making only
3 out of the 50 individual determinations used in this analysis.
However, Commerce used adverse inferences in nearly half of its
determinations against individual market economy companies.
Since adverse inferences are already factored into this model, as is
the country-wide rate, the remaining differences accounted for by the
China variable in table 3 are between individual (noncountry-wide)
Chinese rates and individual market economy rates in which adverse
inferences are not used. Table 8 shows that there is a statistically
significant 27 percentage point difference between these rates.
However, because there are methodological differences between the NME
and market economy methodologies for individual companies, it is not
clear how often adverse inferences would be used against individual
Chinese companies should they move to a market economy methodology. In
other words, we cannot predict the extent to which, under a market
economy methodology, individual Chinese companies would cooperate with
Commerce or Commerce would find it necessary to use adverse inferences
in its determinations against Chinese companies. It is possible that
some Chinese companies that currently have an individually determined
rate under the NME methodology would face adverse inferences under a
market economy methodology, whereas others would not. This could
produce a result similar to the market economy cases we have examined
in which the overall average (for example, 55 percent) is the result of
some companies receiving comparatively high duty rates (e.g., 77
percent) when adverse inferences are used and others receiving
comparatively low rates (e.g., 16 percent) when adverse inferences are
not used (see table 2). In any case, these results show that there is a
remaining difference between these two groups after accounting for the
use of adverse inferences and the country-wide rate.
Table 8: Results of Multivariate Regression Analysis of Duty Rates on
Explanatory Variables for China, Country-Wide Rates, Adverse
Inferences, Other Facts Available, and Individual Products:
Dependent variable = AD duty rate.
Independent variable: China;
Unstandardized coefficients: (B): 27.342;
Standard error: 6.856;
Standardized coefficients (Beta): .252;
t-statistic: 3.988;
Significance of t-statistic: .000.
Independent variable: Year;
Unstandardized coefficients: (B): 4.831;
Standard error: 17.572;
Standardized coefficients (Beta): .582;
t-statistic: .275;
Significance of t-statistic: .784.
Independent variable: Country-wide rate;
Unstandardized coefficients: (B): 9.910;
Standard error: 10.064;
Standardized coefficients (Beta): .060;
t-statistic: .985;
Significance of t-statistic: .326.
Independent variable: Adverse inferences;
Unstandardized coefficients: (B): 60.196;
Standard error: 6.845;
Standardized coefficients (Beta): .587;
t-statistic: 8.794;
Significance of t-statistic: .000.
Independent variable: Facts available;
Unstandardized coefficients: (B): 10.135;
Standard error: 8.495;
Standardized coefficients (Beta): .069;
t-statistic: 1.193;
Significance of t-statistic: .234.
Independent variable: Carbazole violet pigment 23 (2004);
Unstandardized coefficients: (B): -40.728;
Standard error: 229.493;
Standardized coefficients (Beta): -.136;
t-statistic: -.177;
Significance of t-statistic: .859.
Independent variable: Carbon steel butt-weld pipe fittings (1992);
Unstandardized coefficients: (B): 39.749; Dependent variable
= AD duty rate: Standard error: 26.189;
Standardized coefficients (Beta): .165;
t-statistic: 1.518;
Significance of t-statistic: .131.
Independent variable: Certain hot-rolled carbon steel flat products
(2001);
Unstandardized coefficients: (B): -57.704;
Standard error: 176.678;
Standardized coefficients (Beta): -.337;
t-statistic: -.327;
Significance of t-statistic: .744.
Independent variable: Collated roofing nails (1997);
Unstandardized coefficients: (B): -45.478;
Standard error: 107.679;
Standardized coefficients (Beta): -.152;
t-statistic: -.422;
Significance of t-statistic: .673.
Independent variable: Ferrosilicon (1993);
Unstandardized coefficients: (B): -3.176;
Standard error: 49.788;
Standardized coefficients (Beta): -.011;
t-statistic: -.064;
Significance of t-statistic: .949.
Independent variable: Ferrovanadium (2003);
Unstandardized coefficients: (B): -40.348;
Standard error: 212.436;
Standardized coefficients (Beta): -.114;
t-statistic: -.190;
Significance of t-statistic: .850.
