The Final Rule published by the Department of Commerce (“Department”) on Monday, September 20, 2021, makes certain modifications to the Department’s regulations on new shipper reviews of antidumping and countervailing duty order. Among other changes, the new regulations increase the burden for parties requesting new shipper reviews by requiring more documentation supporting the sales under review and by requiring certifications from unaffiliated customers. These changes are intended to enhance the Department’s ability to assess whether new shipper review requests are based on “bona fide” sales. Several of the more burdensome requirements contained in the proposed version of the rule, issued last August, did not ultimately survive the notice and comment process. Even so, the additional requirements imposed by this regulatory amendment will likely make it more difficult for parties to seek and obtain new shipper reviews, and could give the Department greater leeway in rejecting such requests.
Provided for by Section 751(a)(2)(B) of the Act, a new shipper review allows a foreign exporter or producer that did not export subject merchandise to the United States during the period of the original antidumping (AD) or countervailing duty (CVD) investigation, and is not affiliated with an exporter or producer that did export, an opportunity to obtain its own dumping or countervailing duty margin after it makes its first U.S. sale on an expedited basis. Regulations for new shipper reviews are outlined in 19 CFR Section 351.214.
A key concept in the “new shipper review” process is whether the sale under review is “bona fide.” This analysis – which has long formed part of the Department’s evaluation of new shipper reviews and which was codified in the Act by Section 232 of the Enforce and Protect Act of 2015 – evaluates whether a sale has been made under circumstances typical of normal commercial transactions in the industry. The Department developed this concept in order to prevent parties from obtaining their own AD/CVD margins on the basis of atypical sales activity.
But the determination of whether a sale is or is not “bona fide” is a highly subjective determination. As a result, the Department’s determinations of whether sales are “bona fide” in the context of new shipper reviews have been subject to multiple challenges before the Court of International Trade. In particular, in the 2010s, the CIT remanded several of the Department’s decisions to rescind new shipper reviews due to insufficient information to conduct a bona fide analysis, stating that the Department could have relied on facts available rather than full rescission of review. The Final Rule seeks to facilitate the Department’s assessment of “bona fide” sales by adding certain objective filing requirements that reduce this subjectivity, and thus, reduce the possibility for adverse judicial determinations.
Notably, however, certain of these new documentation requirements had already been introduced through statutory changes to the new shipper review provision of the Act. Specifically, Section 232 of the Enforce and Protect Act of 2015 amended the Act by adding a list of specific factors for Commerce use to assess whether sales were bona fide at Section 751(a)(2)(B)(iv). Several of those considerations are now included in the Final Rule. Thus, though certain of these factors had already formed part of Commerce’s analysis of new shipper review applications for some time, they are now being codified in the regulations, likely to ensure consistency.
The Final Rule amends Section 351.214 by requiring the following additional materials, indicated in italics, as part of the application for new shipper reviews:
- Additional documentation for new shipper review requests. In addition to the previous documentation required as part of the request for a new shipper review, listed in 351.124(b)(2)(v), the Department has added the following data requirements in italics, below:
- (A) The date on which subject merchandise of the exporter or producer making the request was first entered, or withdrawn from warehouse, for consumption, or, if the exporter or producer cannot establish the date of first entry, the date on which the exporter or producer first shipped the subject merchandise for export to the United States;
- (B) The volume of that shipment and any subsequent shipments, including whether such shipments were made in commercial quantities;
- (C) The date of the first sale, and any subsequent sales, to an unaffiliated customer in the United States;
- (D) The circumstances surrounding such sale(s), including but not limited to:
- (1) The price of such sales;
- (2) Any expenses arising from such sales;
- (3) Whether the subject merchandise involved in such sales was resold in the United States at a profit;
- (4) Whether such sales were made on an arms-length basis; and
- (E) Additional documentation regarding the business activities of the producer or exporter, including but not limited to:
- (1) The producer or exporter’s offers to sell merchandise in the United States;
- (2) An identification of the complete circumstance surrounding the producer or exporter’s sales to the United States, as well as any home market or third country sales;
- (3) In the case of a non-producing exporter, an explanation of the exporter’s relationship with its producer/supplier; and
- (4) An identification of the producer’s or exporter’s relationship to the first unaffiliated U.S. purchaser;
- (vi) In the case of a review of a countervailing duty order, a certification that the exporter or producer has informed the government of the exporting country that the government will be required to provide a full response to the Department’s questionnaire.
