[Federal Register: May 19, 1997 (Volume 62, Number 96)]
[Rules and Regulations]
[Page 27295-27345]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19my97-16]
[[Page 27295]]
_______________________________________________________________________
Part II
Department of Commerce
_______________________________________________________________________
International Trade Administration
_______________________________________________________________________
19 CFR Part 351 et al.
Antidumping Duties; Countervailing Duties; Final rule
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Parts 351, 353, and 355
[Docket No. 950306068-6361-04]
RIN 0625-AA45
Antidumping Duties; Countervailing Duties
AGENCY: International Trade Administration, Commerce.
ACTION: Final rule.
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SUMMARY: The Department of Commerce (``the Department'') hereby revises
its regulations on antidumping and countervailing duty proceedings to
conform the Department's existing regulations to the Uruguay Round
Agreements Act, which implemented the results of the Uruguay Round
multilateral trade negotiations. In addition to conforming changes, in
these regulations the Department has sought to: where appropriate and
feasible, translate the principles of the implementing legislation into
specific and predictable rules, thereby facilitating the administration
of these laws and providing greater predictability for private parties
affected by these laws; simplify and streamline the Department's
administration of antidumping and countervailing duty proceedings in a
manner consistent with the purpose of the statute and the President's
regulatory principles; and codify certain administrative practices
determined to be appropriate under the new statute and under the
President's Regulatory Reform Initiative.
DATES: The effective date of this final rule is June 18, 1997. See
Sec. 351.701 for applicability dates.
FOR FURTHER INFORMATION CONTACT: Michael Rill (202) 482-3058. For
information concerning matters relating to the scope of orders or
changed circumstances reviews, contact the Office of Policy (202) 482-
4412.
SUPPLEMENTARY INFORMATION:
Background
The publication of this notice of final rules completes a
significant portion of the process of developing regulations under the
Uruguay Round Agreements Act (``URAA''). This process began when the
Department took the unusual step of requesting advance public comments
in order to ensure that, at the earliest possible stage, we could
consider and take into account the views of the private sector entities
that are affected by the antidumping (``AD'') and countervailing duty
(``CVD'') laws. On February 27, 1996, the Department published proposed
rules dealing with AD and CVD procedures and AD methodology (``AD
Proposed Regulations''). The Department received over five hundred
written public comments regarding the AD Proposed Regulations. On June
7, 1996, the Department held a public hearing, and, thereafter,
received over one hundred additional post-hearing written public
comments on the AD Proposed Regulations.<SUP>1</SUP>
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\1\ The prior notices published by the Department as part of its
URAA rulemaking activity are: (1) Advance Notice of Proposed
Rulemaking and Request for Public Comments (Antidumping Duties;
Countervailing Duties; Article 1904 of the North American Free Trade
Agreement), 60 FR 80 (Jan. 3, 1995); (2) Advance Notice of Proposed
Rulemaking: Extension of Comment Period (Antidumping Duties;
Countervailing Duties; Article 1904 of the North American Free Trade
Agreement), 60 FR 9802 (Feb. 22, 1995); (3) Interim Regulations;
Request for Comments (Antidumping and Countervailing Duties), 60 FR
25130 (May 11, 1995); (4) Proposed Rule; Request for Comments
(Antidumping and Countervailing Duty Proceedings; Administrative
Protective Order Procedures; Procedures for Imposing Sanctions for
Violation of a Protective Order), 61 FR 4826 (Feb. 8, 1996); (5)
Notice of Proposed Rulemaking and Request for Public Comments
(Antidumping Duties; Countervailing Duties), 61 FR 7308 (Feb. 27,
1996); (6) Extension of Deadline to File Public Comments on Proposed
Antidumping and Countervailing Duty Regulations and Announcement of
Public Hearing (Antidumping Duties; Countervailing Duties), 61 FR
18122 (April 24, 1996); (7) Announcement of Opportunity to File
Public Comments on the Public Hearing of Proposed Antidumping and
Countervailing Duty Regulations (Antidumping Duties; Countervailing
Duties), 61 FR 28821 (June 6, 1996); (8) Notice of Proposed
Rulemaking and Request for Public Comments (Countervailing Duties),
62 FR 8818 (Feb. 26, 1997); and (9) Extension of Deadline to File
Public Comments on Proposed Countervailing Duty Regulations
(Countervailing Duties), 62 FR 19719 (April 23, 1997).
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In drafting these final rules, the Department has carefully
reviewed and considered each of the hundreds of comments it received.
While we have not always adopted suggestions made by commenters, we
found the comments to be extremely useful in helping us to work our way
through the legal and policy thickets created by the massive rewriting
of our operating statute. Therefore, we are extremely grateful to those
who took the time and trouble to express their views regarding how the
Department should administer the AD and CVD laws in the future.
In addition, in these final rules, the Department has continued to
be guided by the objectives described in the AD Proposed Regulations.
Specifically, these objectives are: (1) Conformity with the statutory
amendments made by the URAA; (2) the elaboration through regulation of
certain statements contained in the Statement of Administrative Action
(``SAA''); <SUP>2</SUP> and (3) consistency with President Clinton's
Regulatory Reform Initiative and his directive to identify and
eliminate obsolete and burdensome regulations.
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\2\ Statement of Administrative Action Accompanying H.R. 5110,
H.R. Doc. No. 316, Vol. 1, 103d Cong., 2d Sess. (1994).
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Explanation of the Final Rules
General Background
Consolidation of Antidumping and Countervailing Duty Regulations
As described in the AD Proposed Regulations, in response to the
President's Regulatory Reform Initiative and to reduce the amount of
duplicative material in the regulations, the Department proposed to
consolidate the AD and CVD regulations into a new part 351, and to
remove parts 353 and 355. The Department did not receive any comments
concerning the consolidation of the regulations, and, upon further
review, we believe that the consolidation reduces duplication and makes
the AD/CVD regulations easier to use. Accordingly, we are promulgating
a single part 351, and are removing parts 353 and 355.
The structure of part 351 is as follows. Subpart A (Scope and
Definitions) is based on former subpart A of parts 353 and 355. Among
other things, the regulations contained in subpart A deal with general
definitions applicable to AD/CVD proceedings, the record for such
proceedings, de minimis standards for countervailable subsidies and
dumping margins, and the rates to be applied in the case of
nonproducing exporters or AD proceedings involving nonmarket economy
countries.
Subpart B (Antidumping and Countervailing Duty Procedures) is based
on former subpart B of parts 353 and 355. As indicated by the title,
subpart B deals with procedural aspects of AD and CVD proceedings.
Where the procedures for AD and CVD proceedings are different, the
regulations in subpart B so specify.
Subpart C (Information and Argument) is based on former subpart C
of parts 353 and 355. Subpart C establishes rules for AD/CVD
proceedings regarding such matters as the submission of information,
the treatment of business proprietary information, the verification of
information, and determinations based on the facts available. Certain
portions of subpart C dealing with the treatment of business
proprietary information and administrative protective order procedures
were the subject of a separate notice of proposed rulemaking
[[Page 27297]]
and request for public comments on February 8, 1996. 61 FR 4826. A
separate notice of final regulations will be published for these
portions of subpart C.
Subpart D (Calculation of Export Price, Constructed Export Price,
Fair Value, and Normal Value) is based on former subpart D of part 353.
Subpart D deals with methodologies for identifying and measuring
dumping.
Subpart E is designated ``[Reserved].'' Proposed rules to be
included in subpart E were published in a separate notice of proposed
rulemaking and request for public comments on February 26, 1997. 62 FR
8818. The Department will publish a separate notice of final
regulations after reviewing and considering public comments submitted
in connection with proposed subpart E.
Subpart F (Cheese Subject to In-Quota Rate of Duty) is based on
subpart D of former part 355, and implements section 702 of the Trade
Agreements Act of 1979, as amended by the URAA.
Comments on Overall Drafting Approach
The Department received a few comments regarding the overall
drafting approach used in the AD Proposed Regulations. One commenter
complimented the Department on its use of introductory paragraphs
before each regulation, but noted that in several instances the
language of the introductory paragraph did not accurately reflect the
content of the regulation itself. In addition, this same commenter
noted that in several instances, the Department's use of the citation
signal ``See'' to a particular statutory provision was ambiguous. We
have taken this commenter's suggestions to heart, and in drafting these
final regulations we have reviewed the introductory paragraphs and our
citation signals in order to improve the clarity and precision of these
regulations.
A different commenter noted that in the AD Proposed Regulations,
when the Department referred to a particular section of the statute, it
referenced only the Tariff Act of 1930 (the ``Act'') itself, not the
section of the U.S. Code where the section is codified. This commenter
suggested that to make the regulations more ``user friendly,'' the
Department should refer to the relevant U.S. Code section of the Act or
to both the U.S. Code and the Act.
While we appreciate the spirit in which this suggestion was made,
we have not adopted it in drafting these final regulations. For years,
the Department generally has referenced sections of the Act in its
regulations, and we are not aware of any objections having been raised
regarding this drafting practice (other than the instant comment). The
absence of objections to this practice, as well as the absence of any
other comments endorsing the use of U.S. Code citations, suggests to us
that those who use these laws are comfortable with our practice of
referencing sections of the Act. As for the suggestion that we
reference both the Act and U.S. Code sections, given the numerous
statutory references in these final regulations, the adoption of this
suggestion would add considerably to the overall length of the
regulations without, in our view, contributing significantly to their
ease of use.
Explanation of Particular Provisions
In drafting these final regulations, the Department carefully
considered each of the comments received. In addition, we conducted our
own independent review of those provisions of the AD Proposed
Regulations that were not the subject of public comments. The following
sections contain a summary of the comments we received and the
Department's responses to those comments. In addition, these sections
contain an explanation of any changes the Department has made to the AD
Proposed Regulations either in response to comments or on its own
initiative. The following sections do not contain a discussion of those
provisions that remain unchanged from the AD Proposed Regulations and
that were not the subject of any public comments.
Subpart A--Scope and Definitions
Subpart A of part 351 sets forth the scope of part 351,
definitions, and other general matters applicable to AD/CVD
proceedings.
Section 351.102
Section 351.102 sets forth definitions of terms that are used
throughout part 351. With respect to most of the definitions contained
in Sec. 351.102, we received no comments. Definitions that we have
added or revised, or on which we received comments, are discussed
below.
We received one general comment suggesting that we number each of
the definitions contained in Sec. 351.102(b) as a separate numbered
paragraph. According to the commenter, the absence of subparagraph
numbering will make shorthand references to a particular definition
impossible and will render definitions difficult to locate.
We have not adopted this suggestion, because we have followed the
guidelines set forth in the Document Drafting Handbook 1991 ed. (Office
of the Federal Register), which states, at page 21, that ``paragraph
designations are not required for the terms being defined, if the terms
are listed in alphabetical order,'' as is the case with respect to
Sec. 351.102(b). Because the definitions in Sec. 102(b) are listed in
alphabetical order, we do not believe that it will be difficult to
locate a particular definition. In addition, we do not believe that the
format we have used precludes shorthand references.
Affiliated persons; affiliated parties: Many commenters claimed
that because the statute and the SAA do not provide sufficient guidance
as to when the Department will consider an affiliation to exist by
virtue of ``control,'' the Department should provide clearer guidance
in the regulations. In this regard, we received a number of specific
suggestions relating to the issue of ``control,'' many of which had
been submitted previously.
As a general observation, the Department appreciates the desire for
additional detail regarding the concept of affiliation. To the extent
possible, we have attempted to provide additional guidance in this
explanatory material. However, we continue to believe that it would be
premature to codify much guidance in the form of a regulation. As
explained in the AD Proposed Regulations, 61 FR at 7310, we believe
that it is more appropriate to develop our practice regarding
affiliation through the adjudication of actual cases.
Turning to specific suggestions, several commenters suggested that
the definition should state that in order for control to exist within
the meaning of section 771(33) of the Act, a relationship must affect
the subject merchandise or foreign like product. These commenters
argued that the purpose of such a requirement would be to winnow out
those relationships that, while unquestionably close enough to
constitute control in the abstract, do not affect the production or
sale of the product that the Department is examining. According to
these commenters, this approach is in line with the statement in the AD
Proposed Regulations, 61 FR at 7310, that the Department would look at
the ability to impact production, pricing, or cost, an analysis which,
they claimed, must be directed at the product under investigation or
review.
In general we agree with the suggestion that we focus on
relationships that have the potential to impact decisions concerning
production, pricing or cost. This does not mean however, that proof is
required that a relationship in fact has
[[Page 27298]]
had such an impact. In this regard, section 771(33), which refers to a
person being ``in a position to exercise restraint or direction,''
properly focuses the Department on the ability to exercise ``control''
rather than the actuality of control over specific decisions.
Therefore, we will consider the full range of criteria identified in
the SAA, at 838, in determining whether ``control'' exists. Moreover,
we do not believe that we should ignore situations in which a control
relationship, while relating directly to another product or another
type of commercial activity, could affect decisions involving the
production, pricing or cost of the merchandise under consideration.
Therefore, in these types of situations, where a control relationship
exists, the respondent will have to demonstrate that the relationship
does not have the potential to affect the subject merchandise or
foreign like product.
Several commenters suggested that the Department reconsider the
statement in the preamble to the AD Proposed Regulations, 61 FR at
7310, that ``temporary market power, created by variations in supply
and demand conditions, would not suffice [as evidence of control].''
With respect to this comment, we continue to believe that temporary
market power generally would not constitute sufficient evidence of
control. However, where the issue arises, the Department will conduct a
case-by-case examination to determine whether market power is truly
``temporary.''
Another commenter suggested that the regulations state that in
analyzing control, the Department will focus on long-term, rather than
short-term, relationships. With respect to this suggestion, the
Department normally will not consider firms to be affiliated where the
evidence of ``control'' is limited, for example, to a two-month
contract. On the other hand, the Department cannot rule out the
possibility that a short-term relationship could result in control.
