                        TITLE 19--CUSTOMS DUTIES
 
                      CHAPTER 4--TARIFF ACT OF 1930
 
           SUBTITLE IV--COUNTERVAILING AND ANTIDUMPING DUTIES
 
                       Part IV--General Provisions
 
Sec. 1677b. Normal value


(a) Determination

    In determining under this subtitle whether subject merchandise is 
being, or is likely to be, sold at less than fair value, a fair 
comparison shall be made between the export price or constructed export 
price and normal value. In order to achieve a fair comparison with the 
export price or constructed export price, normal value shall be 
determined as follows:

                  (1) Determination of normal value

        (A) In general

            The normal value of the subject merchandise shall be the 
        price described in subparagraph (B), at a time reasonably 
        corresponding to the time of the sale used to determine the 
        export price or constructed export price under section 1677a(a) 
        or (b) of this title.

        (B) Price

            The price referred to in subparagraph (A) is--
                (i) the price at which the foreign like product is first 
            sold (or, in the absence of a sale, offered for sale) for 
            consumption in the exporting country, in the usual 
            commercial quantities and in the ordinary course of trade 
            and, to the extent practicable, at the same level of trade 
            as the export price or constructed export price, or
                (ii) in a case to which subparagraph (C) applies, the 
            price at which the foreign like product is so sold (or 
            offered for sale) for consumption in a country other than 
            the exporting country or the United States, if--
                    (I) such price is representative,
                    (II) the aggregate quantity (or, if quantity is not 
                appropriate, value) of the foreign like product sold by 
                the exporter or producer in such other country is 5 
                percent or more of the aggregate quantity (or value) of 
                the subject merchandise sold in the United States or for 
                export to the United States, and
                    (III) the administering authority does not determine 
                that the particular market situation in such other 
                country prevents a proper comparison with the export 
                price or constructed export price.

        (C) Third country sales

            This subparagraph applies when--
                (i) the foreign like product is not sold (or offered for 
            sale) for consumption in the exporting country as described 
            in subparagraph (B)(i),
                (ii) the administering authority determines that the 
            aggregate quantity (or, if quantity is not appropriate, 
            value) of the foreign like product sold in the exporting 
            country is insufficient to permit a proper comparison with 
            the sales of the subject merchandise to the United States, 
            or
                (iii) the particular market situation in the exporting 
            country does not permit a proper comparison with the export 
            price or constructed export price.

        For purposes of clause (ii), the aggregate quantity (or value) 
        of the foreign like product sold in the exporting country shall 
        normally be considered to be insufficient if such quantity (or 
        value) is less than 5 percent of the aggregate quantity (or 
        value) of sales of the subject merchandise to the United States.

                       (2) Fictitious markets

        No pretended sale or offer for sale, and no sale or offer for 
    sale intended to establish a fictitious market, shall be taken into 
    account in determining normal value. The occurrence of different 
    movements in the prices at which different forms of the foreign like 
    product are sold (or, in the absence of sales, offered for sale) in 
    the exporting country after the issuance of an antidumping duty 
    order may be considered by the administering authority as evidence 
    of the establishment of a fictitious market for the foreign like 
    product if the movement in such prices appears to reduce the amount 
    by which the normal value exceeds the export price (or the 
    constructed export price) of the subject merchandise.

            (3) Exportation from an intermediate country

        Where the subject merchandise is exported to the United States 
    from an intermediate country, normal value shall be determined in 
    the intermediate country, except that normal value may be determined 
    in the country of origin of the subject merchandise if--
            (A) the producer knew at the time of the sale that the 
        subject merchandise was destined for exportation;
            (B) the subject merchandise is merely transshipped through 
        the intermediate country;
            (C) sales of the foreign like product in the intermediate 
        country do not satisfy the conditions of paragraph (1)(C); or
            (D) the foreign like product is not produced in the 
        intermediate country.

                    (4) Use of constructed value

        If the administering authority determines that the normal value 
    of the subject merchandise cannot be determined under paragraph 
    (1)(B)(i), then, notwithstanding paragraph (1)(B)(ii), the normal 
    value of the subject merchandise may be the constructed value of 
    that merchandise, as determined under subsection (e) of this 
    section.

