[Federal Register: June 30, 2005 (Volume 70, Number 125)]
[Notices]
[Page 37761-37764]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jn05-42]
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DEPARTMENT OF COMMERCE
International Trade Administration
Expected Non-Market Economy Wages: Request for Comment on
Calculation Methodology
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Request for comments
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SUMMARY: The Department of Commerce (``Department'') has a long-
standing practice of calculating expected non-market economy (``NME'')
wages for use as surrogate values in antidumping proceedings involving
NME countries. These expected NME wages are calculated annually in
accordance with Sec. 351.408(c)(3) of the Department's regulations.
This notice describes the Department's methodology for the calculation
of expected NME wages and provides the public with an opportunity to
comment on this methodology in response to comments that have been
submitted in several NME proceedings. For purposes of public comment,
the Department has also calculated expected NME wages using currently
available data for 2003 and the methodology described herein. This is a
sample calculation based on 2003 data, and is subject to data updates
and revisions.
DATES: Comments must be submitted no later than thirty days after
publication of this Notice.
ADDRESSES: Written comments (original and six copies) should be sent to
Joseph A. Spetrini, Acting Assistant Secretary for Import
Administration, U.S. Department of Commerce, Central Records Unit, Room
1870, 14th Street and Pennsylvania Avenue N.W., Washington, DC 20230.
FOR FURTHER INFORMATION CONTACT: John D. A. LaRose, Assistant to the
Senior Enforcement Coordinator, Office of China/NME Compliance or
Shauna Lee-Alaia, Policy Analyst, Office of Policy, Import
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue N.W., Washington, DC 20230, (202) 482-3794 or (202)
482-2793.
SUPPLEMENTARY INFORMATION:
Background
With regard to its calculation of expected NME wages, the
Department stated in its November 17, 2004, Final Determination in the
investigation of Wooden Bedroom Furniture from the People's Republic of
China, that it would ``invite comments from the general public on this
matter in a proceeding separate from the {Furniture{time}
investigation.'' Final Determination of Sales at Less Than Fair Value:
Wooden Bedroom Furniture From the People's Republic of China, 69 FR
67313 (November 17, 2004) and accompanying Issues and Decisions
Memorandum at 180 (Cmt. 23).
The NME Wage Rate Methodology
The Department's regulations generally describe the methodology by
which the Department calculates expected NME wages:
For labor, the Secretary will use regression-based wage rates
reflective of the observed relationship between wages and national
income in market economy countries. The Secretary will calculate the
wage rate to be applied in nonmarket economy proceedings each year. The
calculation will be based on current
[[Page 37762]]
data, and will be made available to the public.
19 CFR 351.408(c)(3).
In accordance with Sec. 351.408(c)(3), the Department annually
calculates expected NME wages in two steps. First, the Department uses
regression analysis\1\ to estimate a linear relationship between per-
capita gross national income (``GNI'') and hourly wages in market
economy (``ME'') countries. Second, the Department uses the results of
the regression and NME GNI data to estimate hourly wage rates for NME
countries.
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\1\ Ordinary least squares regression.
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There is usually a two-year interval between the current year and
the most recent reporting year of the data required for this
methodology due to the practices of the respective data sources. The
Department bases its regression analysis on this most recent reporting
year, which the Department refers to as the ``Base Year.'' For example,
the Department relied upon data from 2001 to calculate expected NME
wages in 2003, i.e., the ``Base Year'' for the 2003 calculation was
2001. In practice, the ``Base Year,'' i.e., the year upon which the
regression data are based, is two years prior to the year in which the
Department conducts its regression analysis.
1. Regression Analysis
The Department's regression analysis, which describes generally the
relationship between wages and GNI, relies upon four separate data
series: (A) country-specific wage data for 56 countries from Chapter 5B
of the International Labour Organization's (``ILO'') Yearbook of Labour
Statistics; (B) country-specific consumer price index (``CPI'') data
from the International Financial Statistics of the International
Monetary Fund (``IMF''); (C) exchange rate data from the IMF's
International Financial Statistics; and (D) country-specific GNI data
from the World Development Indicators of the World Bank (``WB'').
The wage rate data described above are converted to hourly wage
rates and adjusted using CPI data to be representative of the current
Base Year. The data are then converted to U.S. dollars using the
appropriate exchange rate data. These adjusted wage rate data are
ultimately regressed on GNI.
The following sections describe each data series and how it is
used.
(A) Wage Data
For each of 56 countries, the Department chooses a single wage rate
that represents a broad measure of wages for that country that is most
contemporaneous with the Base Year.
To arrive at a single wage rate for each country from among the
many wage rates included in the ILO database for each country, the
Department prioritizes the following ILO data parameters\2\ in the
following order:
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\2\ Each data point in the ILO database is accompanied by values
for each of a number of parameters that describe the characteristics
of the data. These parameters include those enumerated above, and
also include two other parameters: ``Source,'' i.e., the original
survey source of the data and ``Classification,'' i.e., the
industrial classification.