Therefore, the Department will consider the temporal aspect of a
relationship as one factor to consider in determining whether control
exists. In this regard, we also should note that we do not intend to
ignore a control relationship that happens to terminate at the
beginning (or comes into existence at the end) of a period of
investigation or review.
A number of commenters asked that the Department refrain from
finding an affiliation in situations where the applicable national law
prevents one firm from exercising control over another. With respect to
this suggestion, the Department will take national laws into account in
examining the existence of control. However, the Department also will
consider whether, national laws notwithstanding, there is any de facto
control.
Many commenters requested that the Department establish (1)
rebuttable presumptions for when control does or does not exist; (2)
bright-line thresholds establishing when control does not exist; and
(3) specific examples in the regulations of relationships that do or do
not constitute control. We have not adopted these suggestions, because
they require the type of fact-specific determinations that the
Department is not prepared to make at this time. As discussed above,
the Department intends to establish guidelines concerning affiliation
gradually as we gain experience through the resolution of issues in
actual cases.
One commenter suggested that the Department should find control to
exist only if a relationship resulted in an impact on prices or other
significant terms of sale. The Department has not adopted this
suggestion, because we do not agree that it is appropriate to require
evidence regarding the actual impact of a relationship. Because section
771(33) refers to a person being ``in a position to exercise restraint
or direction,'' we are required to examine the ability to control, not
the actual exercise of control.
Another commenter suggested that the Department should not consider
``normal commercial relationships'' as giving rise to control. We have
not adopted this suggestion, because ``normal'' is a subjective term
that lacks any clear definition. In our view, a standard of
``normality'' would be subject to substantial confusion, argument, and
litigation. More importantly, there is nothing in the statute or the
legislative history that suggests that ``normal commercial
relationships'' cannot give rise to control. To the contrary, the SAA
at 838 states: ``A company may be in a position to exercise restraint
or direction, for example, through corporate or family groupings,
franchises or joint venture agreements, debt financing, or close
supplier relationships in which the supplier or buyer becomes reliant
upon the other.'' Each of the relationships described in this passage
can be characterized as ``normal'' in the sense that they are
commercial relationships commonly entered into by firms. Nevertheless,
notwithstanding the ``normality'' of these commercial relationships,
the SAA indicates that they can give rise to control.
One commenter suggested that the Department clarify that the
provision of a loan by one firm to another on terms consistent with
commercial considerations will not constitute control. The Department
has not adopted this suggestion, because we do not believe that the
fact that a loan is provided on terms consistent with commercial
considerations is necessarily dispositive with respect to the issue of
control. For example, in situations where the supply of credit is
limited, the availability of a loan, regardless of the loan's terms,
may allow the lender to exercise control over the recipient of the
loan.
Several commenters suggested that the Department should define
legal or operational control as the ``enforceable ability to compel or
restrain commercial actions.'' As a further refinement of this
suggestion, one commenter suggested that the Department should find
control only if one firm is capable of forcing another firm to act
against its own interests.
The Department has not adopted these suggestions, because we do not
believe that ``enforceability'' is a requisite factor under section
771(33). In addition, in the case of the second suggestion, we believe
that focusing on the speculative question of what is or is not in a
firm's interests would render our analysis of affiliation less, rather
than more, predictable.
Aggregate basis: We received one comment concerning the definition
of the term ``aggregate basis,'' a term that describes CVD proceedings
in which the Department, under section 777A(e)(2)(B) of the Act,
determines a single country-wide subsidy rate applicable to all
exporters and producers. The commenter suggested that we substitute the
word ``principally'' for ``solely'' so that the definition would read:
`` `Aggregate basis' means the calculation of a country-wide subsidy
rate based principally on information provided by the foreign
government.'' According to the commenter, the purpose of the
modification would be to avoid confusion when the Department conducts a
CVD investigation or review on an aggregate basis, but one or more
producers request an individual review or exclusion.
We have adopted this suggestion, although not for the reason
suggested. Although section 777A(e) of the Act establishes a preference
for individual countervailable subsidy rates, section 777A(e)(2)
provides for alternative methods where there are a large number of
exporters or producers involved in an investigation or review. Under
section 777A(e)(2)(B), one of these alternatives is to determine a
single country-wide subsidy rate. Should the Department
[[Page 27299]]
have to use the country-wide rate method of section 777A(e)(2)(B), the
Department will not review firms individually, although, where
practicable, the Department will consider requests for an individual
zero rate in an administrative review under Sec. 351.213(k). In
addition, while the Department will consider requests for exclusions
from firms that claim to have received no countervailable subsidies,
the Department will not calculate subsidy rates to be applied to
merchandise produced or exported by such firms. Instead, the Department
merely will determine whether or not a firm requesting exclusion
receives countervailable subsidies in more than de minimis amounts. If
the firm does not, the Department will exclude the firm. If the firm
does receive more than de minimis countervailable subsidies, the
Department will not exclude the firm, and will apply to that firm the
country-wide subsidy rate.
Thus, the definition of ``aggregate basis'' is not inaccurate
insofar as it relates to the calculation of individual rates and the
granting of exclusions. On the other hand, the definition, as drafted,
fails to reflect the fact that even in a CVD proceeding in which the
Department calculates a single country-wide rate, it may have to obtain
information from one or more firms with respect to certain types of
subsidies, such as equity infusions. Therefore, we have substituted the
word ``principally'' for ``solely'' to reflect this fact.
Country-wide subsidy rate: One commenter suggested that we add to
Sec. 351.102(b) a definition of ``country-wide subsidy rate.'' The
proposed definition included a statement that the Secretary shall use
``the smallest applicable and feasible jurisdictional unit consistent
with'' the definition of ``country'' in section 771(3) of the Act. The
thrust of the comment was that the Department should calculate separate
``country-wide subsidy rates'' for individual subnational
jurisdictions, such as provinces or states. A different commenter
opposed this suggestion.
We have not adopted this suggestion, because the statute does not
require the Department to calculate state- or province-specific subsidy
rates. The Department rejected province-specific rates in Certain
Softwood Lumber Products from Canada, 57 FR 22570, 22578-80 (1992), and
the Department's position was sustained in Certain Softwood Lumber
Products from Canada, No. USA-92-1904-01, Slip op. 139-43 (FTA Panel
May 6, 1993). We do not believe that any of the statutory amendments
made by the URAA warrants a different outcome. Moreover, there is no
indication in the legislative history that Congress intended any change
to the Department's practice in this regard.
Ordinary course of trade: We received several comments concerning
the Department's proposed definition of the term ``ordinary course of
trade.'' Some of these comments dealt with the definition in general,
while other comments focussed on particular aspects of the definition.
The definition in general: One commenter stated that the definition
should establish a presumption that sales are in the ordinary course of
trade until a party demonstrates otherwise on a sale-by-sale basis
(with the exception of home-market sales at prices below cost of
production). This commenter also argued that the standards for making
such a claim should be exacting, and that no general unsupported
conclusions should suffice to exclude selected transactions. This
commenter also urged the Department to omit from the regulation
examples of sales that might be outside the ordinary course of trade,
stating that each case should turn on its facts.
We have adopted this suggestion in part. We have not adopted the
suggestion regarding the establishment of a presumption, because we
believe that judicial precedent is sufficiently clear that the party
making the claim bears the burden of proving that sales are outside the
ordinary course of trade. See, e.g., Koyo Seiko Co., Ltd. v. United
States, Slip op. 96-101 (Ct. Int'l Trade June 19, 1996), pp. 22-25, and
cases cited therein. In addition, we have not adopted the suggestion
that we delete references to particular types of sales that might be
considered as outside the ordinary course of trade. Given the
illustrative examples of such sales in the SAA, we believe that it is
appropriate to provide guidance to parties by describing certain types
of transactions that, depending on the facts, might be deemed to be
outside the ordinary course of trade.
However, we have modified the definition so as to emphasize the
fact-specific nature of ordinary course of trade analyses. As revised,
the definition states that, as required by judicial precedent, the
Secretary will evaluate ``all the circumstances particular to the sales
in question.''
Another commenter expressed satisfaction with the proposed
definition, but suggested that the Department's placement of the closed
parenthesis in the definition was incorrect. We agree that we misplaced
the closed parenthesis. However, we have corrected the error by
restating the parenthetical as a separate sentence.
Abnormally high profits: Several commenters objected to the
reference in the proposed definition to ``merchandise sold * * * with
abnormally high profits.'' According to one commenter, neither the
statute nor the SAA refers to ``abnormally high profits'' as a factor
in considering whether merchandise is sold in the ordinary course of
trade. In addition, this commenter asserted that the inclusion of this
factor in the definition would invite respondents to argue for the
exclusion of allegedly overly profitable sales.
Another commenter acknowledged that the SAA does discuss sales with
``abnormally high profits'' as being outside the ordinary course of
trade, but that it does so in the context of constructed value profit.
This same commenter also argued that the proposed definition is overtly
biased in favor of respondents, because it does not provide for the
exclusion of sales with abnormally ``low'' profits as being outside the
ordinary course of trade. A third commenter, also noting that the
proposed definition does not refer to sales with abnormally ``low''
profits, requested that the Department either delete the reference to
abnormally high profits or revise the definition to refer to
``merchandise sold at aberrational prices or profits.''
We have not adopted these suggestions. With respect to the
propriety of including in the definition any reference to sales with
abnormally high profits, we believe that the SAA warrants such a
reference. As acknowledged by one of the commenters, the SAA at 839-40
does refer to sales with abnormally high profits as being outside the
ordinary course of trade. Although this reference is made in the
context of constructed value profit, we believe that it applies in
other contexts, as well. The SAA at 839 itself notes that ``constructed
value serves as a proxy for a sales price.'' Thus, where normal value
is based on constructed value, the constructed value is supposed to
approximate what a price-based normal value would be if there were
usable sales. Because, according to the SAA, a constructed value that
included a profit element based on sales with abnormally high prices
would not constitute an acceptable normal value, it follows that it
would be improper to use sales with abnormally high profits as a basis
for a price-based normal value.
With respect to the suggestion that the Department will be
overwhelmed with arguments from respondents claiming
[[Page 27300]]
that particular sales have abnormally high profits, as discussed above,
the burden of establishing that a particular sale is outside the
ordinary course of trade rests on the party making the claim. Over
time, we believe that this evidentiary burden will ensure that only
serious claims are presented to the Department.
Finally, we do not believe that the proposed definition favors
respondents. When one considers the proposed definition in light of the
entire statute and the SAA, it is apparent that the Department may
exclude sales with both abnormally low (i.e., negative) and abnormally
high profits from a dumping analysis. The only difference is that the
Department considers sales with abnormally low profits under the rubric
of ``sales below cost of production'' and section 773(b) of the Act.
However, as section 771(15)(A) of the Act makes clear, sales that are
disregarded under section 773(b)(1) as being below cost are considered
to be outside the ordinary course of trade.
Off-quality merchandise: One commenter requested that the
Department delete the reference in the proposed definition to ``off-
quality merchandise.'' According to this commenter, neither the statute
nor the SAA mentions ``off-quality merchandise,'' and such merchandise
may be in the ordinary course of trade in certain industries and
markets.
We have not adopted this suggestion. Contrary to the comment, the
SAA at 839 does refer to ``off-quality merchandise,'' albeit in the
context of constructed value profit. For the reasons set forth above in
connection with the issue of ``abnormally high profits,'' we believe
that this reference is relevant to the general definition of ``ordinary
course of trade.'' As for the argument that sales of ``off-quality
merchandise'' may be in the ordinary course of trade in certain
industries and markets, the inclusion of the reference to ``off-quality
merchandise'' does not mean that sales of such merchandise are
automatically outside the ordinary course of trade. As discussed above,
and as the revised definition now makes clear, the Secretary will
conclude that particular sales are outside the ordinary course of trade
only after an evaluation of all of the circumstances.
Samples and Prototypes: One commenter suggested that the Department
should consider sales of sample and prototype merchandise to be outside
the ordinary course of trade, and should exclude such sales from its
calculations of dumping margins. We have not adopted this suggestion
for several reasons. First, there needs to be some limit on the number
of items included in a non-exhaustive list of examples. While we do not
disagree that there may be instances in which the Department might
consider sales of samples or prototypes to be outside the ordinary
course of trade, the commenter acknowledged that such sales already may
be embraced by the regulatory reference to merchandise ``sold pursuant
to unusual terms of sale.'' Second, the commenter requested that sales
of samples or prototypes be excluded from the dumping margin
calculation altogether. However, as both the Department and the courts
have made clear on numerous occasions, the statutory exclusion for
sales outside the ordinary course of trade applies only to sales used
to determine foreign market value (now normal value), not sales used to
determine U.S. price (now export price or constructed export price).
Thus, the courts have sustained the inclusion of all United States
sales whether in or out of the ordinary course of trade. See, e.g.,
Bowe Passat Reinigungs-Und Waschereitechnik GMBH v. United States, 926
F. Supp. 1138, 1147-49 (Ct. Int'l Trade 1996), and cases cited therein.
Price adjustment: We have added to Sec. 351.102(b) a definition of
the term ``price adjustment.'' This term is intended to describe a
category of changes to a price, such as discounts, rebates and post-
sale price adjustments, that affect the net outlay of funds by the
purchaser. As discussed in connection with Sec. 351.401, below, such
price changes are not ``expenses'' as the Department usually uses that
term, but rather are changes that the Department must take into account
in identifying the actual starting price. Numerous commenters requested
clarification on whether price adjustments would be treated as direct
or indirect expenses. As discussed more fully below, price adjustments
are neither direct nor indirect expenses, although they impact price as
additions or deductions.
Sale or likely sale: The proposed definition of ``likely sale,''
which was based on 19 CFR Secs. 353.2(t) and 355.2(p), defined this
term as meaning ``a person's irrevocable offer to sell.'' One commenter
suggested that the Department liberalize this definition to encompass
something less than an irrevocable offer to sell.