With respect to the issue of what constitute a “commercial quantity,” certain commenters had requested that the Department establish that single or low number of sales were automatically not sufficient. However, the Department rejected such requests and reiterated that it makes its “bona fide” sales determinations on a case-by-case basis.
- Additional factors to consider for ascertaining whether a sale was “bona fide.” The Final Rule also directs the Department to consider the additional following factors as part of its “bona fide” analysis under Section 751(a)(2)(B)(iv):
- (1) Whether the producer, exporter, or customer was established for purposes of the sale(s) in question after the imposition of the relevant antidumping or countervailing duty order;
- (2) Whether the producer, exporter, or customer has lines of business unrelated to the subject merchandise;
- (3) The quantity of sales; and
- (4) Any other factor that the Secretary determines to be relevant with respect to the future selling behavior of the producer or exporter, including any other indicia that the sale was not commercially viable.
Two additional factors – whether there is an established history of duty evasion or circumvention with respect to new shipper reviews under the relevant order, and whether there is an established history of evasion or circumvention with respect to new shippers under any order in the same or similar industry – had been included in the proposed regulations but were removed in the Final Rule. Some commenters, opposing the addition of these considerations, argued that unless Commerce found collusion at play, any wrongdoing that may have occurred in the past was not pertinent to the review because there was no nexus between the current shipper and any past wrongdoing. The Department did not agree with this comment per se, but ultimately removed these factors from the final rule on the ground that these factors need not be considered in every case.
- Certain information regarding the unaffiliated customer. Whereas the prior version of Section 351.214 only required certifications from producers and exporters as part of the request for a new shipper review, the Final Rule now requires certain information regarding the unaffiliated customer.
Specifically, under the new Section 351.214(b)(2)(iv), the exporter or producer must provide:
- A certification from the exporter or producer that it will provide, to the fullest extent possible, necessary information related to the unaffiliated customer in the United States during the new shipper review, and
- A certification by the unaffiliated customer of its willingness to participate in the new shipper review and provide information relevant to the new shipper review, if such information is requested by the Secretary, or an explanation by the producer/exporter of why such certification from the unaffiliated customer cannot be provided.
These requirements for the unaffiliated customer are less strict than those in the proposed version of the rule, which had included certification from unaffiliated customers certifying that (1) they did not purchase the subject merchandise from the producer or exporter during the period of investigation; and (2) they will provide necessary information requested by Commerce regarding their purchases of subject merchandise. Several commenters argued that such certifications from unaffiliated customers would be too burdensome, and that there may be legitimate circumstances where a new shipper has no sales to unaffiliated customers in the United States. Seeing the merits of these arguments, the Department removed the substantive certification from the unaffiliated customer and only kept the requirement that the unaffiliated customer agree that it would participate if requested.
The foregoing revisions apply to any new shipper reviews filed on or after November 4, 2021.
 See, e.g., Haixing Jingmei Chem. Prod. Sales Co. v. United States, 308 F. Supp. 3d 1366 (Ct. Int’l Trade 2018),
Jinxiang Huameng Imp & Exp Co. v. United States, 335 F. Supp. 3d 1288, 1289 (Ct. Int’l Trade 2018),
Jinxiang Yuanxin Imp. & Exp. Co. v. U.S, 37 C.I.T. 917, 919 (2013), determination sustained, 71 F. Supp. 3d 1338 (Ct. Int’l Trade 2015).