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1. ``Sex,'' i.e., male/female coverage;
2. ``Sub-Classification,'' i.e., coverage of different types of
industry;
3. ``Worker Coverage,'' i.e., coverage of different types of
workers, such as wage earners or salaried employees;
4. ``Type of Data,'' i.e., the unit of time for which the wage is
reported, such as per hour or per month; and,
5. ``Source ID,'' i.e., a code for the source of the data.
First, the Department looks to the parameter for gender. For the
``Sex'' parameter, the Department always chooses data that cover both
men and women.\3\
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\3\ The Department does not consider values of ``Indices, Men
and Women'' for this parameter.
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Second, for the ``Sub-Classification'' parameter, the Department
chooses in each instance data that cover all reported industries in a
given country (indicated in the database by a value of ``Total'' for
the ``Sub-Classification'' parameter).
When a wage rate that meets these two criteria (for ``Sex'' and
``Sub-Classification'') is not available for the Base Year, the
Department will use the most recently available data within five years
of the Base Year, thereby considering a total of six years of data. For
example, when the Base Year was 2001, the Department used the data
reported for the most recent year between the years of 1996 and 2001.
The Department does not choose wage rate data that do not meet the
requirements for ``Sex'' and ``Sub-Classification'' described above. If
there is more than one record in the ILO database that meets those
requirements, the Department looks to the remaining parameters. Once
the Department's requirements for these two parameters are satisfied,
the Department then prioritizes data that are closest to the Base Year
within the remaining ILO parameters discussed below.
For example, for the third parameter, the Department generally
prioritizes ``wage earners,'' ``employees'' and ``total employment,''
in that order for the parameter ``Worker Coverage.'' However, the
Department would choose more contemporaneous ``employees'' data over
less contemporaneous ``wage earner'' data.
Fourth, when the values for all other parameters are equal, the
Department prioritizes data reported on an hourly basis over that
reported on a monthly or weekly basis for the parameter ``Type of
Data.''
Fifth, if necessary, the Department prioritizes data with a
``Source ID'' value of ``1'' over ``2'' or ``3.''
Finally, it is the Department's normal practice to eliminate
aberrational values (i.e., values that vary in either direction in the
extreme from year to year) from the wage rate dataset.
The ILO data that are not reported on an hourly basis are converted
to an hourly basis based on the premise that there are 44 working hours
per week and 192 working hours per month.
(B) CPI Data
Once hourly figures have been calculated based on the wage rate
data discussed above, the wages are adjusted to the Base Year on the
basis of the Consumer Price Index for each country, as reported by the
IMF's International Financial Statistics. This adjustment is made for
any wage rate data not reported for the Base Year.
(C) Exchange Rate Data
These inflation-adjusted wage data, which are denominated in the
national currency of their country, are then converted to U.S. dollars
using Base Year period-average exchange rates reported by the IMF's
International Financial Statistics.
Thus, using (A) wage data, (B) CPI data and (C) exchange rate data,
discussed above, the Department arrives at hourly wages, denominated in
U.S. dollars and adjusted for inflation for each of the 56 countries
for which all the above data are available.
(D) GNI Data
The Department uses Base Year GNI data for each of the 56 countries
in the Department's analysis, as reported by the WB. GNI data are
denominated in U.S. dollars current for the Base Year. The WB defines
GNI per capita as gross national product (``GNP'') per capita, which is
``the dollar value of a country's final output of goods and services in
a year divided by its population.'' The WB further explains that this
measure ``reflects the average income of a country's citizens.'' See
http://www.worldbank.org/depweb/english/modules/glossary.html.
[[Page 37763]]
The Department conducts its regression analysis\4\ using the Base
Year wages per hour in U.S. dollars discussed above and Base Year GNI
per capita in U.S. dollars to arrive at the following equation:
Wagei = Y-intercept + X-coefficient * GNI. The X-coefficient
describes the slope of the line estimated by the regression analysis,
while the Y-intercept is the point on the Y-axis where the regression
line intercepts the Y-axis. The results of this regression analysis
describe generally the relationship between hourly wages and GNI.
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\4\ Linear, ordinary least squares regression.
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2. Application of Regression Results to NME GNI Data
The Department applies the NME Base Year GNI to the equation
presented above to arrive at an estimated wage rate for the NME. This
is done for each NME.
Example of Methodology Applied to Base Year 2003 Data
Following the criteria and methodology discussed above, and using
the data available to the Department as of June 15, 2005, the
Department has calculated sample expected NME wages.
The Dominican Republic, Algeria and Kenya, three of the 56
countries, have been excluded from the Department's regression analysis
because ILO wage rate data were not available for these countries in
the instant dataset.