                (5) Indirect sales or offers for sale

        If the foreign like product is sold or, in the absence of sales, 
    offered for sale through an affiliated party, the prices at which 
    the foreign like product is sold (or offered for sale) by such 
    affiliated party may be used in determining normal value.

                           (6) Adjustments

        The price described in paragraph (1)(B) shall be--
            (A) increased by the cost of all containers and coverings 
        and all other costs, charges, and expenses incident to placing 
        the subject merchandise in condition packed ready for shipment 
        to the United States;
            (B) reduced by--
                (i) when included in the price described in paragraph 
            (1)(B), the cost of all containers and coverings and all 
            other costs, charges, and expenses incident to placing the 
            foreign like product in condition packed ready for shipment 
            to the place of delivery to the purchaser,
                (ii) the amount, if any, included in the price described 
            in paragraph (1)(B), attributable to any additional costs, 
            charges, and expenses incident to bringing the foreign like 
            product from the original place of shipment to the place of 
            delivery to the purchaser, and
                (iii) the amount of any taxes imposed directly upon the 
            foreign like product or components thereof which have been 
            rebated, or which have not been collected, on the subject 
            merchandise, but only to the extent that such taxes are 
            added to or included in the price of the foreign like 
            product, and

            (C) increased or decreased by the amount of any difference 
        (or lack thereof) between the export price or constructed export 
        price and the price described in paragraph (1)(B) (other than a 
        difference for which allowance is otherwise provided under this 
        section) that is established to the satisfaction of the 
        administering authority to be wholly or partly due to--
                (i) the fact that the quantities in which the subject 
            merchandise is sold or agreed to be sold to the United 
            States are greater than or less than the quantities in which 
            the foreign like product is sold, agreed to be sold, or 
            offered for sale,
                (ii) the fact that merchandise described in subparagraph 
            (B) or (C) of section 1677(16) of this title is used in 
            determining normal value, or
                (iii) other differences in the circumstances of sale.

                     (7) Additional adjustments

        (A) Level of trade

            The price described in paragraph (1)(B) shall also be 
        increased or decreased to make due allowance for any difference 
        (or lack thereof) between the export price or constructed export 
        price and the price described in paragraph (1)(B) (other than a 
        difference for which allowance is otherwise made under this 
        section) that is shown to be wholly or partly due to a 
        difference in level of trade between the export price or 
        constructed export price and normal value, if the difference in 
        level of trade--
                (i) involves the performance of different selling 
            activities; and
                (ii) is demonstrated to affect price comparability, 
            based on a pattern of consistent price differences between 
            sales at different levels of trade in the country in which 
            normal value is determined.

        In a case described in the preceding sentence, the amount of the 
        adjustment shall be based on the price differences between the 
        two levels of trade in the country in which normal value is 
        determined.

        (B) Constructed export price offset

            When normal value is established at a level of trade which 
        constitutes a more advanced stage of distribution than the level 
        of trade of the constructed export price, but the data available 
        do not provide an appropriate basis to determine under 
        subparagraph (A)(ii) a level of trade adjustment, normal value 
        shall be reduced by the amount of indirect selling expenses 
        incurred in the country in which normal value is determined on 
        sales of the foreign like product but not more than the amount 
        of such expenses for which a deduction is made under section 
        1677a(d)(1)(D) of this title.

                (8) Adjustments to constructed value

        Constructed value as determined under subsection (e) of this 
    section, may be adjusted, as appropriate, pursuant to this 
    subsection.