Independent variable: Furfuryl alcohol (1995);
Unstandardized coefficients: (B): -13.868;
Standard error: 73.344;
Standardized coefficients (Beta): -.046;
t-statistic: -.189;
Significance of t-statistic: .850.
Independent variable: Helical spring lock washers (1993);
Unstandardized coefficients: (B): -18.938;
Standard error: 41.354;
Standardized coefficients (Beta): -.063;
t-statistic: -.458;
Significance of t-statistic: .647.
Independent variable: Honey (2001);
Unstandardized coefficients: (B): -31.946;
Standard error: 176.875;
Standardized coefficients (Beta): -.121;
t-statistic: -.181;
Significance of t-statistic: .857.
Independent variable: Industrial nitrocellulose (1990);
Unstandardized coefficients: (B): 8.668;
Standard error: 25.589;
Standardized coefficients (Beta): .040;
t-statistic: .339;
Significance of t-statistic: .735.
Independent variable: Iron construction castings (1986);
Unstandardized coefficients: (B): 25.459;
Standard error: 89.838;
Standardized coefficients (Beta): .118;
t-statistic: .283;
Significance of t-statistic: .777.
Independent variable: Melamine institutional dinnerware (1997);
Unstandardized coefficients: (B): -53.825;
Standard error: 107.215;
Standardized coefficients (Beta): -.242;
t-statistic: -.502;
Significance of t-statistic: .616.
Independent variable: Polyethylene retail carrier bags (2004);
Unstandardized coefficients: (B): -55.280;
Standard error: 229.336;
Standardized coefficients (Beta): -.310;
t-statistic: -.241;
Significance of t-statistic: .810.
Independent variable: Polyvinyl alcohol 1 (1996);
Unstandardized coefficients: (B): -5.196;
Standard error: 90.169;
Standardized coefficients (Beta): -.022;
t-statistic: -.058;
Significance of t-statistic: .954.
Independent variable: Polyvinyl alcohol 2 (2003);
Unstandardized coefficients: (B): -22.256;
Standard error: 211.996;
Standardized coefficients (Beta): -.084;
t-statistic: -.105;
Significance of t-statistic: .916.
Independent variable: Porcelain-on-steel cooking ware (1986);
Unstandardized coefficients: (B): 32.037;
Standard error: 89.998;
Standardized coefficients (Beta): .133;
t-statistic: .356;
Significance of t-statistic: .722.
Independent variable: Potassium permanganate (1984);
Unstandardized coefficients: (B): 33.392;
Standard error: 125.194;
Standardized coefficients (Beta): .085;
t-statistic: .267;
Significance of t-statistic: .790.
Independent variable: Preserved mushrooms (1999);
Unstandardized coefficients: (B): 32.301;
Standard error: 139.519;
Standardized coefficients (Beta): .155;
t-statistic: .232;
Significance of t-statistic: .817.
Independent variable: Silicomanganese 1 (1994);
Unstandardized coefficients: (B): 3.633;
Standard error: 59.124;
Standardized coefficients (Beta): .008;
t-statistic: .061;
Significance of t-statistic: .951.
Independent variable: Silicon metal (1991);
Unstandardized coefficients: (B): 39.950;
Standard error: 22.201;
Standardized coefficients (Beta): .124;
t-statistic: 1.799;
Significance of t-statistic: .073.
Independent variable: Steel concrete reinforcing bars (2001);
Unstandardized coefficients: (B): -41.334;
Standard error: 176.900;
Standardized coefficients (Beta): -.216;
t-statistic: -.234;
Significance of t-statistic: .815.
Independent variable: Sulfanilic acid (1992);
Unstandardized coefficients: (B): -1.893;
Standard error: 35.427;
Standardized coefficients (Beta): -.004;
t-statistic: -.053;
Significance of t-statistic: .957.
Independent variable: Sulfur chemicals (1991);
Unstandardized coefficients: (B): -8.757;
Standard error: 23.151;
Standardized coefficients (Beta): -.025;
t-statistic: -.378;
Significance of t-statistic: .706.
Independent variable: Tapered roller bearings (1987);
Unstandardized coefficients: (B): 12.952;
Standard error: 73.025;
Standardized coefficients (Beta): .046;
t-statistic: .177;
Significance of t-statistic: .859.
Source: GAO analysis of Commerce data.