As noted in the ILO database, the wage rates for Turkey and Korea,
two of the 56 countries, are denominated in units of 1,000 of their
respective national currency, and have been converted accordingly.
While the ILO database indicates that wage rate data for Greece and
the Netherlands, two of the 56 countries, are denominated in euros, the
notes to the ILO database indicate that these wage rates are
denominated in drachmas and guilders, respectively.\5\ Because
appropriate exchange rates were not available in the International
Financial Statistics for Greece and the Netherlands, the Department
relied on the exchange rate information that it regularly obtains from
Dow Jones B.I.S. and the Federal Reserve and posts on the Import
Administration web site for these countries. Thus, the Department has
calculated the annual 2003 average exchange rates for Greek drachmas
and Dutch guilders, which were 0.00328 U.S. dollars per drachma and
0.51859 U.S. dollars per guilder.
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\5\ This correction has been made in previous years, and
addresses an apparent discrepancy when using the euro exchange rate.
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2003 WB GNI data were not available for Zimbabwe, one of the 56
countries. Consequently, Zimbabwe has been excluded from the
Department's regression analysis.
Following the data compilation and regression methodology described
above, and using GNI and wage data for Base Year 2003, the regression
results are: Wagei = 0.410466 + 0.000515 * GNI. The r-
square, which is a measure of the statistical validity of a regression
analysis,\6\ is 0.91632 for the Department's regression analysis,\7\
indicating a statistically valid analysis.
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\6\ Linear, ordinary least squares regression.
\7\ Linear, ordinary least squares regression.
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Application of these regression results to 2003 NME GNI data yields
the following sample 2005 schedule of expected NME wages for
antidumping (``AD'') purposes:
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Country 2003 GNI Expected NME Wage
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Armenia......................... $950 $0.90
Azerbaijan...................... $820 $0.83
Belarus......................... $1,600 $1.23
Estonia[dagger]................. $5,380 $3.18
Georgia......................... $770 $0.81
Kazakhstan[dagger].............. $1,780 $1.33
Kyrgyz Republic................. $340 $0.59
Lithuania[dagger]............... $4,500 $2.73
Moldova......................... $590 $0.71
China........................... $1,100 $0.98
Romania[dagger]................. $2,260 $1.57
Russian Federation[dagger]...... $2,610 $1.75
Tajikistan...................... $210 $0.52
Turkmenistan.................... $1,120 $0.99
Ukraine......................... $970 $0.91
Uzbekistan...................... $420 $0.63
Vietnam[Dagger]................. $480 $0.66
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[dagger]Applicable only to review periods that pre-date the effective
date of graduation to market-economy status (Estonia (01/01/03);
Lithuania (01/01/03); Romania (01/01/03); and Russia (04/01/02);
Kazakhstan (10/01/01)).
[Dagger]On November 8, 2002, the Department determined that Vietnam will
be treated as a non-market economy country for purposes of antidumping
duty and countervailing proceedings (see Notice of Final Antidumping
Duty Determination of Sales at Less Than Fair Value and Affirmative
Critical Circumstances: Certain Frozen Fish Fillets from the Socialist
Republic of Vietnam, 68 FR 37116, June 23, 2003).
In order to facilitate a full opportunity for comment, and because
the underlying data is voluminous, the results and underlying data for
this sample calculation have been posted on the Import Administration
website (http://ia.ita.doc.gov), but will not be used for AD purposes.
Comments
Persons wishing to comment on the Department's methodology
described above for the calculation of expected NME wages should file a
signed original and six copies of each set of comments by the date
specified above. The Department will consider all comments received
before the close of the comment period. Comments received after the end
of the comment period will be considered, if possible, but their
consideration cannot be assured. The Department will not accept
comments accompanied by a request that a part or all of the material be
treated confidentially because of its business proprietary nature or
for any other reason. The Department will return such comments and
materials to the persons submitting the comments and will not consider
them in development of any
[[Page 37764]]
changes to its practice. All comments responding to this notice will be
a matter of public record and will be available for public inspection
and copying at Import Administration's Central Records Unit, Room B-
099, between the hours of 8:30 a.m. and 5 p.m. on business days. The
Department requires that comments be submitted in written form. The
Department recommends submission of comments in electronic form to
accompany the required paper copies. Comments filed in electronic form
should be submitted either by e-mail to the Webmaster below, or on CD-
ROM, as comments submitted on diskettes are likely to be damaged by
postal radiation treatment.
Comments received in electronic form will be made available to the
public in Portable Document Format (PDF) on the Internet at the Import
Administration website at the following address: http://ia.ita.doc.gov/.
Any questions concerning file formatting, document conversion,
access on the Internet, or other electronic filing issues should be
addressed to Andrew Lee Beller, Import Administration Webmaster, at
(202) 482-0866, e-mail address: webmaster-support@ita.doc.gov.
Dated: June 23, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 05-12862 Filed 6-29-05; 8:45 am]