(b) Sales at less than cost of production

                (1) Determination; sales disregarded

        Whenever the administering authority has reasonable grounds to 
    believe or suspect that sales of the foreign like product under 
    consideration for the determination of normal value have been made 
    at prices which represent less than the cost of production of that 
    product, the administering authority shall determine whether, in 
    fact, such sales were made at less than the cost of production. If 
    the administering authority determines that sales made at less than 
    the cost of production--
            (A) have been made within an extended period of time in 
        substantial quantities, and
            (B) were not at prices which permit recovery of all costs 
        within a reasonable period of time,

    such sales may be disregarded in the determination of normal value. 
    Whenever such sales are disregarded, normal value shall be based on 
    the remaining sales of the foreign like product in the ordinary 
    course of trade. If no sales made in the ordinary course of trade 
    remain, the normal value shall be based on the constructed value of 
    the merchandise.

                  (2) Definitions and special rules

        For purposes of this subsection--

        (A) Reasonable grounds to believe or suspect

            There are reasonable grounds to believe or suspect that 
        sales of the foreign like product were made at prices that are 
        less than the cost of production of the product, if--
                (i) in an investigation initiated under section 1673a of 
            this title or a review conducted under section 1675 of this 
            title, an interested party described in subparagraph (C), 
            (D), (E), (F), or (G) of section 1677(9) of this title 
            provides information, based upon observed prices or 
            constructed prices or costs, that sales of the foreign like 
            product under consideration for the determination of normal 
            value have been made at prices which represent less than the 
            cost of production of the product; or
                (ii) in a review conducted under section 1675 of this 
            title involving a specific exporter, the administering 
            authority disregarded some or all of the exporter's sales 
            pursuant to paragraph (1) in the investigation or if a 
            review has been completed, in the most recently completed 
            review.

        (B) Extended period of time

            The term ``extended period of time'' means a period that is 
        normally 1 year, but not less than 6 months.

        (C) Substantial quantities

            Sales made at prices below the cost of production have been 
        made in substantial quantities if--
                (i) the volume of such sales represents 20 percent or 
            more of the volume of sales under consideration for the 
            determination of normal value, or
                (ii) the weighted average per unit price of the sales 
            under consideration for the determination of normal value is 
            less than the weighted average per unit cost of production 
            for such sales.

        (D) Recovery of costs

            If prices which are below the per unit cost of production at 
        the time of sale are above the weighted average per unit cost of 
        production for the period of investigation or review, such 
        prices shall be considered to provide for recovery of costs 
        within a reasonable period of time.

                (3) Calculation of cost of production

        For purposes of this part, the cost of production shall be an 
    amount equal to the sum of--
            (A) the cost of materials and of fabrication or other 
        processing of any kind employed in producing the foreign like 
        product, during a period which would ordinarily permit the 
        production of that foreign like product in the ordinary course 
        of business;
            (B) an amount for selling, general, and administrative 
        expenses based on actual data pertaining to production and sales 
        of the foreign like product by the exporter in question; and
            (C) the cost of all containers and coverings of whatever 
        nature, and all other expenses incidental to placing the foreign 
        like product in condition packed ready for shipment.

    For purposes of subparagraph (A), if the normal value is based on 
    the price of the foreign like product sold for consumption in a 
    country other than the exporting country, the cost of materials 
    shall be determined without regard to any internal tax in the 
    exporting country imposed on such materials or their disposition 
    which are remitted or refunded upon exportation.

(c) Nonmarket economy countries

                           (1) In general

        If--
            (A) the subject merchandise is exported from a nonmarket 
        economy country, and
            (B) the administering authority finds that available 
        information does not permit the normal value of the subject 
        merchandise to be determined under subsection (a) of this 
        section,

    the administering authority shall determine the normal value of the 
    subject merchandise on the basis of the value of the factors of 
    production utilized in producing the merchandise and to which shall 
    be added an amount for general expenses and profit plus the cost of 
    containers, coverings, and other expenses. Except as provided in 
    paragraph (2), the valuation of the factors of production shall be 
    based on the best available information regarding the values of such 
    factors in a market economy country or countries considered to be 
    appropriate by the administering authority.

                            (2) Exception

        If the administering authority finds that the available 
    information is inadequate for purposes of determining the normal 
    value of subject merchandise under paragraph (1), the administering 
    authority shall determine the normal value on the basis of the price 
    at which merchandise that is--
            (A) comparable to the subject merchandise, and
            (B) produced in one or more market economy countries that 
        are at a level of economic development comparable to that of the 
        nonmarket economy country,

    is sold in other countries, including the United States.

