On November 10, 2022, the U.S. Department of Commerce (“Commerce”) announced that it has reclassified Russia as a nonmarket economy, meaning that it will no longer treat Russia as a market economy in antidumping (AD) proceedings. This is an unprecedented move because it is the first time that Commerce upgraded a country to market economy and then downgraded it to nonmarket status.  Commerce had been treating Russia as a market economy since 2002.  Commerce’s decision to downgrade Russia’s market economy status means that it will have the ability to apply the “full force of the U.S. AD law to address the market distortions caused by increasing interference from the Russian government in their economy.”[1] Specifically, the application of Commerce’s “non-market methodology” in antidumping proceedings is essentially a summary finding that the Department cannot rely on the costs reported by Russian manufacturers in the dumping calculation.  This generally results in significantly higher duty rates through the use of surrogate costs from comparable market economy producers. Russia joins 11 other countries classified as nonmarket economies by the Department of Commerce, including China, Vietnam, and nine former Soviet republics.

 In October 2021, Commerce had reviewed Russia’s market economy status and decided to maintain Russia’s market economy status, although it had expressed disappointment with Russia’s lack of progress toward a more market-oriented economy since attaining the designation in 2002. Russia’s new nonmarket economy status was triggered in large part by petitions submitted on June 30, 2022, from CF Industries Nitrogen LLC, an Illinois-based fertilizer producer and its subsidiaries. The company claimed that both Russia and Trinidad and Tobago “are exporting illegally subsidized fertilizer to the U.S. at unfairly low prices and underpricing their goods by as much as 433.37%”.[2] In its petition, CF Industries highlighted Russian President Vladimir Putin’s two-decade hold on power and stated that Russia’s “move from a centrally planned economy toward a market-based system has stalled and, in many areas, reversed in recent years.” In response, Commerce launched an investigation to assess whether the Russian Federation operates as a nonmarket economy, which concluded with its announcement on Thursday.

Russia’s new nonmarket economy status is likely to significantly raise tariffs for Russian imports such as aluminum, steel, and chemicals into the United States, which have already fallen drastically following U.S. sanctions and trade restrictions in response to Russia’s invasion of Ukraine. According to official data from Commerce, the United States imported $12.5 billion worth of Russian goods in between January and September of this year, which is roughly half the level achieved during the same time period in 2021.  

[1] https://www.trade.gov/press-release/us-department-commerce-revokes-russias-market-economy-status-antidumping-proceedings

[2] https://www.law360.com/articles/1405407/feds-fertilizer-probe-to-decide-if-russia-is-market-economy

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Photo of Dmitry Bergoltsev Dmitry Bergoltsev

Dmitry Bergoltsev is a senior international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border

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Dmitry Bergoltsev is a senior international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection (CBP). He works closely with attorneys developing courses of action for clients impacted by investigations under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. He also supports unfair trade investigations, including antidumping (AD) and countervailing duty (CVD) investigations, sunset reviews, and changed circumstance reviews before the Department of Commerce and the International Trade Commission (ITC).

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Photo of John Brew John Brew

John Brew is the co-chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office. He has extensive experience in import and export trade regulation, and he regularly advises corporations, trade associations, foreign governments, and non-governmental organizations…

John Brew is the co-chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office. He has extensive experience in import and export trade regulation, and he regularly advises corporations, trade associations, foreign governments, and non-governmental organizations on matters involving customs administration, enforcement, compliance, litigation, legislation and policy.

John represents clients in proceedings at the administrative and judicial levels, as well as before Congress and the international bureaucracies that handle customs and trade matters. He advises clients on all substantive import regulatory issues handled by U.S. Customs and Border Protection and Immigration and Customs Enforcement, such as classification, valuation, origin, marking, tariff preference programs, other agency regulations, admissibility, import restrictions, quotas, drawback, audits, prior disclosures, penalties, investigations, Importer Self Assessment and Customs-Trade Partnership Against Terrorism programs, importations under bond, the Jones Act, vessel repairs, and foreign trade zone matters.

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Photo of Daniel Cannistra Daniel Cannistra

Dan Cannistra is a partner in the firm’s Washington, D.C. office. His practice focuses on legislative, executive and regulatory representation of domestic and international clients on a broad spectrum of international trade matters. Dan has represented domestic and foreign companies in over 75

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Dan Cannistra is a partner in the firm’s Washington, D.C. office. His practice focuses on legislative, executive and regulatory representation of domestic and international clients on a broad spectrum of international trade matters. Dan has represented domestic and foreign companies in over 75 U.S. antidumping and countervailing duty cases before the U.S. Department of Commerce and the U.S. International Trade Commission under the Tariff Act of 1930. Many of these matters involved appeals to the U.S. Court of International Trade, the U.S. Court of Appeals for the Federal Circuit, binational panels under the North American Free Trade Agreement (NAFTA), and dispute settlement proceedings before the World Trade Organization (WTO). Dan has also represented clients in antidumping proceedings in the European Union, Canada, Mexico, Brazil, India, Thailand, Singapore, Guatemala and Taiwan.

Prior to joining Crowell & Moring, Dan was a director in a national accounting firm providing customs and international trade guidance to multinational clients related to the supply and distribution of goods and services across international borders. Areas of specialization included antidumping and countervailing duties and policy, trade remedies and litigation, free trade agreements and negotiations, classification and valuation, and international trade and development.

Dan’s government appointments include service to U.S. Trade Representative on the roster of international trade practitioners to resolve antidumping disputes involving NAFTA members. For the European Commission, Dan provided advice and training on international trade and antidumping methodology and practice. In addition, Dan has served as an international trade consultant to the governments of Guatemala and Singapore, providing technical advice to these governments on the application of international trade regulations consistent with international law and World Trade Organization agreements and the General Agreement on Tariffs and Trade, Agreement on Antidumping.

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