Note: R-square = 0.562; Adjusted R-square = 0.502; Observations = 243.
[End of table]
In order to examine whether the above results hold for all NMEs, we ran
the same regressions for a larger set of 31 products (compared with the
25 products above) in which we found matching cases between nonmarket
economies other than China and market economies. The data set on these
31 products included rates from 128 orders (26 on China, 82 on market
economies, and 20 on NMEs other than China) that contained 355 duty
rates (dependent variable).
These analyses confirmed our China-market economy only analyses but
also showed that other NME countries tend to have duty rates that are
statistically higher than market economy rates for this sample of
matching cases. (Note that the number of additional products--six--is
relatively small.) Controlling for both the NME designation and the
country-wide rate, the NME designation itself is a significant variable
at the 97 percent level of confidence with a coefficient of 23 percent
(the coefficient for China is not statistically significant). The
country-wide variable is also significant (99 percent level) and larger
with a coefficient of 48 percent. As additional variables are added for
individual products, the NME designation continued to be significant
along with the country-wide rate variable.
There may be other systematic factors not accounted for in this
regression model that would explain some of the variability not
accounted for by the variables we included. As shown in table 7, our
model accounted for about 50 percent (half) of the variation in rates.
Some of this variation may be idiosyncratic and related to differences
in individual companies' practices, other may relate to how Commerce
has implemented its analysis. However, these unexplained factors do not
appear to be systematically related to whether the case involved China
or a market economy since the regression analysis already controls for
that difference.
[End of section]
Appendix IV: Comments from the Department of Commerce:
UNITED STATES DEPARTMENT OF COMMERCE:
The Under Secretary for International Trade:
Washington, D.C. 20230:
DEC 8 2005:
Mr. Loren Yager:
Director:
International Affairs and Trade:
U. S. Government Accountability Office:
Washington, D.C. 20548:
Dear Mr. Yager:
Thank you for providing us with your draft report on the potential
effects on certain Chinese companies of eliminating the non-market
economy (NME) antidumping duty (AD) calculation methodology. As there
has been increased concern with China trade practices in general, as
well as increased attention paid to Commerce's statutorily based NME
methodology, we find your report both timely and helpful. This study
demonstrates a strong effort by the GAO staff to understand Commerce's
application of the NME methodology; the history of AD duties applied to
China during the last 25 years compared to the rates applied to market
economy countries; and the circumstances under which the United States
might determine it appropriate to stop applying its NME methodology,
along with and the potential consequences of such a decision.
We have reviewed carefully the facts regarding the 25 cases in which
there were both Chinese and market economy AD orders issued. We found
some errors in the data and shared them with your staff. We agree with
the report's observation that the starkest difference between China
rates and market economy rates lays in the difference between the NME
country-wide rate and the market economy "all others" rate. We further
agree that this difference arises from both the NME methodology itself,
which requires a country-wide rate, and from how the two rates are
calculated. The former rate usually reflects corroborated adverse
inferences based on non-cooperation, while the latter is a weighted
average of only the calculated individual company rates. The GAO could
have analyzed such differing data pools as the set of all final AD
margins generated regardless of whether an order was put in place. It
also could have chosen to highlight other comparisons, such as between
the rates determined for cooperating individual Chinese respondents and
those applicable to cooperating respondents in market economy
countries. The noticeable difference between the two types of rates,
however, would likely have remained the same.
We note with interest the GAO's cautionary observations. First, it is
true that increasing numbers of Chinese companies have been applying
for, and receiving, separate, individual rates in AD investigations.
This has the effect of removing those companies from coverage under the
countrywide rate, and likely reducing the ultimate trade impact of
eliminating the NME methodology, as the GAO surmises. Second, we note
the GAO's explicit discussion of the relatively low explanatory power
of its model, i.e., the model does not explain that much of the
observed difference between China and market economy rates. In
addition, the report acknowledges that it cannot predict the extent to
which individual Chinese companies would cooperate with Commerce under
a market economy methodology and thus avoid the use of adverse
inferences. These limitations make clear that no definitive conclusions
or recommendations could reliably be drawn from the findings, as the
report itself seems to recognize.
I appreciate the opportunity to provide comments on the draft report.
Enclosed is an attachment with specific technical comments relating to
the text of the report.
