Commerce to Again Consider Nonmarket Economy Status for Russia Following Ukraine Invasion

The Commerce Department will again consider ending Russia’s market economy status in antidumping duty proceedings, according to a prepublication version of a notice released May 9. After determining Russia still warranted market economy treatment in October during an antidumping duty investigation on urea ammonium nitrate solutions, Commerce is now beginning a changed circumstances review based on actions Russia has taken since its invasion of Ukraine in February.

“We find that good cause exists to initiate a changed circumstances review (CCR) within the [urea ammonium nitrate] proceeding to determine whether Russia remains an ME country in light of the recent developments within its economy that have, to a large degree, been associated with Russia’s 2022 invasion of Ukraine,” Commerce said in the associated decision memo.

One factor Commerce considers when determining whether a country is a market or nonmarket economy is currency convertibility, and Russia has “implemented several capital controls and restrictions on currency conversion that may have influenced the value of the ruble,” Commerce said. That includes a requirement that exporters convert 80% of new earnings overseas into rubles and a ban on the sale of preexisting securities by foreigners, as well as restrictions on the movement of money abroad by Russians.

Russia has also increased restrictions on foreign investment, another factor in Commerce’s determination, by subjecting investment from “unfriendly countries” to approval. Russia nationalized production facilities owned by foreign firms following the invasion, increased control over price and output decisions to keep local prices low, and amended its laws to silence independent journalism, Commerce said.

Should Commerce assign Russia nonmarket economy status, all Russian exporters would be subject to a country-wide rate unless they apply for a separate rate and prove an absence of government control. The final results of Commerce’s changed circumstances review are due in about nine months.