Russia’s Market Economy Status in Play?
The U.S. Department of Commerce published in the Federal Register today its notice of initiation of the investigation of Urea Ammonium Nitrate Solutions from Russia and Trinidad and Tobago. 86 Fed. Reg. 40008. Of great significance is the fact that petitioners alleged that Russia functions as a non-market economy (NME) and that Commerce therefore should calculate the Russian exporters’ dumping margins on the basis of the NME methodology used primarily for China and Vietnam. The Notice makes it appear that Commerce will use both market economy and NME methodologies to calculate dumping margins, as it goes through the process of considering which category should apply.
This development means that the burden placed on the Russian exporters in this investigation will likely be heavy, as they will have to submit Normal Value data based on two different methodologies. But the implications are broader. If Russia is found to be a NME, this would be the first time that a country that had “graduated” to market economy status, as Russia did in 2002, would be returned to NME status. The impact would be felt not just for the specific product and exporters involved in the UANS investigation, but across all anti-dumping (and countervailing duty) proceedings involving Russia – including, for example, various steel and other fertilizer products. It has further implications for “suspension agreements” involving Russian exports, which were converted from NME to market economy architecture in the years after the 2002 determination. That range of cases and agreements will be impacted despite the fact that the Russian exporters and U.S. importers of such products are not participants, and have no standing as “interested parties,” in the current UANS investigation.
The broad impact of a market economy determination is one reason that Commerce, in 2001-02, opened a country-wide inquiry into Russia’s economic status – independent of any specific anti-dumping proceeding – and applied its determination prospectively when it determined that Russia should be treated as a market economy. Further, the market economy-vs.-NME determination is subject to a range of criteria, some economic and some quasi-political, which means that the decision can be swayed by geopolitical considerations. And to state the obvious, the United States’ geopolitical relationship with Russia is very different today from 2001-02. Finally, tucked away in U.S. anti-dumping law is a provision (19 U.S.C. § 1677(18)(D)) that Commerce’s determinations on NME status “shall not be subject to judicial review” – thus ensuring that such geopolitical/economic determinations are final.
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Neil Ellis was extensively involved in the negotiation of NME-based suspension agreements between Commerce and Russia in the late 1990s, and in the 2001-02 proceedings that resulted in Commerce’s decision to treat Russia as a market economy. For more information on the economic and political issues underlying NME status determinations, please contact us at email@example.com.