Sincerely,
Signed by:
Franklin L. Lavin:
The following are GAO's comments on the Department of Commerce's letter
dated December 8, 2005.
GAO Comments:
1. We re-examined our data, making corrections as appropriate, and
updated our analyses. The report reflects these corrections, though
they did not have a significant impact on any of our findings.
2. As discussed in the report, the overall difference between the duty
rates applied to China and those applied to market economy countries is
largely explained by the application of comparatively high country-wide
rates to China. Therefore, the model allows us to conclude that
elimination of the NME methodology--and thus these country-wide rates-
-would result in lower duties for some Chinese companies. Nevertheless,
there would still be variation in duty rates among companies and
products due to a range of other factors.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Loren Yager (202) 512-4347:
Staff Acknowledgments:
In addition to the individual named above, Adam R. Cowles, Monica
Ghosh, R. Gifford Howland, Michael McAtee, Richard Seldin, Ross
Tuttleman, Roberto Walton, and Timothy Wedding made significant
contributions to this report.
(320327):
FOOTNOTES
[1] Both values are expressed in constant 2004 dollars.
[2] In U.S. law, an NME is a country that does not operate on market
principles "so that sales of merchandise in such country do not reflect
the fair value of the merchandise." 19 U.S.C. §1677(18). China is one
of 12 countries that Commerce has determined is an NME. Commerce
classified China as an NME in Final Determination of Sales at Less than
Fair Value: Natural Menthol from the People's Republic of China, 46
Fed. Reg. 24614 (May 1, 1981).
[3] H.R. Rep. No. 108-401, at 574 (2003), accompanying the Consolidated
Appropriations Act, 2004, Pub. L. No. 108-199, 118 Stat. 3, 65.
[4] GAO, U.S.-China Trade: Textile Safeguard Procedures Should be
Improved, GAO-05-296 (Washington, D.C.: Apr. 4, 2005); GAO, U.S.-China
Trade: Commerce Faces Practical and Legal Challenges in Applying
Countervailing Duties, GAO-05-474 (Washington D.C.: June 17, 2005);
GAO, U.S.-China Trade: US-China Trade: The United States Has Not
Restricted Imports Under the China Safeguard, GAO-05-1056 (Washington,
D.C.: Sept. 29, 2005).
[5] We also collected and examined data on duties imposed against other
NME countries. Appendix III briefly discusses our analyses of this
data.
[6] U.S. antidumping duty laws are found in 19 U.S.C. §§1673 et seq.
The general international framework for application of antidumping
duties can be found in the WTO Agreement on Implementation of Article
VI of the General Agreement on Tariffs and Trade 1994--commonly known
as the "Antidumping Agreement"--and in article VI of the General
Agreement.
[7] For example, 19 U.S.C. §1673a sets forth criteria for initiating an
AD investigation. It calls for petitions to be filed "by or on behalf
of" the affected domestic industry and requires petitioners to submit
"reasonably available" information to support their allegations that
dumping has occurred and that they have suffered injury as a result.
[8] U.S. law defines material injury as harm that is "not
inconsequential, immaterial, or unimportant." 19 U.S.C. §1677(7)(A).
[9] Under U.S. law, Commerce sets antidumping duties equivalent to
dumping margins. 19 U.S.C. §1673. WTO rules encourage, but do not
require, member states to apply antidumping duty rates that are less
than the identified dumping margins if such lower rates are found
sufficient to remedy the injury suffered by the domestic industry. WTO,
Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994, Art. 9.1.
[10] 19 U.S.C. §1677a(a).
[11] 19 U.S.C. §1677b establishes Commerce' authority to apply these
approaches to establishing normal value. Article 2.2 of the WTO
antidumping agreement also provides that normal value determinations
shall generally be based on a product's sales price in its home market
but permits investigating officials to refer to prices in another
export market or to "constructed" prices, in certain circumstances.
[12] 19 U.S.C. §1677f-1(c)(1) provides that, as a general rule,
Commerce shall determine a dumping margin for each known exporter and
producer of the subject merchandise. Article 6.10 of the WTO
antidumping agreement is similar.
[13] Commerce is required to verify all of the information that it
employs in making its final AD determinations. 19 U.S.C. §1677m(i).
