The US Department of Commerce announced on November 10 that it no longer will treat Russia as a market economy in its antidumping (AD) proceedings, giving the United States the ability to apply the full force of the US AD law to address market distortions deemed caused by increasing Russian governmental interference in the Russian economy.
According to a Commerce press release, “Based on a balanced evaluation of facts and in line with U.S. law, this decision will ensure that Commerce’s dumping calculations reflect economic realities on the ground and that U.S. industries get the relief from unfair imports that they are entitled to under the law. This decision is an important acknowledgement of the rise of Russian state-influence in their economy, which puts U.S. industries at a disadvantage when trying to compete globally.”
Commerce’s analysis found “extensive backtracking,” particularly since the invasion of Ukraine, in several areas on which its market and nonmarket economy determinations are based, including currency convertibility, how wages are determined, the climate for foreign investment, government control of the means of production, and government control over firm business decisions.
Commerce therefore concluded that this government involvement in the Russian economy has led to distorted prices and costs that do not accurately reflect whether Russian companies are fairly pricing imports into the United States.
As a result of this decision, in future cases involving imports from Russia Commerce will apply an alternative methodology to calculate the AD duties on imports from Russia based on market-based prices and costs from a country at a comparable level of economic development that produces comparable merchandise, thereby enabling Commerce to more effectively address Russian unfair trade practices that harm US manufacturers.
Action item: Taxpayers that import goods from Russia may wish to consider monitoring Commerce’s antidumping procedures via the International Trade Administration ACCESS system here.
For prior coverage of US revocation of “most favored nation” status for goods imported from Russia and Belarus, see PwC Tax Insight, United States revokes MFN status for Russian and Belarusian goods; CBP issues implementing guidance, April 21, 2022.
Global and US Tax Knowledge Management Leader, PwC US