Although the Department has not adopted this particular suggestion,
we have taken another look at the ``irrevocable offer'' standard.
Because most AD/CVD petitions are based on sales, rather than likely
sales, the Department rarely has applied this standard. However, in one
case where the use of the irrevocable offer standard was at issue, the
court criticized the standard. Kerr-McGee Chemical Corp. v. United
States, 765 F. Supp. 1576 (Ct. Int'l Trade 1991). Therefore, the
Department has decided to eliminate the definition of ``likely sale''
in Sec. 351.102(b). Should the meaning of this term become an issue in
future cases, we will interpret the term in light of the statute and
the legislative history.
Segment of the proceeding: One commenter suggested that paragraph
(2) of the definition of ``segment of the proceeding'' include a
reference to scope inquiries, because such inquiries are separately
reviewable under section 516A of the Act. We have adopted this
suggestion, and have revised paragraph (2) of the definition
accordingly.
Another commenter did not object to the definition itself, but
stated that the Department should treat each whole review as a separate
proceeding, and should rely upon the record from each proceeding only
in connection with that particular proceeding. Because this commenter
did not propose any revisions to the definition, we have not made any
changes to the definition based on this comment.
Suspension of liquidation: One commenter suggested that in order to
eliminate confusion created by ``suspensions'' ordered by agencies
other than the Department, such as the Customs Service, the Department
should add to Sec. 351.102 a definition of ``suspension of
liquidation.'' The commenter included a proposed definition that, in
general, defined ``suspension of liquidation'' as a suspension of
liquidation specifically ordered by the Department under the authority
of title VII or title X of the Tariff Act, or by the courts in
litigation involving antidumping or countervailing duties. No commenter
opposed this suggestion.
We have adopted the suggestion, and have added to Sec. 351.102(b) a
definition of ``suspension of liquidation'' along the lines suggested
by the commenter. However, we have modified the language proposed by
the commenter in order to make the definition more accurate with
respect to suspensions of liquidation ordered by courts.
Section 351.104
Section 351.104 defines what constitutes the official and public
records of an AD/CVD proceeding, and prohibits the removal of a record
or any portion thereof unless ordered by the Secretary or required by
law.
In connection with Sec. 351.104(a)(1) and its list of examples of
materials that will be included in the official record,
[[Page 27301]]
one commenter suggested that the Department add to this list ``changes
to the electronic database that are made by Commerce (or by
respondents)'' and ``computer programs.'' Although the material
described by the commenter is, as a matter of practice, included in the
official record, we have not adopted this suggestion. As the commenter
acknowledged, paragraph (a)(1) merely contains examples of material
that will be included in the record, and is not itself an exhaustive
list. The commenter did not indicate that the absence of a reference in
the former regulations to computer programs or changes to the
electronic database gave rise to difficulties in actual cases. In the
absence of such difficulties, we see no need to revise this regulation.
One commenter supported Sec. 351.104(a)(2)(ii), which deals with
the inclusion in the official record of documents returned to the
submitter. The commenter requested that this provision remain
unchanged. The Department has not revised this provision.
Section 351.105
Section 351.105 defines the four categories of information
applicable to AD/CVD proceedings: public, business proprietary,
privileged, and classified. After a review of proposed Sec. 351.105 and
the comments submitted pertaining to that section, we have left
Sec. 351.105 unchanged, but for some stylistic changes involving the
substitution of ``that'' for ``which.''
One commenter suggested that the proposed definition of ``public
information'' in Sec. 351.105(b) is too narrow, because it excludes
business information claimed by the submitter to be business
proprietary unless the submitter has published the information or
otherwise made it public. According to this commenter, the definition
should include all non-classified information that a party learns
through any lawful means outside the context of disclosure under an
administrative protective order (``APO''). The commenter cited, for
example, information acquired through market research that may not have
been published or made generally available to the public at large. In
addition, this commenter proposed that the definition of ``business
proprietary information'' contained in Sec. 351.105(c) expressly
exclude all ``public information'' as the commenter would define
``public information.''
For the following reasons, the Department has not adopted this
suggestion. The Department places a high priority on the safeguarding
of business proprietary information. The definition of ``public
information'' in Sec. 351.105(b) is identical to the definition of that
term in former 19 CFR Secs. 353.4(a) and 355.4(a). Absent some evidence
that the definition interferes with a party's ability to defend its
interests in an AD/CVD proceeding, we are reluctant to transform what
heretofore has been considered as business proprietary information into
public information. However, the commenter did not offer any evidence
that the Department's longstanding definition of ``public information''
has had this effect. Instead, the commenter merely asserted that it is
not the Department's role ``to regulate lawfully acquired commercial
information.''
The same commenter suggested that the Department should amend
Sec. 351.105(b) so as to add the following additional category of
information normally considered as public: ``descriptions of reporting
methodologies, such as allocation methods.'' We have not adopted this
suggestion, because here, too, there is no indication that the absence
of a reference in Sec. 351.105(b) to this type of information has
interfered with a party's ability to defend its interests in an AD/CVD
proceeding.
We should note, however, that the former regulations did not, and
these regulations will not, preclude a party from arguing in a given
case that business proprietary treatment should not be accorded to
particular information. In this regard, Sec. 351.104(b)(3) continues to
treat as ``public information'' information ``that the Secretary
determines is not properly designated as business proprietary.''
However, we should emphasize here that where a party seeks to challenge
the business proprietary status of certain information, it should take
care to ensure that in submitting its challenge to the Secretary, it
does not inadvertently disclose the information in dispute.
Finally, we received two comments that essentially suggested that
the Department delete proposed Sec. 351.105(c)(10), which provides for
business proprietary treatment of the position of a domestic producer
or workers regarding a petition. According to one commenter,
Sec. 351.105(c)(10) would effectively preclude industrial users and
consumers from commenting on the issue of industry support for a
petition, because users and consumers would not be eligible to obtain
this information under APO. In addition, both commenters were skeptical
regarding the ability of the Department to grant APO access to this
information in a timely manner so that ``interested parties'' will be
able to comment on the issue of industry support within the 20-day
statutory deadline. A third commenter, however, opposed deleting
paragraph (c)(10), although it agreed that the Department should
expedite the APO process.
We have not adopted this suggestion for several reasons. As we
stated in the AD Proposed Regulations, 61 FR at 7314, several
commenters indicated that, due to concerns regarding commercial
retaliation, business proprietary treatment may be necessary in order
to encourage domestic producers and workers to present their candid
views regarding a petition. The instant commenters did not challenge
the validity of these concerns. As for APO disclosure, the Department
is aware of the need for expedited disclosure with respect to
information concerning industry support, and is confident that it will
be able to process APO requests in a timely manner that allows
interested parties to exercise their right to comment on the existence
of industry support for a petition.
Section 351.106
Section 351.106 deals with the de minimis standard, and implements
section 703(b)(4) and section 733(b)(3) of the Act. After reviewing
proposed Sec. 351.106 and the comments pertaining to that section, we
have left Sec. 351.106 unchanged.
One commenter objected to the fact that the de minimis standard for
reviews remained at 0.5 percent, and suggested that this was
inconsistent with the spirit, if not the letter, of the AD Agreement.
We have left the de minimis standard for reviews at 0.5 percent,
because, as stated in the AD Proposed Regulations, 61 FR at 7312, this
result is required by the statute and is consistent with both the AD
Agreement and the SCM Agreement.
As discussed above in connection with Sec. 351.102(b), one
commenter suggested a definition of ``country-wide subsidy rate'' that
would have provided for the application of country-wide subsidy rates
on a state-or province-specific basis. This same commenter, assuming
the adoption of its prior suggestion, proposed that we add a paragraph
to Sec. 351.106 that would have applied the de minimis standard to
country-wide rates on a state-or province-specific basis. The same
commenter that opposed the prior suggestion also opposed the instant
suggestion concerning the de minimis standard. Because we have not
adopted the prior suggestion, we are not adopting the corresponding
suggestion regarding the de minimis standard; i.e.,
[[Page 27302]]
we will not apply the de minimis standard on a subnational level.
We have left unchanged proposed Sec. 351.106(c)(2), which applies
the de minimis standard to the assessment of antidumping duties.
Applying the de minimis standard to assessments on an importer-specific
basis resolves the inconsistency between the treatment of cash deposits
and assessments. If a de minimis amount of estimated duties is not
worth collecting, then there is no reason to believe that a de minimis
level of definitively determined duties is worth assessing and
collecting either. Paragraph (c)(2) also avoids an inconsistency
between the administration of the AD and CVD laws, something that the
Department has expressed as one of its goals.
One commenter contended that the Department should not apply the de
minimis standard to the assessment of antidumping duties, because such
a policy does not result in any reduction in the Department's
administrative burden, is contrary to the SAA, and is not allowed by
the statute. This commenter cited the statutory requirement that
antidumping duties be imposed ``in an amount equal to the amount by
which the normal value exceeds the export price (or the constructed
export price) for the merchandise'' for the proposition that the
Department never may decline to assess antidumping duties, regardless
of how small such duties may be. With regard to the SAA, this commenter
contended that the SAA expressly limits the application of the de
minimis standard to the collection of deposits only by stating:
``Commerce will continue its present practice in reviews of waiving the
collection of estimated cash deposits if the deposit rate is below 0.5
percent ad valorem, the existing regulatory standard for de minimis.''
As noted above, the Department will apply the de minimis standard
to the assessment of antidumping duties on an importer-specific basis.
Regarding the commenter's statutory arguments, we believe that the
statute is silent on the issue. Although the statutory provisions cited
provide that the Department must assess duties, as the courts have
recognized, these provisions do not specify any particular assessment
methodology. See, e.g., FAG Kugelfischer Georg Schafer KGaA v. United
States, Slip Op. 95-158, 1995 Ct. Int'l. Trade LEXIS 209 (1996), aff'd,
No. 96-1074 (Fed. Cir. May 20, 1996). Significantly, the statutory
provisions cited by the commenter do not address how the Department
should apply the de minimis standards in reviews. Instead, the only
mention of such standards applying in reviews is contained in the SAA.
However, the SAA statement cited by the commenter (that the Department
will continue its practice of waiving cash deposits below 0.5 percent
in reviews) does not address the assessment issue at all. Read in
context, the statement refers to the fact that the de minimis standard
in reviews will continue to be 0.5 percent, as opposed to the new 2
percent standard for AD investigations. This statement does not address
the issue of whether the application of the 0.5 percent standard is
limited to the collection of cash deposits of estimated duties. As the
Department noted in the AD Proposed Regulations, 61 FR at 7312, the
only statement addressing that issue in the SAA is the general
statement that ``de minimis margins are regarded as zero margins.'' The
commenter offers no policy arguments for adopting an approach that
would limit the application of the de minimis standard to the deposit
of estimated duties.
Another commenter agreed with the Department's proposal to apply
the de minimis standard to the assessment of antidumping duties. In
addition, this commenter proposed that the Department clarify that
where an importer purchases from more than one exporter, the importer
will receive producer-specific assessment rates, and that no duties
will be assessed for individual de minimis rates.
In general, we agree with this comment, although we do not believe
that revisions to the regulations are necessary. As discussed below,
under Sec. 351.212(b)(1), the Department, as it has in many previous
cases, will calculate importer-specific assessment rates for each
producer or exporter reviewed. Thus, if one importer purchases from
several producers or exporters, the Department will assign that
importer an assessment rate for each producer or exporter. The
Department will apply the de minimis standard to these individual
assessment rates.
Proposed paragraph (c)(2) provided that the Secretary will instruct
the Customs Service to liquidate without regard to antidumping duties
all entries of subject merchandise for which the Secretary calculates
an assessment rate that is de minimis (i.e., less than 0.5 percent ad
valorem. Two commenters noted that the proposed regulations did not
indicate which entries will be subject to paragraph (c)(2) if it is
issued in final form. According to the commenters, paragraph (c)(2)
should apply to all entries that are unliquidated as of the date of
issuance of the final regulations.
The Department recognizes the need for guidance on this issue, but
has not adopted the solution proposed. Instead, the Department will
apply paragraph (c)(2) to all liquidations done pursuant to final
results in reviews that the Department initiates after the effective
date of these regulations. This approach is consistent with the
applicability date set forth in Sec. 351.701. In addition, this
approach is necessary in order to avoid the extreme administrative
burden the Department would face if it applied paragraph (c)(2)
retroactively, in which case the Department would have to amend the
numerous liquidation instructions that it has sent to the Customs
Service over the years. Normally, the Customs Service liquidates
entries soon after the Department issues liquidation instructions.
However, the Department has no way to determine whether the Customs
Service has liquidated all entries subject to liquidation instructions,
because liquidation may have been delayed for reasons unrelated to the
existence of an AD order. Therefore, to implement the commenters'
proposal, the Department would have to amend all of its previously
issued liquidation instructions.
One commenter expressed concern that the Department will apply
paragraph (c)(2) based upon de minimis weighted-average dumping
margins. With respect to this comment, we note that Department usually
uses the term ``weighted-average dumping margin'' to refer to an
exporter-or producer-specific margin that the Department uses for cash
deposit purposes. As discussed above, the Department normally will
apply paragraph (c)(2) on the basis of importer-specific assessment
rates. However, although the Department has been calculating importer-
specific assessment rates for some time, there are some cases that are
held up in litigation. In these cases, we may not be able to calculate
importer-specific assessment rates, because the record does not contain
the necessary information. In such situations, where the Department
issues assessment instructions at the conclusion of the litigation, we
will apply the de minimis rule on the basis of the weighted-average
dumping margin calculated for the exporter or producer.
Section 351.107
We have added a new Sec. 351.107 that deals with (1) the
establishment of deposit rates in situations involving a nonproducing
exporter, (2) the selection of the appropriate deposit rate where entry
documents do not identify the
[[Page 27303]]
producer of subject merchandise, and (3) the calculation of rates in AD
proceedings involving nonmarket economy countries.