[14] 19 U.S.C. §1677e provides that if necessary information is not
available on the record, or an interested party withholds requested
information, fails to provide it by the deadline for submission,
submits information that cannot be verified, or otherwise significantly
impedes an investigation, then Commerce shall use "facts otherwise
available" to make its determinations. Article 6.8 of the WTO
Antidumping Agreement specifies that when an interested party "refuses
access to, or otherwise does not provide, necessary information ..or
significantly impedes the investigation" the importing country may base
AD duty rates on the facts available. Annex II of the agreement
elaborates on this basic point.
[15] 19 U.S.C. §1677e(b).
[16] Final Determination of Sales at Less Than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products,
and Certain Cut-to-Length Carbon Steel Plate from Brazil, 58 Fed. Reg.
37091 (July 9, 1993).
[17] 19 U.S.C. §1677b(c). This provision specifies that surrogate
countries should be (1) at a level of economic development comparable
to the NME in question and (2) a significant producer of the product
being examined. Wage rates are determined by reference to wages
prevailing in market economy countries at the per capita income level
of the NME country being investigated. 19 C.F.R. §351.408(3).
[18] 19 U.S.C.§1677b(c)(2) states that if the available information
does not permit Commerce to apply this methodology, Commerce may base
its normal value determination on the price at which a comparable
product, produced in a market economy country at a level of development
similar to the exporting country, is sold in other countries, including
the United States. In practice, however, Commerce has never resorted to
this alternative.
[19] Commerce first developed and applied this test in a 1991 case
involving sparklers from China--Final Determination of Sales at Less
Than Fair Value: Sparklers from the People's Republic of China, 56 Fed.
Reg. 20588, (May 6, 1991). Commerce elaborated further upon its
criteria in Final Determination of Sales at Less than Fair Value:
Silicon Carbide from the People's Republic of China, 59 Fed. Reg. 22585
(May 2, 1994).
[20] Department of Commerce, Import Administration Policy Bulletin
Number 05.1 (Washington, D.C.: Apr. 5, 2005).
[21] 19 U.S.C. § 1677f-1(c)(2) provides that if it is not practicable
to establish individual rates for all known exporters or producers,
Commerce may limit its individual examinations to a statistically valid
sample of companies or to those companies that account for the largest
volume of the subject merchandise. Article 6.10 of the WTO Antidumping
Agreement provides that when large numbers of exporters are involved,
authorities may limit their examination to a reasonable number of
parties.
[22] 19 U.S.C. §1673d(c)(5)(A). This section also specifies that in
making such calculations Commerce shall exclude any duty rates that
were determined entirely by applying facts available, as well as any
rates that are zero or de minimis (less than 2 percent). Article 9.4 of
the WTO antidumping agreement is similar.
[23] Commerce did this in 15 of the 68 China cases that we examined.
For example, in one recent case Commerce calculated individual rates
for 7 Chinese companies and also assigned a weighted average duty rate
to 19 other Chinese companies that passed Commerce's separate rates
test but were not fully examined. See Notice of Final Determination of
Sales at Less Than Fair Value: Polyethylene Retail Carrier Bags from
the People's Republic of China, 69 Fed. Reg. 34125 (June 18, 2004). As
in market economy cases, weighted average calculations exclude
individual duty rates that are determined entirely by applying facts
available, or that are or de minimis.
[24] When Commerce identifies all NME exporters and producers, when all
of these companies cooperate, and when Commerce can establish
individual rates for each company, Commerce establishes country-wide
rates that are weighted averages of the individual company rates.
However, such cases are not common. Commerce employed this alternative
in only 5 (about 7 percent) of the 68 AD orders it issued against China
from 1980 through 2004. For an example, see Notice of Final
Determination of Sales at Less than Fair Value: Furfuryl Alcohol from
the People's Republic of China, 60 Fed. Reg. 22544 (May 8, 1995).
[25] During the 1980s, Japan was the single most frequently targeted
country. About 17 percent of all the AD orders that Commerce issued
during the decade applied to Japan.
[26] China had the highest percent of investigations that resulted in
orders (62 percent of 110 investigations) of any country subject to
more than 15 AD orders. Japan (58 percent), Korea (51 percent), Taiwan
(47 percent), and Germany (38 percent) followed China. Some countries,
such as Latvia and Bangladesh, were subject to only one or two
investigations and all of them resulted in orders, giving them a 100
percent rate. Ukraine, another NME, was subject to 13 antidumping
orders, and 69 percent of them resulted in orders.
