Commerce Finalizes New Procedures for CV Duties on Currency Undervaluation

The Commerce Department is amending its regulations to provide for the imposition of countervailing duties to address currency undervaluation, it said in a final rule. The changes take effect in 60 days, meaning that all investigations, administrative reviews or other proceedings that begin on or after April 6 could result in the imposition of CV duties for currency manipulation.

Commerce made minor changes from a proposed rule on the subject it issued in May (see 1905240035), including adding more detail to the regulations themselves on the new procedures. Under the approach finalized by Commerce’s rule, the agency will consider real effective exchange rates to determine the extent to which a currency is undervalued, and seek the Treasury Department’s formal, non-binding evaluation on whether the foreign government’s actions were responsible for the undervaluation.

If Commerce finds the undervaluation resulted from government action, Commerce will then potentially consider currency exchanges by the country’s international traders to be a subsidy, because they’d receive more domestic currency in return for their exchanges of U.S. dollars than they otherwise should have. Commerce will look at each individual exporter’s currency exchanges, and specifically the amount of additional domestic currency received in exchanges due to undervaluation. It will add the currency subsidy amount to the exporter’s overall CV duty rate.

(Federal Register 02/04/20)