Nonproducing exporters: In the AD Proposed Regulations, 61 FR at
7311, the Department requested additional public comment on the issue
of whether to promulgate special rules regarding the rates applicable
to exporters that are not also producers, such as trading companies. We
noted that one alternative would be to calculate a separate rate for
each exporter/producer combination.
One commenter suggested that the Department should apply this
approach in all instances. Other commenters argued that the Department
should not codify an across-the-board rule, but instead should
establish rates for exporter/producer combinations on a case-by-case
basis. Another commented that it would be inappropriate to determine
rates solely on the basis of exporter/producer combinations, and that
normally the Department should base deposits of estimated duties on the
rate calculated for the producer.
The Department agrees with the comments suggesting that it is
appropriate in some instances to establish rates for exporter/producer
combinations. Therefore, in paragraph (b)(1)(i), we have provided for
the establishment of such ``combination rates.''
We believe that combination rates are appropriate, because, in an
AD proceeding, the Department usually investigates or reviews sales by
a nonproducing exporter only if that exporter's supplier sold the
subject merchandise to the exporter without knowledge that the
merchandise would be exported to the United States. While we agree with
one commenter that in these instances the producer's pricing is not at
issue, we are concerned about the proper application of any deposit
rate determined on the basis of the exporter's pricing. Establishing a
deposit rate for an exporter and, without regard to the identity of the
supplier, applying that rate to all future exports by that exporter
could lead to the application of that rate even if other suppliers sold
to the exporter with knowledge of exportation to the United States.
This would enable a producer with a relatively high deposit rate to
avoid the application of its own rate by selling to the United States
through an exporter with a low rate. Therefore, in order to ensure the
proper application of deposit rates, the Department believes that it
should establish, where appropriate, individual rates for nonproducing
exporters in combination with the particular supplier or suppliers from
whom the exporter purchased the subject merchandise.
On the other hand, the Department believes that there are
situations where it may be inappropriate and/or impractical to
establish combination rates. For example, it may not be necessary to
establish combination rates when investigating or reviewing
nonproducing exporters that are not trading companies, such as original
equipment manufacturers. In addition, it may not be practicable to
establish combination rates when there are a large number of producers,
such as in certain agricultural cases. The Department will make such
exceptions to combination rates on a case-by-case basis.
Another instance in which the Department assigns rates to exporters
is in AD investigations and reviews of imports from nonmarket economies
(NMEs). In those cases, if sales to the United States are made through
an NME trading company, we assign a noncombination rate to the trading
company regardless of whether the NME producer supplying the trading
company has knowledge of the destination of the merchandise. One
exception to this NME practice occurs where we find no dumping and
exclude an exporter from an AD order. Where exclusions are involved, we
publish a combination rate to address the same concerns described above
regarding redirection of exports through an excluded trading company.
Nothing in Sec. 351.107(b)(1) is intended to change our policy for
assigning rates in NME proceedings.
The Department also believes it is not appropriate to establish
combination rates in an AD investigation or review of a producer; i.e.,
where a producer sells to an exporter with knowledge of exportation to
the United States. In these situations, the establishment of separate
rates for a producer in combination with each of the exporters through
which it sells to the United States could lead to manipulation by the
producer. Furthermore, the Department recognizes that in many
industries it is not uncommon for a producer to sell some amount of
merchandise purchased from other producers. In such situations, the
Department generally intends to establish a single rate for such a
respondent based on its status as a producer, although unusual
circumstances may warrant the application of a combination rate.
The Department also generally agrees with the comment that, in AD
cases, if an exporter changes its supplier, the supplier's rate should
be applied for deposit purposes rather than the ``all-others'' rate.
Therefore, paragraph (b)(2) provides that for purposes of deposits, the
Department will apply the producer's rate to entries if the Department
has not established previously a deposit rate for the particular
exporter/producer combination or the exporter alone. If the Department
has not calculated an individual rate for the producer, the Department
will apply the ``all-others'' rate. Again, nothing in this section is
intended to change our practice regarding the rates assigned to NME
exporters. In particular, an ``all-others'' rate may not be calculated
in an NME proceeding or, if it is, it may not apply to the new shippers
covered in this section.
In the case of CVD proceedings, subject merchandise may be
subsidized by means of subsidies provided to both the producer and the
exporter. In the Department's view, all subsidies conferred on the
production of subject merchandise benefit that merchandise, even if it
is exported to the United States by a reseller rather than the producer
itself. Therefore, the Department calculates countervailable subsidy
rates on the basis of any subsidies provided to the producer, as well
as those provided to the exporter in any investigation or review
involving exports by a nonproducing exporter. As a result, rates
established for particular combinations of exporters and producers are
the most accurate rates. Moreover, as in an AD proceeding, combination
rates help to ensure the proper application of combination rates when
other producers sell through the same exporter.
As in AD proceedings, in CVD proceedings there may be situations in
which it is not appropriate or practicable to establish combination
rates. In such situations, the Department will make exceptions to its
combination rate approach on a case-by-case basis. In addition, for a
new combination of exporter and producer, the Department believes that
it should apply the supplier's rate, rather than the ``all-others''
rate, for deposit purposes. Therefore, under paragraph (b)(2), in a CVD
proceeding the Department intends to apply the producer's rate to
entries for deposit purposes if the Department has not established a
rate for the particular exporter/producer combination or the exporter
alone. If the producer's rate is applicable, but the Department has not
established a rate for that producer, the Department will apply the
``all-others'' rate.
In this regard, however, in a CVD proceeding, the Department
intends to establish a deposit rate for each
[[Page 27304]]
producer that it investigates or reviews, even if during the period of
investigation or review the producer happened to be selling to the
United States through a reseller. The purpose of this approach is to
ensure that if the producer subsequently begins to export to the United
States directly, the Department will be able to apply a deposit rate
based on the producer's own level of subsidization, as opposed to the
``all-others'' rate.
The proper application of rates to entries for deposit purposes
generally requires that the producer of the merchandise be identified.
Accordingly, under paragraph (c), if an entry does not identify the
producer (or the exporter's supplier if the exporter is not the
producer), the Department will instruct the Customs Service to use the
higher of: (1) the highest of any combination rate involving that
exporter, (2) the highest rate for any producer other than a producer
for which the Secretary has established a combination rate involving
the exporter in question, or (3) the ``all-others'' rate. The objective
of paragraph (c) is to prevent an exporter from obtaining a lower
deposit rate by means of withholding the identity of its supplier from
the Customs Service.
As an example of how paragraph (c) would operate, assume that in an
AD proceeding the existing rates are: Exporter A/Producer 1--5 percent;
Exporter B/Producer 2--20 percent; Producer 1--18 percent; Producer 2--
15 percent; and All Others--10 percent. If an entry did not identify
the producer of subject merchandise exported by Exporter A, the
Department would instruct the Customs Service to apply Producer 2's
deposit rate of 15 percent. 15 percent would be the appropriate rate if
Producer 2 were the supplier, and it also is the highest of the
possible rates applicable had the producer been identified (those rates
being 5, 10, and 15 percent in this example). Producer 1's rate of 18
percent would not be appropriate, because the Department already would
have established that, when Producer 1 exports through Exporter A, the
appropriate rate is 5 percent.
Nonmarket economy cases: The second sentence of the definition of
``rates'' in proposed Sec. 351.102(b) provided the Department with the
authority to apply a single AD margin to all producers and exporters
from a nonmarket economy (``NME'') country. We have moved that sentence
to paragraph (d) of Sec. 351.107.
As explained in the AD Proposed Regulations, 61 FR at 7311, the
Department elected not to codify its current presumption that a single
rate will be applied in NME cases. We received several comments on this
issue.
Four commenters suggested that the Department codify its current
presumption of a single rate. Three of these commenters viewed the
presumption as correct, because the fact that a country is an NME
carries with it an assumption that the government controls all
exporters. Moreover, these commenters asserted that NME governments,
due to their control, can funnel sales of the subject merchandise
through, or transfer production of the subject merchandise to, the
entity that receives the most favorable dumping margin. These
commenters further urged the Department to extend the presumption of
control beyond the central NME government to provincial and municipal
governments, as well. One commenter that urged the Department to codify
the presumption of a single rate also argued that the presumption is
consistent with the statute, because all NME companies are under common
ownership and, hence, comprise a single exporter. Consequently, in this
commenter's view, the Department should calculate a single dumping
margin just as it would calculate a single dumping margin in situations
where the Department ``collapses'' market economy producers under
common ownership. This same commenter urged the Department to make
clear that the NME-wide rate calculated as a consequence of the
presumption is different from the ``all-others'' rate described in
section 735(c)(1)(B)(i)(II) of the Act.
One commenter opposed the presumption. In discussing the People's
Republic of China (``PRC''), this commenter pointed to the reforms that
have been instituted in the PRC economy, claiming that the underlying
premise of the presumption--that the central government controls
exporters--is erroneous. According to the commenter, the Department's
experience in administering the presumption confirms this conclusion,
because in virtually every case since the Department instituted the
presumption, individual PRC producers have been able to demonstrate
that they are entitled to their own rates. Consequently, this commenter
argued, the Department should abandon the presumption of a single NME-
wide rate, and non-investigated exporters in an NME should receive an
all-others rate. Another commenter asked that even if the Department
does not codify the presumption, the Department should clarify that it
will continue to calculate separate rates in appropriate cases.
Several commenters went on to make specific suggestions for
amending the so-called ``separate rates test''; i.e., the conditions
that must be met for rebutting the presumption. One commenter urged the
Department to incorporate into the separate rates test the affiliated
party criteria from section 771(33) of the Act and Secs. 351.102(b) and
351.401(f) of the regulations. In this commenter's view, the affiliated
party criteria provide appropriate guidance on when parties under
common ownership should be subject to a single AD rate. A second
commenter recommended amending the test to include an assessment of
possible central government influence in the future. Also, in this
commenter's view, the NME exporter seeking a separate rate should be
required to present affirmative evidence that the government is not
involved in the exporter's pricing decision. In other words, this
commenter claimed, an absence of evidence of control should not be
sufficient to rebut the presumption. Finally, this commenter suggested
that, because of the potential for circumvention, the Department should
calculate individual rates only for manufacturers, and not for export
trading companies.
Another commenter pointed to the unfairness of having to prove the
negative; i.e., the absence of control. This commenter also suggested
that the Department should focus on events during the period of
investigation and not speculate about events that might occur in the
future. Two commenters urged the Department to provide an opportunity
for firms to receive separate rates in those situations where the
Department chooses not to investigate all exporters. In their view,
instead of using the punitive NME-wide rate, the Department should
assign these non-investigated exporters an average dumping margin
calculated on the basis of investigated firms receiving separate rates.
As in the proposed regulations, we have refrained from codifying
the presumption of a single rate in NME AD cases. Nor have we adopted a
modified version of the presumption. We appreciate the many thoughtful
comments that we received on this topic. However, because of the
changing conditions in those NME countries most frequently subject to
AD proceedings, we do not believe it is appropriate to promulgate the
presumption or the separate rates test in these regulations. Instead,
we intend to continue developing our policy in this area, and the
comments that were submitted will help us in that process. We would
like
[[Page 27305]]
to clarify, however, that we do intend to grant separate rates in
appropriate circumstances, and that our decision not to codify the
presumption or the separate rates test should not be seen, as one
commenter suggested, as a decision not to grant separate rates. Also,
as discussed above in connection with Sec. 351.107(b)(1), we intend to
continue calculating AD rates for NME export trading companies, and not
the manufacturers supplying the trading companies.
Subpart B--Antidumping Duty and Countervailing Duty Procedures
Subpart B deals with AD/CVD procedures, and is based on subpart B
of part 353 and part 355 of the Department's former regulations.
Section 351.202
Section 351.202 deals with the contents of, and filing requirements
for, AD/CVD petitions. We received several comments regarding proposed
Sec. 351.202.
Contents of petitions: Proposed Sec. 351.202(b), consistent with
the statute, provided that a petition must contain specified
information ``to the extent reasonably available to the petitioner.''
One commenter suggested that the Department revise Sec. 351.202(b) so
as to make clear that the ``reasonably available'' standard is
flexible, and that, in particular, the Department expressly acknowledge
in the regulation that cost is a relevant consideration in determining
what is ``reasonably available.''
We have not adopted this suggestion. While we do not disagree with
the proposition that the ``reasonably available'' standard is flexible,
we believe that the word ``reasonably'' makes this flexibility
manifest. In addition, while we also do not disagree with the notion
that cost to a petitioner is a factor in determining what is reasonably
available, it is only one of many possible factors. To identify in the
regulation one factor to the exclusion of others might result in undue
emphasis being placed on the factor of cost. The ``reasonably
available'' standard has been in the statute for many years, and we
believe that it provides sufficient guidance to petitioners as to the
efforts they must undertake in providing information to the Department.
The same commenter objected to the requirement in proposed
Sec. 351.202(b)(3) that a petitioner provide production data for each
domestic producer identified by the petitioner. This commenter argued
that Article 5.2 of the AD Agreement and Article 11.2 of the SCM
Agreement merely require that a petitioner provide aggregate production
data for all known domestic producers. A second commenter supported
proposed Sec. 351.202(b)(3) as drafted, arguing that the SAA at 861
clearly requires producer-specific production data.
We do not agree with the first commenter's interpretation of
articles 5.2 and 11.2. However, even if that interpretation were
correct, it is the U.S. statute that controls. The SAA clearly requires
that a petitioner provide producer-specific production data, subject,
of course, to the proviso that such information is reasonably available
to the petitioner. This information is necessary in order to enable the
Department to determine whether an adequate portion of domestic
producers support a petition, an inquiry which is based on production
volumes of domestic producers. Therefore, we have left
Sec. 351.202(b)(3) unchanged.
