Since 2002, Russia has been considered a market economy under US anti-dumping laws.
in a nutshell
November 9, 2022, U.S. Department of Commerce (“documents“) revoked Russia’s market economy status for purposes of US anti-dumping legislation. Redesignation of Russia as a non-market economy (“NME”) – an economy where prices are set by the government rather than by supply and demand – will, in the case of future anti-dumping, make it easier for the DOC to impose anti-dumping taxes using a special This means that you can impose tariff rates on imports from Russia.
The DOC’s decision was based on “extensive setbacks” in the Russian economy, particularly since Russia’s invasion of Ukraine, and the NME criteria contained in U.S. law, namely (1) currency convertibility, (2) how wages are determined, (3) the environment for foreign investment; (4) government control over the means of production; (5) government control over firm business decisions; considerations, and freedom of information.
Background
Prior to 2002, Russia was considered an NME for the purposes of US anti-dumping laws. However, in 2002 Russia was designated a market economy and has enjoyed that status for 20 years. In October 2021, the DOC completed its first review of Russia’s market economy status, and Russia maintained its status. However, there have been important developments since the October 2021 decision, and the DOC has announced that it will continue to monitor the progress of Russia’s economic reforms in the near future.
In May 2022, prompted by the invasion of Ukraine, the DOC launched another review of the state of Russia’s market economy. This review was first led to an anti-dumping investigation on fertilizers from Russia and finalized under an anti-dumping investigation on emulsion styrene-butadiene rubber from Russia. Ultimately, the DOC concluded that since the October 2021 review, the Russian economy has fallen back on the six factors set out in US law for determining NME status.
- The extent to which the ruble can be exchanged for currencies of other countries.
- The extent to which Russian wage rates are determined by free bargaining between employers and workers.
- The extent to which joint ventures or other investments by other foreign companies are permitted in Russia.
- The degree of government ownership or control over the means of production in Russia.
- The extent of government control over resource allocation and firm price and output decisions.When
- Other factors that the DOC deems appropriate to consider, namely corruption, rule of law, protection of property rights and freedom of information.
Based on an analysis of these six factors, the DOC concluded that Russia should again be considered an NME. This decision will have important implications for both US and Russian companies.
Under US anti-dumping laws, imports from countries designated as NMEs (particularly China) are subject to a different dumping calculation method than imports from countries that are considered market economies.
With Russia once again designated as an NME, the DOC ignores prices and costs on the Russian market when determining the so-called fair value of products under anti-dumping investigations and considers these prices and costs to be potentially higher. , can be replaced by an out-of-out price. National benchmark price. In practice, this makes it much easier to spot dumping of imports from Russia, resulting in significantly higher levels of anti-dumping duties on such imports.
The treatment of NMEs in anti-dumping cases is a controversial issue under World Trade Organization law (seeWTO‘), and Russia told the DOC that, in its view, the only outcome of the review consistent with the WTO is for Russia to maintain its status as a market economy.
For context, across the Atlantic, the DOC counterpart of the European Union, the European Commission (“commission“) formally takes a different approach to the status of the Russian market economy.
Spurred on by a WTO challenge that the EU treats China as an NME, the European Commission will consider whether there is substantive government intervention that significantly distorts certain prices or costs, including those of raw materials and energy. We have adopted a new damping calculation method that revolves around Home market for exporters. In principle, the European Commission can conclude that there are significant distortions in any sector in any country.
To assess whether significant distortion exists, the EU anti-dumping law requires consideration of six factors reminiscent of those considered by the DOC.
- Whether the market in question is served to a significant extent by an entity owned, controlled, or operated under policy supervision or guidance of an authority in the exporting country.
- Whether there is a state presence in the enterprise that allows the state to interfere with respect to prices or costs.
- Whether there are public policies or measures that discriminate in favor of domestic suppliers, or whether they affect free market forces.
- lack of, discriminatory application, or inadequate enforcement of bankruptcy, corporate or property laws;
- Whether wage costs are distorted.When
- Whether access to finance is granted by institutions that carry out public policy objectives or by institutions that do not act independently of the State.
If the Commission finds that significant distortions are present, it should use a damping calculation method that is as effective as the DOC’s NME methodology. Using this method can make it easier to find damping and increase the damping margin.
The commission singled out China and Russia despite the fact that, in principle, significant distortions have been found in any sector of any country. That is, to assist petitioners in proving that material distortions exist, the Commission has the power to adopt reports that provide evidence of material distortions. Her two published reports so far concern China and Russia.