[27] We reviewed all antidumping orders between 1980 and 2004 and
identified, from the 68 orders put in place against China, any in which
there was also a corresponding order against the same product from at
least one market economy within one year of the order against China. We
found similar market economy orders for 25 of the 68 orders against
China. See appendix I for more information.
[28] For details on this case, see the duty orders as follows: 69 Fed.
Reg. 48201 (China), 69 Fed. Reg. 48203 (Malaysia), and 69 Fed. Reg.
48204 (Thailand), all published on Aug. 9, 2004.
[29] This was not the case in two of the 25 cases that we examined in
detail. In these cases, Commerce calculated individual rates for two
Chinese companies and, since these companies represented all known
exports of the subject products to the United States, calculated a
weighted average of these two rates. See, for example, Notice of Final
Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From
the People's Republic of China, 60 Fed. Reg. 22544 (May 8, 1995). In
addition, in 3 of the other 43 orders against China Commerce calculated
a weighted average of individual rates rather than a country-wide rate.
[30] See Notice of Final Determination of Sales at Less Than Fair
Value: Carbazole Violet Pigment 23 from the People's Republic of China,
69 Fed. Reg. 67304 (Nov. 17, 2004). In some cases, Commerce has set a
country-wide rate equivalent to the duty rate that it calculated for
one fully investigated company. Appendix II provides more information
on these cases.
[31] In certain cases, Commerce has used facts-available-based
individual company rates to establish all-others rates. 19 U.S.C.
§1673d(c)(5)(B) provides that if all of the individual rates in a case
were determined through application of facts available (or are zero or
de minimis) then Commerce may use "any reasonable method" to establish
the all-others rate.
[32] These averages are based on a subset of the 25 products in which
individual company rates were calculated for both China and at least
one market economy. We found 18 products in which this was the case.
However, the average duty rates for individual companies from China and
market economies are still similar for the full set of 25 products--the
average duty rate for individual Chinese companies was 52 percent
compared with 48 percent for market economy companies.
[33] To determine whether our results held for all NMEs, we collected
and performed regression analyses including data on all AD actions from
1980 through 2004 in which Commerce applied duties to both a nonmarket
economy other than China--such as Ukraine--and at least one market
economy country. This increased the number of products we analyzed from
25 to 31.
[34] GAO-05-474, pages 10-15.
[35] 19 U.S.C. § 1677(18). The criteria include the extent to which the
country's currency is freely convertible and the extent to which wage
rates are determined by free labor-management bargaining.
[36] Since 1993, Commerce has reclassified Russia and nine other
formerly communist countries as market economies.
[37] According to Commerce, the working group has held two meetings--in
July 2004 and May 2005. The United States and China established the
Joint Commission in 1983 to serve as a forum for high-level dialogue on
bilateral trade issues.
[38] For details, see Sulfanilic Acid from the Peoples Republic of
China, 57 Fed. Reg. 9409 (Mar. 18, 1992). Commerce's criteria for
designation as a market-oriented industry are (a) virtually no
government involvement in setting prices or amounts to be produced, (b)
industry characterized by private or collective (not state) ownership,
and (3) market-determined prices for all significant inputs whether
material or nonmaterial (e.g., labor and overhead).
[39] WTO Protocol on the Accession of the People's Republic of China,
Art. 15(a).
[40] WTO Protocol on the Accession of the People's Republic of China,
Art. 15(d). China acceded to the WTO in December, 2001. The protocol
also specifies that countries determining that market economy
conditions prevail in China as a whole or in individual Chinese
industries will cease applying third-country information in AD duty
investigations against the country as a whole or against such
industries. This provision is similar to U.S. trade law.
[41] The General Agreement on Tariffs and Trade, Annex I, Ad Art. VI,
para. 1.2.
[42] The duty rate reported here (17 percent) differs slightly from the
rate reported in table 2 (16 percent) since this statement refers to
the full 25 cases and the table refers just to the 18 cases in which
individual rates were calculated for both China and at least one market
economy.