Two commenters suggested that the Department coordinate with the
Commission with respect to regulations dealing with the contents of
petitions, and that the Department incorporate into Sec. 351.202(b) the
specific requirements contained in the Commission's corresponding
regulation. In addition, these commenters suggested that, in light of
the Commission's proposed Sec. 207.11(b)(2)(iv), the Department should
revise its own proposed Sec. 351.202(b)(8) so as to require volume and
value information regarding the subject merchandise for the most recent
three-year period, as opposed to a two-year period.
We have adopted these suggestions in part. The Commission completed
its rulemaking activity and issued final rules on July 22, 1996. See 61
FR 3818. These final rules contain a revised 19 CFR Sec. 207.11 that
deals with the contents of AD/CVD petitions. We have incorporated
elements of the Commission's regulations into Sec. 351.202(b) where the
information identified in Sec. 207.11 is of the same general type as
that sought by the Department. With respect to the identity of
importers, we have revised proposed Sec. 351.202(b)(9) so as to require
telephone numbers for each importer identified, to the extent such
information is reasonably available to the petitioner. On the other
hand, we have not incorporated elements of Sec. 207.11 where the
information identified in that regulation is not of the same general
type as that sought by the Department. For example, we have not
included the requirement of Sec. 207.11(b)(2)(iv) that a petitioner
identify each product for which the petitioner requests the Commission
to seek pricing information in its questionnaires. Finally, we have
added a sentence to paragraph (a) that advises petitioners to refer to
the Commission's regulations concerning petition contents.
With respect to the suggestion that we require three, rather than
two, years of volume and value information, as required by proposed
Sec. 207.11(b)(2)(iv), we note that the Commission deleted this
provision in its final rule. Therefore, we are not adopting this
suggestion for purposes of Sec. 351.202(b).
Amendments to petitions: One commenter objected to the substitution
of ``may'' for ``will'' in proposed Sec. 351.202(e) (``The Secretary
may allow timely amendment of the petition''). The commenter argued
that the substitution is improper, because it confers on the Department
more discretion than is allowed by section 732(b)(1) of the Act. We
have retained the language of the proposed rule. In our view, the
statute, by permitting the Secretary to establish on a case-by-case
basis the timing and conditions for any amendments to a petition,
confers considerable discretion. We continue to believe that the word
``may'' more accurately reflects this discretionary authority than does
the word ``will.''
Pre-initiation communications: Commenting on proposed
Sec. 351.202(i), one commenter suggested that because the statutory
limitation on pre-initiation communications is limited to comments that
are unsolicited by the Department, the Department should revise
Sec. 351.202(i) so as to clarify that the Department retains the
discretion to ``solicit'' comments on its own initiative. According to
this commenter, the Department's interpretation of the SAA in the AD
Proposed Regulations is incorrect. See 61 FR at 7313. The commenter
argued that while the SAA limits the pre-initiation right of parties to
comment to the issue of industry support, Congress deliberately used
the word ``unsolicited'' in sections 702(b)(4)(B) and 732(b)(3)(B) of
the Act in order to provide the Department with the discretion to
solicit comments on any issue where necessary. Two other commenters
submitted similar comments.
Three commenters, however, opposed the suggestion described in the
preceding paragraph. In addition, these commenters proposed that the
Department revise the proposed regulations so as to expressly state
that the Department will not solicit information from sources other
than domestic interested parties.
We have not adopted either of these competing suggestions. As noted
above,
[[Page 27306]]
in drafting these regulations, the Department has sought to avoid
repeating the statute to the extent possible. Consistent with this
objective, in proposed Sec. 351.202(i), the Department sought to do no
more than clarify that the filing of a notice of appearance would not
constitute a ``communication'' within the meaning of the statute. The
Department referred in paragraph (i) to sections 702(b)(4)(B) and
732(b)(3)(B) merely to provide a context for this clarification. As for
the Department's discussion of the SAA mentioned by the first
commenter, this discussion was in response to suggestions that the
Department should solicit comments regarding a petition, an activity
clearly not contemplated by the statute or the SAA.
Each group of commenters is asking the Department to place a
different gloss on the statute. At this time, we do not believe that
either gloss is necessary or appropriate. However, in view of the fact
that both groups of commenters apparently misinterpreted the
Department's intent in drafting proposed Sec. 351.202(i), we have
revised that paragraph to clarify that it deals only with the treatment
of notices of appearance.
We should note that the Department has no intention of soliciting
comments concerning the adequacy and accuracy of a petition. In this
regard, the Department intends to follow the general rule articulated
by the Federal Circuit in United States v. Roses, Inc., 706 F.2d 1563
(1983), that, in order to determine whether a petition is adequate
under the law, the Department should look only within the four corners
of the petition. This general principle is now incorporated in sections
702(b)(4)(B) and 732(b)(3)(B) of the Act.
The three exceptions to this rule are those specified in the Act
and the SAA: for comments concerning industry support for the petition;
for inquiries concerning the status of the Department's consideration
of the petition; and for government-to-government consultations in CVD
investigations. With respect to industry support, the statutory
exception is necessary in part because the issue of industry support
cannot be revisited after initiation. The SAA at 194 makes clear that
the Department is to construe this exception narrowly. The Department
may accept and answer inquiries concerning the status of the
Department's consideration of a petition, because such inquiries do not
constitute comments on the accuracy and adequacy of the petition
itself. In the case of CVD investigations, section 702(b)(4)(B)
expressly directs the Department to provide the government of the
exporting country with an opportunity for consultations on the
petition. This requirement implements Section 13.1 of the SCM
Agreement. The Department will determine what weight to give to any
information received during the course of such consultations on a case-
by-case basis.
Other comments: One commenter argued that it was improper for a
Department official to counsel a petitioner in preparing a petition and
then, after the petition is formally filed, participate in an analysis
of the adequacy of the petition. According to this commenter, such
activity gives rise to an appearance of impropriety and violates the
Department's own rules on ethical conduct. The commenter proposed a
revision to Sec. 351.202 which would have (1) required the Department
to disclose publicly the names of all Department personnel who assisted
in the preparation of a petition; and (2) precluded any such official
from participating in the relevant AD/CVD proceeding once the petition
was filed.
We have not adopted this comment, and we disagree strongly with its
underlying premise. We do not believe that Department personnel lose
their objectivity or impartiality regarding the merits of a petition
when they have provided advice to a petitioner in the preparation of a
petition. In addition, we do not believe that there is an appearance of
impropriety or a violation of the Department's rules of ethical conduct
when such personnel participate in an AD/CVD proceeding triggered by
the filing of a petition with respect to which they may have offered
pre-filing advice.
The same commenter also suggested that the Department revise
proposed Sec. 351.202(i)(2), which provides that, in the case of a CVD
petition, the Department will invite the government of the exporting
country involved for consultations under Article 13.1 of the SCM
Agreement. Consistent with other comments made by this commenter based
on its analysis of the statutory term ``country,'' the commenter
suggested that the Department modify paragraph (i)(2) to provide that
the Department also will invite for consultations the government of any
political subdivision of a named country.
We have not adopted this suggestion. Although there certainly are
situations in which the statute treats political subdivisions as
``countries,'' this is not one of those situations. Section
702(b)(4)(A)(ii) of the Act refers to consultations with a ``Subsidies
Agreement country.'' In our view, a state or provincial government does
not meet the definition of ``Subsidies Agreement country'' in section
702(b) of the Act.
Moreover, under Article 13.1, the obligation of the United States
is to consult with ``Members'' of the WTO, a term that excludes
subnational governments, such as states and provinces. While the
central government of a WTO Member may choose to be accompanied at
consultations by representatives of subnational levels of government,
the Department will not embroil itself in the internal politics of
another country by inviting such representatives to participate in
Article 13.1 consultations.
Finally, one commenter proposed that the following sentence be
added to proposed Sec. 351.202(c): ``Other filing requirements are set
forth in Sec. 351.303.'' The purpose of this addition would be to put
petitioners on notice as to the existence and location of distinct
filing requirements. The Department agrees with this suggestion, and we
have revised paragraph (c) accordingly.
Other changes: In light of the recent reorganization of Import
Administration, we have revised Sec. 351.202(h)(2) to provide that
persons seeking information concerning petitions should contact Import
Administration's Director for Policy and Analysis.
Section 351.203
Section 351.203 deals with determinations regarding the sufficiency
of an AD or CVD petition, and implements sections 702(c) and 732(c) of
the Act. We received several comments regarding Sec. 351.203.
Adequacy of allegations: Three commenters made suggestions relating
to proposed Sec. 351.203(b)(1), which provides that ``the Secretary, on
the basis of sources readily available to the Secretary, will examine
the accuracy and adequacy of the evidence provided in the petition and
determine whether to initiate an investigation.'' While these
commenters agreed that proposed Sec. 351.203(b)(1) was consistent with
the statute, they were concerned that the Department's commentary in
the AD Proposed Regulations and/or the Department's practice was not.
In the commentary, we described our prior practice in reviewing a
petition and stated that this practice was consistent with the type of
review contemplated by the new statute. In particular, we noted that it
was the Department's practice to seek additional information when a
particular allegation lacked sufficient support or appeared
aberrational, even though the allegation was supported by some
documentation. 61 FR at 7313.
[[Page 27307]]
One of the three commenters, however, stated that the practice
described amounted to the weighing of evidence, and that this practice
is inconsistent with the legislative history of the Trade Agreements
Act of 1979, a legislative history that the SAA endorsed. This
commenter proposed that the 1979 legislative history be incorporated
into Sec. 351.203(b)(1).
The second of the three commenters also complained that the
Department's commentary suggested the weighing of evidence, and
disagreed that the Department's proposal was consistent with past
practice. Asserting that the statute and legislative history do not
envision an adversarial pre-initiation proceeding, this commenter
proposed that the Department clarify that (1) it will not allow
respondents to bring public information to the Department's attention
for purposes of assessing the sufficiency of a petition; and (2) that
the new regulations are not intended to increase the burden on
petitioners for initiating investigations.
The third of the three commenters agreed with proposed
Sec. 351.203(b)(1) and the accompanying commentary, but alleged that
over time, the Department has been subjecting petitioners to
substantially increased demands for additional factual support.
Therefore, while not suggesting any changes to Sec. 351.203(b)(1) or
the commentary, this commenter suggested that the Department review its
practice to ensure that that practice is consistent with the regulation
and the commentary.
We agree that the pre-initiation process should not become an
adversarial process between the petitioner and potential respondents.
On the other hand, however, the Department has a statutory obligation
to examine the accuracy and adequacy of the evidence provided in the
petition, an exercise which necessarily entails making some judgments
regarding the quantity and quality of the information contained in a
petition. Whether or not such an examination constitutes the ``weighing
of evidence'' is, in our view, largely a question of semantics.
However, we believe that the practice described in the commentary
accompanying proposed Sec. 351.203(b)(1) does not result in an
adversarial process and that this practice is consistent with the
legislative history of the 1979 Act. That legislative history states,
inter alia, that a petition must be ``reasonably supported by the facts
alleged.'' H.R. Rep. No. 317, 96th Cong., 1st Sess. 51 (1979) (emphasis
added). In our view, this means that the mere provision of any
documentation is not necessarily sufficient, and the Department, where
appropriate, should be able to seek additional information where
support for a particular allegation is weak or information appears
aberrational.
Therefore, we have not changed proposed Sec. 351.203(b)(1) in light
of these comments. However, we wish to reiterate what we said in the
commentary accompanying proposed Sec. 351.203(b)(1); namely, that we do
``not believe that the new statutory standard constitutes a significant
departure from past Department practice.'' 61 FR at 7313.
Sources readily available: Commenting on proposed
Sec. 351.203(b)(1), one commenter suggested that the regulations make
clear that ``sources readily available'' to the Department include any
information that is relevant to its evaluation of a petition and that
is submitted by an interested person further to the Department's
request. We have not adopted this suggestion, because we prefer to
develop our interpretation of this new statutory term on a case-by-case
basis.
The same commenter urged the Department to refrain from allowing a
petitioner to comment on any pre-initiation submissions that a
respondent interested party makes in response to a Department request.
Presumably, this commenter was referring to the following statement in
the preamble to the AD Proposed Regulations: ``The Department will give
the petitioner an opportunity to comment on any such information
acquired by the Department.'' 61 FR at 7313. We have not adopted this
suggestion either, because we continue to believe that it is
appropriate to provide a petitioner with an opportunity to comment on
information collected during the pre-initiation process.
Also in connection with proposed Sec. 351.203(b)(1), another
commenter proposed that after the phrase ``sources readily available to
the Secretary,'' the Department should add the following clause:
``including information provided to the Department by foreign
governments during the consultations required under 19 U.S.C.
Sec. 1671a(b)(4)(A)(ii). * * *'' This commenter was referring to the
pre-initiation consultations provided for in Article 13.1 of the SCM
Agreement and referred to in section 702(b)(4)(A)(ii) of the Act.
According to the commenter, the ``right to consult is meaningless if
the Department were not to consider information provided in the
consultations in making its decision whether to initiate an
investigation and, if so, on what programs.'' Another commenter,
however, opposed this suggestion, arguing that neither the statute nor
the Department's practice concerning CVD petitions allows the
Department to transform Article 13.1 consultations into pre-initiation
litigation.
While we have not adopted the suggestion, we do not disagree with
the thrust of the first commenter's position. Under Article 13.1 of the
SCM Agreement, foreign governments have a right to consultations prior
to the initiation of an investigation. The purpose of these
consultations is to clarify the matters referred to in a petition. The
right to consultations is specifically provided for in
Sec. 702(b)(4)(A)(ii) of the Act. We note that under Sec. 702(b)(4)(B),
the Department is prohibited from accepting any unsolicited oral or
written communication from potential respondents, except as provided
for under the aforementioned provision of the Act requiring that
foreign governments be given an opportunity for consultations.