                      (3) Factors of production

        For purposes of paragraph (1), the factors of production 
    utilized in producing merchandise include, but are not limited to--
            (A) hours of labor required,
            (B) quantities of raw materials employed,
            (C) amounts of energy and other utilities consumed, and
            (D) representative capital cost, including depreciation.

               (4) Valuation of factors of production

        The administering authority, in valuing factors of production 
    under paragraph (1), shall utilize, to the extent possible, the 
    prices or costs of factors of production in one or more market 
    economy countries that are--
            (A) at a level of economic development comparable to that of 
        the nonmarket economy country, and
            (B) significant producers of comparable merchandise.

(d) Special rule for certain multinational corporations

    Whenever, in the course of an investigation under this subtitle, the 
administering authority determines that--
        (1) subject merchandise exported to the United States is being 
    produced in facilities which are owned or controlled, directly or 
    indirectly, by a person, firm, or corporation which also owns or 
    controls, directly or indirectly, other facilities for the 
    production of the foreign like product which are located in another 
    country or countries,
        (2) subsection (a)(1)(C) of this section applies, and
        (3) the normal value of the foreign like product produced in one 
    or more of the facilities outside the exporting country is higher 
    than the normal value of the foreign like product produced in the 
    facilities located in the exporting country,

it shall determine the normal value of the subject merchandise by 
reference to the normal value at which the foreign like product is sold 
in substantial quantities from one or more facilities outside the 
exporting country. The administering authority, in making any 
determination under this paragraph, shall make adjustments for the 
difference between the cost of production (including taxes, labor, 
materials, and overhead) of the foreign like product produced in 
facilities outside the exporting country and costs of production of the 
foreign like product produced in facilities in the exporting country, if 
such differences are demonstrated to its satisfaction. For purposes of 
this subsection, in determining the normal value of the foreign like 
product produced in a country outside of the exporting country, the 
administering authority shall determine its price at the time of 
exportation from the exporting country and shall make any adjustments 
required by subsection (a) of this section for the cost of all 
containers and coverings and all other costs, charges, and expenses 
incident to placing the merchandise in condition packed ready for 
shipment to the United States by reference to such costs in the 
exporting country.

(e) Constructed value

    For purposes of this subtitle, the constructed value of imported 
merchandise shall be an amount equal to the sum of--
        (1) the cost of materials and fabrication or other processing of 
    any kind employed in producing the merchandise, during a period 
    which would ordinarily permit the production of the merchandise in 
    the ordinary course of business;
        (2)(A) the actual amounts incurred and realized by the specific 
    exporter or producer being examined in the investigation or review 
    for selling, general, and administrative expenses, and for profits, 
    in connection with the production and sale of a foreign like 
    product, in the ordinary course of trade, for consumption in the 
    foreign country, or
        (B) if actual data are not available with respect to the amounts 
    described in subparagraph (A), then--
            (i) the actual amounts incurred and realized by the specific 
        exporter or producer being examined in the investigation or 
        review for selling, general, and administrative expenses, and 
        for profits, in connection with the production and sale, for 
        consumption in the foreign country, of merchandise that is in 
        the same general category of products as the subject 
        merchandise,
            (ii) the weighted average of the actual amounts incurred and 
        realized by exporters or producers that are subject to the 
        investigation or review (other than the exporter or producer 
        described in clause (i)) for selling, general, and 
        administrative expenses, and for profits, in connection with the 
        production and sale of a foreign like product, in the ordinary 
        course of trade, for consumption in the foreign country, or
            (iii) the amounts incurred and realized for selling, 
        general, and administrative expenses, and for profits, based on 
        any other reasonable method, except that the amount allowed for 
        profit may not exceed the amount normally realized by exporters 
        or producers (other than the exporter or producer described in 
        clause (i)) in connection with the sale, for consumption in the 
        foreign country, of merchandise that is in the same general 
        category of products as the subject merchandise; and

        (3) the cost of all containers and coverings of whatever nature, 
    and all other expenses incidental to placing the subject merchandise 
    in condition packed ready for shipment to the United States.