[43] Companies may decline to cooperate, at least in part, because
analysis of their own pricing practices leads them to conclude that
cooperation will only result in AD duty rates that are as high, or
higher, than those that would be imposed by application of adverse
inferences.
[44] While Commerce may apply adverse inferences to calculate
individual rates in China cases, it does so infrequently. For example,
in the 25 comparable cases Commerce applied adverse influences in only
3 of 50 individual rate determinations for Chinese companies. Commerce
officials stated that this may be due to Chinese companies that might
otherwise have adverse inferences applied to them declining to
participate in the investigation, and thus accepting application of the
country-wide rate.
[45] Regression analyses employing variables to account for (1)
application of a country-wide rate, (2) whether or not the duty was
applied to China or a market economy, (3) the year of application, (4)
whether or not Commerce applied adverse inferences, and (5) the type of
product involved, taken together, accounted for 50 percent of the
variation in duty rates. Appendix III provides more information on
these results.
[46] One factor that remains poorly documented and is not reflected in
our analysis is the effect that any Chinese government subsidies may
have on Chinese export prices. For more discussion on this topic see
GAO-05-474, pages 18-19.
[47] For details, see Notice of Final Determination of Sales at Less
than Fair Value and Negative Final Determination of Critical
Circumstances: Certain Color Television Receivers from the People's
Republic of China, 69 Fed. Reg. 20594 (Apr. 16, 2004).
[48] Commerce provides internet access to all of its determinations
since July, 1995, and to detailed information on its antidumping
procedures at http://ia.ita.doc.gov/ia-decisions-and-data.html.
[49] The 68 cases resulted in 72 individual orders since the hand tools
case included four separate types of hand tools and the ceiling and
oscillating fans case involved orders against both ceiling and
oscillating fans.
[50] There were more than 68 country-wide rates because in two cases
Commerce calculated more than 1 country-wide rate for China. For hand
tools (1991), Commerce calculated 4 separate country-wide rates based
on the four different types of hand tools under investigation.
Similarly, for oscillating and ceiling fans (1991), Commerce issued 2
separate country-wide rates--1 for oscillating fans and 1 for ceiling
fans. Technically, these two cases resulted in six separate orders,
although we count them as two orders. Since our analysis includes all
of the rates in these six orders, the results are not affected either
way.
[51] Notice of Final Determination of Sales at Less Than Fair Value:
Non-Malleable Cast Iron Pipe Fittings from the People's Republic of
China, 68 Fed. Reg. 7765 (Feb. 18, 2003).
[52] Notice of Final Determination of Sales at Less than Fair Value:
Glycine from the People's Republic of China, 60 Fed. Reg. 5620 (Jan.
30, 1995). In two cases, Chinese companies did provide information but
nonetheless did not receive an individually determined rate. In the
first case, Chinese companies did not request consideration for an
individual rate. In the second, Commerce denied eligibility on the
grounds that the company in question was a state-owned enterprise. See
Notice of Final Determination of Sales at Less than Fair Value: Pure
Magnesium and Alloy Magnesium from the People's Republic of China, 60
Fed. Reg. 16437 (Mar. 30, 1995) and Final Determination of Sales at
Less than Fair Value: Certain Compact Ductile Iron Waterworks Fittings
and Accessories Thereof from the People's Republic of China, 58 Fed.
Reg. 37908 (July 14, 1993).
[53] Commerce officials clarified they have recently stopped including
in duty orders the names of individual companies that have been
assigned the country-wide rate because they have failed the separate
rates test. However, Commerce still lists individual companies that
pass the separate rates test but for other reasons receive an adverse
inference-based rate--which may be the same as the country-wide rate.
[54] Notice of Final Determination of Sales at Less than Fair Value:
Refined Brown Aluminum Oxide from the People's Republic of China, 68
Fed. Reg. 55589 (Sept. 26, 2003). No other countries were included in
this investigation.
[55] See Bruce Blonigen, "Evolving Discretionary Practices of U.S.
Antidumping Activity" National Bureau of Economic Research, Working
Paper #9625 (April 2003).
[56] In other analyses in which we added variables for the types of
product involved, the variable "year" becomes insignificant. Overall,
we found mixed evidence of whether there is a positive trend over time
in duty rates for this group of cases. (See appendix II.)
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