Therefore, we believe that the Department may consider relevant
information provided by a foreign government prior to the initiation of
an investigation. The use of such information and the weight given to
it, either prior to the initiation decision or during an investigation,
will be determined by the Department on a case-by-case basis.
Industry support: Commenting on proposed Sec. 351.203(e)(1), one
commenter suggested that when measuring domestic production as an index
of industry support for a petition, the Department (1) never should
measure production over a period of less than twelve months; and (2)
should retain the flexibility to examine a period greater than twelve
months in appropriate circumstances. A second commenter endorsed
proposed Sec. 351.203(e)(1), arguing that the use of the word
``normally'' in that provision provided the Department with the
necessary flexibility to use periods greater or lesser than twelve
months when appropriate.
We have left Sec. 351.203(e)(1) unchanged. Because the statutory
standard for determining industry support is new, we are reluctant to
adopt a regulation that would preclude, in all cases, the use of a
period shorter than twelve months. As observed by the second commenter,
there may well be industries for which use of a shorter period is
appropriate. While we expect that in most cases the Department will use
a twelve-month period, use of the word ``normally'' provides us with
sufficient flexibility to use longer or shorter periods when
appropriate.
[[Page 27308]]
One commenter suggested that the Department revise proposed
Sec. 351.203(e)(3) to provide that: (1) the Department may base the
position of workers on a statistically valid sampling of the views of
individual workers; and (2) the views of workers and management be
recorded in writing and certified in accordance with Sec. 351.303(g). A
second commenter objected to these suggestions, arguing that (1) the
first commenter's notion of sampling effectively would rewrite the
statute; and (2) a separate certification requirement is unnecessary,
because Sec. 351.303(g) already requires certification of submissions
containing factual information.
We have not adopted the first commenter's suggestions. With respect
to sampling of individual workers, this suggestion would require a
level of regulatory detail greater than what we consider to be
appropriate at this time. The statute does provide for the use of
statistically valid sampling methods to determine industry support, but
only when there are a large number of producers in the relevant
industry. In the AD Proposed Regulations, we deliberately refrained
from elaborating on what is, for the Department, a new and untried
method for determining industry support. For purposes of these final
regulations, we continue to believe that we should develop this method
on a case-by-case basis. With respect to the first commenter's
suggestion regarding filing requirements for industry positions, we
agree with the second commenter that the changes proposed are redundant
and unnecessary.
Another commenter sought clarification with respect to proposed
Sec. 351.203(e)(3), a provision that states that the Secretary will
accord equal weight to the positions of management and workers
regarding a petition. The commenter stated that the 25 percent
threshold for determining industry support should not be subject to
Sec. 351.203(e)(3), apparently based on the commenter's belief that
this provision somehow undermines the 25 percent threshold. A second
commenter offered an interpretation of the first commenter's comment,
and suggested, based on its interpretation, that the commenter's
``complaint should be dismissed.''
The first commenter did not seek a change to the regulation, and we
do not believe that a change is necessary. However, the Department
wishes to confirm that in situations where the views of the management
and workers of a firm negate each other, the production of the firm in
question will be included as part of the total production of the
domestic like product for purposes of applying the 25 percent threshold
in sections 702(c)(4)(A)(i) and 732(c)(4)(A)(i) of the Act.
The same commenter also sought clarification that all interested
parties would be given access to non-confidential information related
to the positions of domestic producers and workers. With respect to
this comment, the Department can confirm that public information (e.g.,
non-business proprietary information) concerning the positions of
producers and workers will be included in the public record of an AD/
CVD proceeding. Under Sec. 351.104(b), the public record will be
available to the public, including interested parties, for inspection
and copying in Import Administration's Central Records Unit.
Another commenter made some suggestions regarding proposed
Sec. 351.203(e)(5), which deals with determinations of industry support
in cases where the petitioner alleges the existence of a regional
industry. This commenter proposed that in regional industry cases, the
Department should (1) determine the position of all members of the
national industry regarding the petition, initiate based upon support
within the alleged region, but terminate the investigation for lack of
interest if there is insufficient support from producers within the
region or nation, as determined by the Commission in its preliminary
determination; and (2) consult extensively with the Commission prior to
initiation regarding the adequacy of the regional industry allegation
and, if the Commission's advice is that the alleged region is
questionable, advise the petitioner to withdraw the petition and refile
it as a national case or with a more properly defined region. According
to the commenter, such an approach is necessary (1) to address the
``anomaly'' in the statute that arises when the Commission rejects a
regional industry alleged in a petition; and (2) to ensure that
allegations of regional industry in a petition are not used to
circumvent the industry support requirements.
A second commenter opposed these suggestions. First, this commenter
noted, the statute addresses this very situation, because the statute
expressly states that (1) the Department shall determine industry
support based on production in the region alleged in the petition, and
(2) the Department shall not reconsider a determination of industry
support once it is made. Second, there is no ``anomaly'' limited to
regional industry cases, because in any case, including a case in which
the petitioner alleges a national industry, the Commission may define
the relevant product in such a way that the scope of the relevant
industry analyzed for injury purposes differs from the scope of the
industry analyzed for purposes of determining industry support. Third,
there is no basis for the Department to revisit its industry support
determination based on the Commission's preliminary determination,
because in its final determination the Commission may change the
definition of the industry at issue yet again, or even revert back to
the definition originally alleged in the petition. Finally, the second
commenter suggested that the first commenter's concerns about
circumvention were overblown, stating that the first commenter did not
understand the difficulties involved in bringing a regional industry
case.
In light of these comments, and because the SAA is clear on this
point, we have deleted paragraph (e)(5).
Other comments: One commenter submitted a comment concerning
proposed Sec. 351.203(c)(2), which requires that, after initiation of
an investigation, the Secretary provide a public version of the
petition to all known exporters who sell for export to the United
States. Section 351.203(c)(2) makes an exception for situations where
the number of exporters is ``particularly large.'' The commenter
suggested that the Department should invoke the exception only in
situations where the number of exporters is ``exceptionally large.'' We
have not adopted this suggestion, because the phrase ``particularly
large'' tracks the language of the SAA and the relevant provisions of
the AD Agreement and the SCM Agreement.
The same commenter also suggested that Sec. 351.203(c)(2) provide
that, upon request, any exporter, producer, or importer of subject
merchandise be provided, free of charge, with a public version of the
petition. We have not adopted this suggestion, because Sec. 351.104(b)
adequately deals with matters relating to access to the public record,
including the public version of a petition.
Section 351.204
Section 351.204 deals with issues relating to the time period and
persons to be examined in an investigation, voluntary respondents, and
exclusions. In the section title, we have substituted ``Time periods''
for ``Transactions'' to reflect more accurately the contents of
Sec. 351.204.
Period of investigation in AD investigations: In proposed
[[Page 27309]]
Sec. 351.204(b)(1), the Department revised the period of investigation
(``POI'') for antidumping investigations. In the past, the Department
normally used a six-month POI that ended with the month in which the
petition was filed. 19 CFR Sec. 353.42(b)(1) (1995). In
Sec. 351.204(b)(1), the Department expanded the POI from six months to
four fiscal quarters (twelve months), with the exception of nonmarket
economy cases. In addition, the Department provided that the POI would
consist of the four most recently completed fiscal quarters as of the
month preceding, instead of including, the month in which the petition
was filed or in which the Secretary self-initiated an investigation.
Finally, the Department preserved its discretion to use a different POI
in appropriate circumstances.
We received several comments concerning this change in the standard
AD POI. One commenter, while approving the expansion of the POI to
twelve months, objected to reliance upon fiscal quarters completed as
of the month preceding the month in which a petition was filed.
According to this commenter, domestic industries are badly buffeted by
dumped imports at least up to the date of the filing of a petition. If
the Department relied on completed fiscal quarters, however, it would
ignore at least two months worth of dumping activity, activity that was
automatically covered by the Department's former POI. In addition, this
commenter asserted, the use of months, rather than fiscal quarters,
``has worked well generally in the past and has not demonstrably been
an impediment to verification.'' Therefore, this commenter proposed
that the standard AD POI be the twelve-month period ending in the month
of filing or self-initiation, and that respondents should have the
burden of proving that a different POI is appropriate.
A second commenter, on the other hand, generally supported the use
of fiscal quarters, but believed that the Department should rely on
completed quarters as of the end of the month of filing or self-
initiation. In addition, this commenter objected to the expansion of
the POI from six months to twelve months, arguing that the Department
had not explained the reasons for this expansion and that it appeared
to be inconsistent with the Department's stated goal of easing
reporting requirements and permitting more efficient verification.
With respect to the expansion of the POI to twelve months, we
believe that this expansion is required by Article 2.2.1, note 4 of the
AD Agreement. Note 4 states: ``The extended period of time should
normally be one year but shall in no case be less than six months.''
Although this statement is made in the context of analyzing sales below
the cost of production, implicit in the statement is the assumption
that the POI in an AD investigation normally will be one year.
Therefore, we have not adopted the suggestion of the second commenter
that we revert to a normal POI of six months.
With respect to the use of completed fiscal quarters rather than
months, while we do not dispute the first commenter's assertion that
domestic industries may be buffeted by dumped imports in the months
immediately preceding the filing of a petition, these imports would not
be subject to antidumping duties, regardless of whether they were
covered by the POI. Moreover, the timing of a petition filing often can
address such concerns. In addition, we continue to believe that
defining the POI in terms of completed fiscal quarters, rather than
calendar months running from the date of filing, will generate
considerable savings in time and money for both the Department and the
parties involved in AD proceedings. Our experience is that a
considerable amount of time is spent in reconciling AD submissions
(that until now have been based on calendar months) to a firm's
accounting records (that typically are based on fiscal quarters).
However, we should emphasize that Sec. 204(b)(1) refers to the POI that
the Secretary ``normally'' will use. Therefore, the Department retains
the discretion to depart from its standard POI where warranted by the
circumstances of a case.
Finally, we are not adopting the suggestion that we base our POI on
completed fiscal quarters as of the end of the month of filing or self-
initiation. In general, we believe that it is more appropriate to
investigate only sales made prior to the filing of a petition to
alleviate concerns about the effect of the petition on pricing
practices.
Period of investigation in CVD investigations: One commenter
suggested that we retain the modifier ``normally'' in the second
sentence of proposed Sec. 351.204(b)(2). According to this commenter,
the Department should retain the flexibility to adopt as the POI the
fiscal year of the foreign government or the main responding company.
We have retained the word ``normally'' in the second sentence.
However, we have changed the second sentence of Sec. 351.204(b)(2).
Originally, this sentence would have required the Secretary to set the
POI as the most recently completed calendar year, if the fiscal years
of the government and the exporters or producers differed. This
language did not correctly reflect our past practice, a practice that
we do not wish to change. The new language simply deletes the reference
to the government's fiscal year. Thus, the Department normally will set
the POI according to the fiscal year of the individual exporters or
producers. Only if the fiscal years of the exporters or producers
differ, will the POI be the most recently completed calendar year. In
the case of investigations conducted on an aggregate basis, the
Department's normal POI will continue to be based on the most recently
completed fiscal year for the government in question.
Acceptance of voluntary respondents: Two commenters submitted
virtually identical comments objecting to the requirement in proposed
Sec. 351.204(d)(2) that a voluntary respondent submit a questionnaire
response before the Department decides whether to examine the voluntary
respondent individually. Citing the Department's AD investigation on
Pasta from Italy, these commenters claimed that an exporter will not be
willing to expend the time and financial resources required to prepare
a questionnaire response without some prior assurance by the Department
that it will conduct an individual examination of the firm. Therefore,
they concluded, this requirement discourages voluntary responses and,
thus, violates Article 6.10.2 of the AD Agreement.
To remedy this alleged violation of international law, the
commenters proposed that the Department require only that any exporter
not selected as a mandatory respondent submit a letter if it is
interested in submitting a voluntary response. Based on these letters,
the Department would decide which, if any, voluntary respondents it
would examine. Only after being selected would voluntary respondents be
required to submit questionnaire responses.
We have not adopted this suggestion, because the approach that the
commenters objected to is made necessary by the requirements of
sections 777A(c)(2)(B) and 782(a) of the Act. Where the Department does
not examine all known producers and exporters, it often selects for
examination all producers or exporters ``that can be reasonably
examined'' in accordance with the requirements of section 777A(c)(2)(B)
of the Act. The selected producers and exporters in this group normally
represent the largest number of respondents the Department believes it
can examine at that time. The Department normally will decide the
number of selected respondents very early in the proceeding; i.e.,
before it
[[Page 27310]]
issues questionnaires to the selected respondents. Therefore, it
frequently is the case that the Department cannot make a determination
as to whether additional voluntary respondents can be reasonably
examined until after the deadline for questionnaire responses has
passed (e.g., one or more selected respondents have not responded). If
the additional voluntary respondents did not begin to prepare their
questionnaire responses until after the Department received
questionnaire responses from the selected respondents, the Department
would not be able to complete the investigation or review within the
statutory deadlines. Therefore, additional voluntary respondents must
submit the complete questionnaire response by the deadlines in
accordance with section 782(a) of the Act. In addition, we do not
believe that section 782(a) ``discourages'' voluntary responses within
the meaning of Article 6.10.2. Instead, it simply recognizes the
constraints on the Department's resources that must be taken into
account in determining whether we can accept a voluntary response. In
order to help potential voluntary respondents decide, prior to
acceptance as a respondent, whether to submit a questionnaire response,
we intend to accept voluntary responses based on the order in which
written requests to be accepted as voluntary respondents are submitted.
In those instances where we can make earlier determinations to accept
voluntary responses, we will do so.
One commenter submitted a comment suggesting that Sec. 351.204 be
amended to incorporate requests by voluntary respondents to be included
in the pool of companies investigated in cases conducted on an
``aggregate'' basis. We have not adopted this suggestion, because under
the statute, only CVD investigations are to be conducted on an
``aggregate basis,'' and it is clear from the comment that the
commenter was addressing AD investigations.