For purposes of paragraph (1), the cost of materials shall be determined 
without regard to any internal tax in the exporting country imposed on 
such materials or their disposition which are remitted or refunded upon 
exportation of the subject merchandise produced from such materials.

(f) Special rules for calculation of cost of production and for 
        calculation of constructed value

    For purposes of subsections (b) and (e) of this section.--

                              (1) Costs

        (A) In general

            Costs shall normally be calculated based on the records of 
        the exporter or producer of the merchandise, if such records are 
        kept in accordance with the generally accepted accounting 
        principles of the exporting country (or the producing country, 
        where appropriate) and reasonably reflect the costs associated 
        with the production and sale of the merchandise. The 
        administering authority shall consider all available evidence on 
        the proper allocation of costs, including that which is made 
        available by the exporter or producer on a timely basis, if such 
        allocations have been historically used by the exporter or 
        producer, in particular for establishing appropriate 
        amortization and depreciation periods, and allowances for 
        capital expenditures and other development costs.

        (B) Nonrecurring costs

            Costs shall be adjusted appropriately for those nonrecurring 
        costs that benefit current or future production, or both.

        (C) Startup costs

            (i) In general

                Costs shall be adjusted appropriately for circumstances 
            in which costs incurred during the time period covered by 
            the investigation or review are affected by startup 
            operations.
            (ii) Startup operations

                Adjustments shall be made for startup operations only 
            where--
                    (I) a producer is using new production facilities or 
                producing a new product that requires substantial 
                additional investment, and
                    (II) production levels are limited by technical 
                factors associated with the initial phase of commercial 
                production.

          For purposes of subclause (II), the initial phase of 
            commercial production ends at the end of the startup period. 
            In determining whether commercial production levels have 
            been achieved, the administering authority shall consider 
            factors unrelated to startup operations that might affect 
            the volume of production processed, such as demand, 
            seasonality, or business cycles.
            (iii) Adjustment for startup operations

                The adjustment for startup operations shall be made by 
            substituting the unit production costs incurred with respect 
            to the merchandise at the end of the startup period for the 
            unit production costs incurred during the startup period. If 
            the startup period extends beyond the period of the 
            investigation or review under this subtitle, the 
            administering authority shall use the most recent cost of 
            production data that it reasonably can obtain, analyze, and 
            verify without delaying the timely completion of the 
            investigation or review. For purposes of this subparagraph, 
            the startup period ends at the point at which the level of 
            commercial production that is characteristic of the 
            merchandise, producer, or industry concerned is achieved.

                    (2) Transactions disregarded

        A transaction directly or indirectly between affiliated persons 
    may be disregarded if, in the case of any element of value required 
    to be considered, the amount representing that element does not 
    fairly reflect the amount usually reflected in sales of merchandise 
    under consideration in the market under consideration. If a 
    transaction is disregarded under the preceding sentence and no other 
    transactions are available for consideration, the determination of 
    the amount shall be based on the information available as to what 
    the amount would have been if the transaction had occurred between 
    persons who are not affiliated.

                        (3) Major input rule

        If, in the case of a transaction between affiliated persons 
    involving the production by one of such persons of a major input to 
    the merchandise, the administering authority has reasonable grounds 
    to believe or suspect that an amount represented as the value of 
    such input is less than the cost of production of such input, then 
    the administering authority may determine the value of the major 
    input on the basis of the information available regarding such cost 
    of production, if such cost is greater than the amount that would be 
    determined for such input under paragraph (2).

(June 17, 1930, ch. 497, title VII, Sec. 773, as added Pub. L. 96-39, 
title I, Sec. 101, July 26, 1979, 93 Stat. 182; amended Pub. L. 98-573, 
title VI, Secs. 615, 620(b), Oct. 30, 1984, 98 Stat. 3036, 3039; Pub. L. 
99-514, title XVIII, Sec. 1886(a)(11), Oct. 22, 1986, 100 Stat. 2922; 
Pub. L. 100-418, title I, Secs. 1316(a), 1318, 1319, Aug. 23, 1988, 102 
Stat. 1186, 1189; Pub. L. 103-465, title II, Sec. 224, Dec. 8, 1994, 108 
Stat. 4878.)