Voluntary respondents and the all-others rate: Proposed
Sec. 351.204(d)(3) provided that in calculating an all-others rate, the
Secretary will exclude weighted-average dumping margins or
countervailable subsidy rates calculated for voluntary respondents. In
the preamble to the AD Proposed Regulations, the Department explained
that the purpose of this provision was to prevent manipulation and to
maintain the integrity of the all-others rate. One commenter argued
that this provision is inconsistent with the statute and should be
deleted.
We do not agree with this comment, and have retained the rule as
drafted. The statute does not define the term ``investigated'' and does
not directly address the question of whether voluntary respondents
should be considered to be part of the Department's investigation.
Because the statute does not resolve the issue, we look to the AD
Agreement for guidance as to the best interpretation of the Act, in
keeping with the requirement that, to the extent possible, a statute be
interpreted in a manner consistent with the international obligations
of the United States.
Article 9.4 of the AD Agreement provides that the duties applied to
``exporters or producers not included in the examination'' (i.e.,
``all-others'') may not exceed the weighted-average margin for the
``selected exporters or producers.'' This implies that those exporters
or producers not ``selected'' are not considered to be included in the
``examination.'' Therefore, the better interpretation of section
735(c)(5) is that producers who are not ``selected'' by the Department
(i.e., voluntary respondents) are not considered to have been
``examined'' (i.e., investigated), so that their margins should not
contribute to the ``all-others'' rate. In effect, the Department
conducts parallel proceedings for voluntary respondents.
As we noted in the preamble to the AD Proposed Regulations,
exclusion of voluntary respondents from the determination of the all-
others rate serves the obvious purpose of preventing distortion or
outright manipulation of the all-others rate. The producers or
exporters most likely to submit voluntary responses are those with
reason to believe that they will obtain a lower margin by volunteering
than they would obtain by being subject to the all-others rate.
Inclusion of rates determined for voluntary respondents thus would be
expected to distort the weighted-average for the respondents selected
by the Department on a neutral basis.
Exclusions: In the AD Proposed Regulations, 61 FR at 7315, the
Department requested additional public comment on the issue of whether
there should be special exclusion rules for firms, such as trading
companies, that export, but do not produce, subject merchandise. We
noted that one alternative would be to limit the exclusion of a
nonproducing exporter to the subject merchandise produced by those
producers that supplied the exporter during the period of
investigation. Several commenters supported this approach, citing the
potential for other producers to avoid the imposition of duties by
selling through an excluded exporter. Other commenters argued that if
an exporter is excluded, the exclusion should apply to all exports by
that exporter, regardless of the producer.
The Department agrees with the first group of commenters that
normally the exclusion of a nonproducing exporter should be limited.
Therefore, we have added a new paragraph (e)(3) to provide that the
exclusion of a nonproducing exporter normally will be limited to
subject merchandise produced or supplied by those companies that
supplied the exporter during the period of investigation.
In an AD investigation, the Secretary may grant an exclusion to a
nonproducing exporter if the Secretary investigates the exporter's
sales and determines that the dumping margins on those sales are not
greater than de minimis. However, to prevent other producers from
selling through an excluded exporter in order to avoid the imposition
of duties, the Secretary normally will apply the exclusion only to the
exporter's exports of subject merchandise purchased from those
producer(s) found by the Secretary to lack knowledge of the exportation
of the merchandise to the United States. This limitation is
appropriate, because the lack of knowledge by these producers provided
the basis for investigating and establishing a rate for the exporter.
In a CVD investigation, the basis for the exclusion of a
nonproducing exporter is that neither the exporter nor the producers or
suppliers of subject merchandise sold by the exporter received more
than de minimis net countervailable subsidies. Therefore, it is
appropriate to limit the exclusion to merchandise purchased from the
same suppliers and producers.
With respect to requests for exclusion in a CVD investigation
conducted on an aggregate basis, we have renumbered paragraph (e)(3) as
paragraph (e)(4), and we have revised paragraph (e)(4)(iv) to clarify
that in the case of a non-producing exporter, the foreign government
must certify that neither the exporter nor the exporter's supplier
received more than de minimis countervailable subsidies during the
review period.
One commenter proposed that (1) the regulations make clear that the
Department has the authority to ``bring back'' under an order an
excluded company if the Department subsequently finds in a review that
the company is dumping, and (2) the regulations retain the requirements
of Secs. 353.14 and 355.14 of the Department's prior regulations.
According to the commenter, the Department required a company with a
[[Page 27311]]
zero or de minimis dumping margin or CVD rate to certify that the
company would not dump or receive countervailable subsidies in the
future. The commenter contended that this certification authorized the
Department to review excluded firms to confirm that they were acting in
a manner consistent with the certification. In addition, this commenter
claimed that because AD/CVD orders apply to countries, rather than to
individual companies, the Department has the authority to review
excluded companies.
We have not adopted these suggestions. With respect to the notion
of ``bringing back'' excluded companies, as a matter of administrative
practice, the Department never has reviewed sales of excluded
companies, with the exception of situations in which nonexcluded
companies attempt to funnel their ``non-excluded'' merchandise through
an excluded company. There is no indication in either the statute or
the SAA that Congress intended the Department to make such a radical
departure from its prior practice concerning exclusions. Moreover, we
believe that the ``inclusion'' of an excluded company would be
inconsistent with Article 5.8 of the AD Agreement and Article 11.9 of
the SCM Agreement (both of which require termination where the amount
of dumping or subsidization is de minimis).
As for former Secs. 353.14 and 355.14, with the exception of CVD
investigations conducted on an aggregate basis, these provisions are no
longer necessary in light of the amendments to the statute made by the
URAA, and, in any event, never functioned in the manner suggested by
the commenter. These provisions, notwithstanding their titles,
functioned as a mechanism for considering requests by voluntary
respondents to be investigated. As stated by the Department when it
adopted Sec. 351.14:
If the Department includes a producer or reseller in its
investigation and determines that the producer or reseller had no
dumping margin during the period of investigation, the Department
would automatically exclude that producer or reseller from the
antidumping duty order, even if the producer or reseller did not
request exclusion under the procedures described in [Sec. 353.14].
The purpose of this section merely is to provide an opportunity for
producers and resellers that the Department might not otherwise
include in its investigation to request that the Department
specifically include and investigate them.
Final Rule (Antidumping Duties), 54 FR 12742, 12748 (1989). The
Department made a virtually identical statement with respect to
Sec. 355.14. Final Rule (Countervailing Duties), 53 FR 53206, 52316
(1988).
Given their original purpose, Secs. 353.14 and 355.14 have become
superfluous in light of section 782(a) of the Act and Sec. 351.204(d)
(which establish new procedures for dealing with voluntary respondents)
and Sec. 351.204(e)(3) (which deals with exclusion requests in CVD
investigations conducted on an aggregate basis). Under these
provisions, decisions on exclusions will be based on a firm's actual
behavior, as opposed to assertions regarding its possible future
behavior.
Other comments: One commenter suggested that Sec. 351.204 be
modified to state explicitly that the Department retains the right to
seek and obtain information from importers in the United States of
subject merchandise. We have not adopted this suggestion. While we do
not disagree with the proposition that the Department may seek
information from importers, we also do not believe that there is any
doubt concerning the Department's authority to seek such information.
Therefore, we do not feel that the suggested modification is necessary.
Section 351.205
Section 351.205 deals with preliminary AD and CVD determinations.
Two commenters noted that, in connection with proposed Sec. 351.205(c),
the Department deleted (1) the requirement that a preliminary
determination include the factual and legal conclusions for the
Department's determination, and (2) the requirement that the Department
notify the parties to the proceeding. They suggested that paragraph (c)
be revised so as to include these requirements.
While we do not disagree with the substance of the comments, we do
not believe that a revision to paragraph (c) is appropriate. Section
777(i) of the Act requires the Department to include its factual and
legal conclusions in a preliminary determination, and sections 703(f)
and 733(f) of the Act require the Department to notify the petitioner
and other parties to an investigation. Therefore, given our overall
approach of avoiding repetitions of the statute, we have not made the
revisions suggested.
Section 351.206
Section 351.206 deals with critical circumstances findings. In
connection with Sec. 351.206, one commenter sought clarification that
provisional measures would not be imposed on merchandise imported prior
to the date of initiation of an AD or CVD investigation. We can confirm
that provisional measures will not be imposed on merchandise entered
prior to the date of initiation. Section 351.206(d), which deals with
retroactive suspension of liquidation, refers to sections 703(e)(2) and
733(e)(2) of the Act. These sections provide that suspension of
liquidation may not apply to merchandise entered prior to the date on
which notice of the determination to initiate is published in the
Federal Register. See also SAA at 878.
Section 351.207
Section 351.207 deals with the termination of investigations. We
received several comments regarding Sec. 351.207 from one commenter.
First, the commenter objected to the proviso in Sec. 351.207(b)(1)
that the Secretary may terminate an investigation if ``the Secretary
concludes that termination is in the public interest.'' The commenter
argued that because the relevant provisions of the statute do not
require a public interest finding, the regulations should not enlarge
upon the statutory criteria.
We have not adopted this suggestion, because the legislative
history of the Trade Agreements Act of 1979 indicates that Congress
intended that the Secretary make a public interest finding before
terminating a self-initiated investigation or an investigation in which
a petition is withdrawn. See, e.g., Trade Agreements Act of 1979
Statements of Administrative Action, H.R. Doc. No. 153, Pt. II, 96th
Cong., 1st Sess. 400, 418 (1979); and S. Rep. No. 249, 96th Cong., 1st
Sess. 54, 70-71 (1979). We believe that this legislative history
remains relevant in interpreting the post-URAA version of the Act.
Moreover, there is no indication in the legislative history of the URAA
that Congress intended that the Department abandon the requirement of a
public interest finding.
Second, in connection with Sec. 351.207(c), the commenter suggested
that the Department clarify that its authority to terminate an
investigation due to lack of interest is unaffected by those statutory
provisions prohibiting the post-initiation reconsideration of industry
support for a petition. We have not adopted this suggestion, because,
as the Department stated in the AD Proposed Regulations, 61 FR at 7315,
the SAA is clear on this point.
Finally, in connection with Sec. 351.207(b)(2), the commenter
suggested that in light of the prohibition against voluntary export
restraints found in the WTO Agreement on Safeguards, the Department
should exercise sparingly its discretion to terminate an investigation
based on a
[[Page 27312]]
foreign government's agreement to limit the volume of imports of
subject merchandise into the United States. The commenter did not
suggest any modifications to Sec. 351.207(b)(2), and we have left that
provision unchanged.
Section 351.208
Section 351.208 deals with suspension agreements and suspended
investigations. Most of the comments we received regarding Sec. 351.208
dealt with our proposed deadlines for initialing and signing suspension
agreements.
Deadlines: In proposed Sec. 351.208(f)(1)(i), we advanced the
deadline for submitting a proposed suspension agreement to 15 days
after a preliminary determination in an AD investigation and 5 days
after a preliminary determination in a CVD investigation. As explained
in the AD Proposed Regulations, the purpose of this change was to
reduce burdens on all parties and Department staff. 61 FR at 7316.
Public reaction to this change in deadlines was mixed, cutting across
respondent/domestic industry lines.
On the domestic industry side, one commenter strongly supported the
change, while another commenter thought the AD deadline too short. On
the respondent side, one commenter supported the change, but three
commenters considered the revised deadline to be too short.
After careful consideration of these comments, we have left the
deadlines as set forth in proposed Sec. 351.208(f)(1)(i). Several of
the commenters seeking a longer deadline argued that exporters are not
in a position to consider whether or not they desire to propose a
suspension agreement until the preliminary determination has been
issued. We can understand why respondent interested parties might wish
to see the results of a preliminary determination before formally
submitting a proposed suspension agreement. However, in our view, a
respondent interested party that is entertaining a suspension agreement
as an option may begin its deliberations as soon as the Department
initiates an investigation instead of waiting until the Department
issues a preliminary determination. If a respondent interested party
begins its deliberations early, we believe that the deadlines set forth
in Sec. 351.208(f)(1)(i) provide sufficient time in which to digest the
results of a preliminary determination.
We received other comments regarding deadlines, in addition to
those described above. One commenter suggested that the Department give
itself authority to extend the deadlines where necessary. We agree with
this suggestion, but note that it already is addressed by
Sec. 351.302(b), which provides the Secretary with authority to extend,
for good cause, any time limit established by part 351.
Another commenter suggested that in order to provide the Department
with more flexibility, the deadlines should run from the date of
publication of a preliminary determination instead of the date of
issuance. We have not adopted this suggestion. In order to accomplish
our objective of reducing burdens, we deliberately chose the date of
issuance, because one week can elapse between the date of issuance and
the date of publication in the Federal Register. However, we believe
that Sec. 351.302(b), discussed in the preceding paragraph, addresses
the commenter's concerns, because it permits the Secretary to extend a
deadline for good cause.
Another commenter suggested that if the deadline for submitting
proposed suspension agreements in CVD investigations remains at 5 days
from the preliminary determination, the timeframe should be modified to
5 business days, excluding applicable foreign holidays. We have adopted
this suggestion in part by changing the deadline from 5 days to 7 days.
However, we have not adopted the suggestion concerning the exclusion of
foreign holidays. If, in a particular case, the occurrence of a foreign
holiday should make this deadline unworkable, this is something that
the Secretary could consider under the extension authority of
Sec. 351.302(b).