                               Amendments

    1994--Pub. L. 103-465 amended section generally, substituting 
present provisions for provisions relating to foreign market value, 
which provided for determination of value in subsec. (a), sales at less 
than cost of production in subsec. (b), treatment of merchandise from 
nonmarket economy countries in subsec. (c), special rule for certain 
multinational corporations in subsec. (d), determination of constructed 
value in subsec. (e), and exportation from an intermediate country in 
subsec. (f).
    1988--Subsec. (a)(5). Pub. L. 100-418, Sec. 1319, added par. (5).
    Subsec. (c). Pub. L. 100-418, Sec. 1316(a), amended subsec. (c) 
generally, substituting provisions relating to nonmarket economy 
countries, for provisions relating to State-controlled economies.
    Subsec. (e)(2) to (4). Pub. L. 100-418, Sec. 1318, substituted 
``(4)'' for ``(3)'' wherever appearing in par. (2), added par. (3), and 
redesignated former par. (3) as (4) and in introductory provisions 
substituted ``paragraphs (2) and (3)'' for ``paragraph (2)''.
    1986--Subsecs. (f), (g). Pub. L. 99-514 redesignated subsec. (g) as 
(f).
    1984--Subsec. (a)(1). Pub. L. 98-573, Sec. 615(1), substituted 
``time such merchandise is first sold within the United States by the 
person for whom (or for whose account) the merchandise is imported to 
any other person who is not described in subsection (e)(3) of this 
section with respect to such person'' for ``time of exportation of such 
merchandise to the United States'' in provisions before subpar. (A).
    Subsecs. (a)(1)(A), (4)(A), (e)(1)(B). Pub. L. 98-573, Sec. 615(2), 
substituted ``commercial quantities'' for ``wholesale quantities'' 
wherever appearing.
    Subsec. (f). Pub. L. 98-573, Sec. 620(b), struck out subsec. (f) 
which related to the authority to use sampling techniques and to 
disregard insignificant adjustments.
    Subsec. (g). Pub. L. 98-573, Sec. 615(3), added subsec. (g).


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-465 effective, except as otherwise 
provided, on the date on which the WTO Agreement enters into force with 
respect to the United States [Jan. 1, 1995], and applicable with respect 
to investigations, reviews, and inquiries initiated and petitions filed 
under specified provisions of this chapter after such date, see section 
291 of Pub. L. 103-465, set out as a note under section 1671 of this 
title.


                    Effective Date of 1988 Amendment

    Amendment by sections 1316(a) and 1318 of Pub. L. 100-418 applicable 
with respect to investigations initiated after Aug. 23, 1988, and to 
reviews initiated under section 1673e(c) or 1675 of this title after 
Aug. 23, 1988, and amendment by section 1319 of Pub. L. 100-418 
applicable with respect to reviews initiated under section 1673e(c) or 
1675 of this title after Aug. 23, 1988, and to reviews initiated under 
such sections which are pending on Aug. 23, 1988, and in which a request 
for revocation is pending on Aug. 23, 1988, see section 1337(b), (f) of 
Pub. L. 100-418, set out as a note under section 1671 of this title.


                    Effective Date of 1984 Amendment

    Amendment by section 615 of Pub. L. 98-573 effective Oct. 30, 1984, 
and amendment by section 620(b) of Pub. L. 98-573 applicable with 
respect to investigations initiated by petition or by the administering 
authority under parts I and II of this subtitle, and to reviews begun 
under section 1675 of this title, on or after Oct. 30, 1984, see section 
626(a), (b)(1) of Pub. L. 98-573, as amended, set out as a note under 
section 1671 of this title.


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1801-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of Title 26, 
Internal Revenue Code.

                  Section Referred to in Other Sections

    This section is referred to in sections 1677, 1677f-1 of this title.