Suspension agreement procedures: We received several comments
concerning the procedures to be followed in entering into a suspension
agreement. One commenter, arguing that current procedures deprive
petitioners of meaningful input, suggested that the Department amend
Sec. 351.208(f)(1) to: (1) require the foreign exporters or foreign
government to serve a copy of the proposed suspension agreement on the
petitioner at the same time that it is submitted to the Department; (2)
require the Department thereafter to consult with all parties and to
request written comments from all parties regarding the terms of the
agreement and whether the agreement is in the public interest; and (3)
require the Department to consider domestic industry opposition to a
suspension agreement as a strong indicator that the agreement is not in
the public interest.
Before addressing the specific suggestions, we should note at the
outset that, in our view, the Department's existing procedures have not
denied petitioners meaningful input regarding decisions to enter into
suspension agreements. Department precedents offer numerous examples of
revisions to proposed suspension agreements that the Department has
made in response to petitioners' comments. While the Department may not
always agree with all of a petitioner's comments, this does not mean
that the Department has not carefully considered those comments.
As for the specific suggestions, we have not adopted them for the
following reasons. With respect to the suggestion that the party
proposing a suspension agreement serve a copy on the petitioner, we
note that sections 704(e) and 734(e) of the Act contemplate that the
Department will notify the petitioner of a proposed suspension
agreement and provide the petitioner with a copy of the proposed
agreement at the time of notification. In our experience, this process
has worked well in the past and there is no need to change it at this
time. With respect to the suggestion that the Department consult with,
and request written comments from, all parties, sections 704(e)(1) and
734(e)(1) require the Department to consult only with the petitioner, a
requirement reflected in Sec. 351.208(f)(2)(iii). Other parties have a
right to comment on a proposed suspension agreement, however, and we do
not believe it is necessary or appropriate to impose an additional
consultation requirement on Department staff. With respect to written
comments, sections 704(e)(3) and 734(e)(3) permit all interested
parties to submit comments and information, a right that is already
reflected in Sec. 351.208(f)(3). Finally, with respect to the
suggestion concerning the significance of domestic industry opposition,
this is something to which the Department would accord considerable
weight when assessing the public interest. However, the Department must
assess the public interest based on all the facts, and we do not
believe it appropriate to issue a regulation that singles out one
factor to the exclusion of others.
Another commenter suggested that before entering into a suspension
agreement, the Department should consult potentially affected consuming
industries and potentially affected producers and workers in the
domestic industry, including producers and workers not party to the
investigation. As discussed above, we do not believe it is necessary or
appropriate to expand the consultation requirements beyond those set
forth in the statute. However, we have revised paragraph (f)(3) so as
to
[[Page 27313]]
expressly permit industrial users and consumers to submit written
argument and factual information concerning a proposed suspension
agreement.
Regional industry cases: One commenter stated that the Department
should clarify Sec. 351.208, in accordance with the new statutory
language, to make it clear that (1) it is not easier for respondents to
obtain a suspension agreement in a regional industry investigation, and
(2) the Department has no more obligation to accept a suspension
agreement in a regional industry investigation than in any other
investigation. We agree that a suspension agreement in a regional
industry investigation is subject to the same requirements as a
suspension agreement in a national industry investigation (including
the public interest requirement), and that the Department need not
accept an agreement in a regional industry investigation if those
requirements are not met. However, because the SAA at 859 makes this
clear, we do not think that additional clarification is necessary.
Revision to paragraph (f)(1): Although not the subject of public
comments, we have made certain stylistic revisions to paragraph (f)(1)
in order to make this provision accurate and more readable.
Section 351.209
Section 351.209 deals with the violation of suspension agreements.
Of the comments we received regarding this section, most related to
proposed Sec. 351.209(b)(2), which deals with the resumption of
suspended investigations that had not been completed under sections
704(g) or 734(g) of the Act. Proposed Sec. 351.209(b)(2) provided that
the Secretary may ``update previously submitted information where the
Secretary deems it appropriate to do so.''
Although one commenter supported the use of updated information,
three commenters opposed the use of updated information. Each of the
latter commenters argued that the use of updated information
constitutes poor policy, because it effectively rewards parties that
violate or take advantage of a suspension agreement. In addition, two
of the commenters referred to sections 704(j) and 734(j) of the Act,
which provide that in making a final determination the Secretary
``shall consider all of the subject merchandise, without regard to the
effect of any [suspension] agreement. . . .'' According to one of the
two commenters, these two statutory provisions preclude the use of
updated information. According to the second of the two commenters,
these provisions preclude the use of updated information except in the
unusual case where the Department is able to account for the effect of
the terminated suspension agreement.
While we do not believe that sections 704(j) and 734(j) necessarily
preclude the use of updated information, we have concluded that, in
light of the Department's limited experience with resumed
investigations, it would be premature at this time to resolve this
issue in the regulations. Therefore, we have revised paragraph (b)(2)
by deleting the phrase dealing with updated information.
One commenter also questioned whether Sec. 351.209(b) was intended
to broaden the circumstances under which it can be determined that a
suspension agreement has been violated. In this regard, our intent was
neither to broaden nor to narrow these circumstances.
Section 351.210
We received two comments concerning Sec. 351.210, which deals with
final determinations in investigations. As it did with respect to
proposed Sec. 351.205(c), one commenter objected to the deletion of (1)
the requirement that the Department include in a final determination
its factual and legal conclusions; and (2) the requirement that the
Department notify parties of a final determination. As we stated above
in connection with Sec. 351.205(c), because the Act clearly imposes
these requirements on the Department, these requirements need not be
reiterated in the regulations.
Another commenter suggested that the Department codify its practice
of treating a request for a postponement of a final determination as a
request for the extension of provisional measures. We agree with this
suggestion. However, instead of assuming that a request for
postponement includes an implied request for an extension of
provisional measures, we prefer to rely on the Department's
discretionary authority to deny requests for postponements of final
determinations. More specifically, the absence of a request to extend
provisional measures would constitute a compelling reason, within the
meaning of Sec. 351.210(e)(1), for denying a request to postpone a
final determination. Therefore, we have revised Sec. 351.210(e) so as
to provide that in the case of a request for postponement made by
exporters, the Secretary will not grant the request unless it is
accompanied by a request for an extension of provisional measures to
not more than 6 months.
Section 351.211
Section 351.211 deals with the issuance of AD and CVD orders. We
received several suggestions concerning proposed Sec. 351.211(c), which
established special procedures concerning the assessment of duties in
proceedings in which the Commission identified a regional industry.
Based on our own review of paragraph (c) and these suggestions, we have
deleted paragraph (c) and substituted in its place a new
Sec. 351.212(f). A discussion of the suggestions and this new provision
appears below under ``Section 351.212.''
Section 351.212
Section 351.212 deals with matters related to the assessment of
antidumping and countervailing duties. We received several comments
relating to automatic assessment of duties and the calculation of
assessment rates.
Automatic assessment: Under the former regulations, if the
Department did not receive a request for the review of particular
entries of subject merchandise, the Department would instruct the
Customs Service to liquidate those entries and assess duties at the
cash deposit rate applied to those entries at the time of entry. In
proposed Sec. 351.212(c), the Department proposed to assess duties on
entries for which there was no review request ``at rates equal to the
rates determined in the most recently completed segment of the
proceeding. . . .'' The Department believed that by relying on more
current rates as the basis for the assessment of duties, the number of
requests for reviews would decline.
Several commenters opposed this change, some describing their
opposition as ``strong.'' They argued that the proposed change would
create an undue element of uncertainty, because at the time when a
party would have to decide whether to request a review, it would not
know the rate that would be applied to its entries if it did not
request a review. This would force parties to request reviews solely to
protect their interests, thereby defeating the purpose of the proposal.
They also argued that the proposal would result in more work for the
Customs Service, a point the Department recognized in 1989. Finally,
even those who did not oppose the change argued that proposed
Sec. 351.212(c) needed additional refinements in order to provide some
minimum degree of certainty.
In light of the comments received, the Department has decided to
continue its current practice with respect to automatic assessment;
i.e., if an entry is
[[Page 27314]]
not subject to a request for a review, the Department will instruct the
Customs Service to liquidate that entry and assess duties at the rate
in effect at the time of entry. We have made the appropriate revisions
to paragraph (c).
Antidumping duty assessment rates: Proposed Sec. 351.212(b)(1)
dealt with the method that the Department will use to assess
antidumping duties upon completion of a review. In proposed paragraph
(b)(1), the Department provided that it normally will calculate an
``assessment rate'' for each importer by dividing the absolute dumping
margin found on merchandise reviewed by the entered value of that
merchandise. As such, paragraph (b)(1) merely codified an assessment
method that the Department has come to use more and more frequently in
recent years.
Historically, the Department (and, before it, the Department of the
Treasury) used the so-called ``master list'' (entry-by-entry)
assessment method. Under the master list method, the Department would
list the appropriate amount of duties to assess for each entry of
subject merchandise separately in its instructions to the Customs
Service. However, in recent years, the master list method has fallen
into disuse for two principal reasons. First, in most cases,
respondents have not been able to link specific entries to specific
sales, particularly in CEP situations in which there is a delay between
the importation of merchandise and its resale to an unaffiliated
customers. Absent an ability to link entries to sales, the Department
cannot apply the master list method. Second, even when respondents are
able to link entries to sales, there are practical difficulties in
creating and using a master list if the number of entries covered by a
review is large. Preparing a master list that covers hundreds or
thousands of entries is a time-consuming process, and one that is prone
to errors by Department and/or Customs Service staff. Therefore, as the
Department explained in the AD Proposed Regulations, 61 FR at 7317, the
Department would consider using the master list method of assessment
only in situations where there are few entries during a review period
and the Department can tie those entries to particular sales.
Several commenters suggested that the Department clarify that it
will apply the master list method if the importer can demonstrate that
the assessment rate approach would distort the amount of duty assessed
as compared to the amount assessed under the master list method. In
addition, one of these commenters urged the Department to clarify that,
regardless of the assessment method used, the Department will not
consider merchandise entered prior to the suspension of liquidation to
be ``subject merchandise'' under section 771(25) of the Act. Finally,
one commenter supported proposed paragraph (b)(1), and urged the
Department to apply the assessment rate method to all outstanding
unliquidated entries, regardless of whether the Department conducted
the applicable review under the pre-or post-URAA version of the Act.
The Department has adopted proposed paragraph (b)(1) without
change. As noted above, and as recognized by most of the commenters, to
a large extent, paragraph (b)(1) simply codifies the Department's
current practice.
With respect to the suggestions that the Department continue to
apply the master list method on a case-by-case basis, in our view, the
fact that a respondent is able to link its sales to entries, in itself,
constitutes an insufficient basis for using the master list method. As
discussed above, there are practical problems inherent in the use of
the master list method wholly apart from the linkage problem.
Thus, based on the results of each review, the Department generally
will assess duties on entries made during the review period and will
use assessment rates to effect those assessments. However, on a case-
by-case basis, the Department may consider whether the ability to link
sales with entries should cause the Department to base a review on
sales of merchandise entered during the period of review, rather than
on sales that occurred during the period of review. These two
approaches differ, because, in the case of CEP sales, the delay between
importation and resale to an unaffiliated customer means that
merchandise entered during the review period often is different from
the merchandise sold during that period. Because of the inability to
tie entries to sales, the Department normally must base its review on
sales made during the period of review. Where a respondent can tie its
entries to its sales, we potentially can trace each entry of subject
merchandise made during a review period to the particular sale or sales
of that same merchandise to unaffiliated customers, and we conduct the
review on that basis. However, the determination of whether to a review
sales of merchandise entered during the period of review hinges on such
case-specific factors as whether certain sales of subject merchandise
may be missed because, for example, the preceding review covered sales
made during that review period or sales may not have occurred in time
to be captured by the review. Additionally, the Department must
consider whether a respondent has been able to link sales and entries
previously for prior review periods and whether it appears likely that
the respondent will continue to be able to link sales and entries in
future reviews. The Department must consider these factors because of
the distortions that could arise by switching from one method to
another in different review periods. Also, in cases in which the
Department is sampling sales under section 777A of the Act, other
complicating factors mitigate against using entries during the POR as
the basis for the review.
Finally, the fact that the amount of duties assessed may differ
depending on the method used is not necessarily grounds to conclude
that the assessment rate method is distortive, because neither the Act
nor the AD Agreement specifies whether sales or entries are to be
reviewed, nor do they specify how the Department must calculate the
amount of duties to be assessed. See, Torrington Co. v. United States,
44 F.3d 1572, 1578 (Fed. Cir. 1995). Moreover, as the Court of
International Trade has recognized in upholding the Department's
assessment rate method, a review of sales, rather than entries,
``appears not to be biased in favor of, or against, respondents.'' FAG
Kugelfischer Georg Schafer KgaA v. United States, 1995 Ct. Int'l. Trade
LEXIS 209, *10 (1995), aff'd, 1996 U.S. App. LEXIS 11544 (Fed. Cir
1996).
With respect to the issue of whether merchandise entered prior to
suspension of liquidation is ``subject merchandise,'' the Department
addressed this issue in Stainless Steel Wire Rod from France, 61 FR
47874, 47875 (Sept. 11, 1996), in which the Department stated:
Sales of merchandise that can be demonstrably linked with
entries prior to the suspension of liquidation are not subject
merchandise and therefore are not subject to review by the
Department. Merchandise that entered the United States prior to the
suspension of liquidation (and in the absence of an affirmative
critical circumstances finding) is not subject merchandise within
the meaning of section 771(25) of the Act.
Finally, with respect to the effective date of paragraph (b)(1), in
many cases the Department currently is applying the assessment rate
method. However, the Department cannot apply this method to all
unliquidated entries. Because liquidation of entries may have been
delayed by the Customs Service for reasons unrelated to the collection
of
[[Page 27315]]
antidumping duties, applying this method to all unliquidated entries
would require the amendment all of our prior liquidation instructions.
Not only would this place an enormous burden on the Department and the
Customs Service, it also would cause uncertainty for the importing
community.
For these reasons, the Department will apply paragraph (b)(1) only
to assessment instructions issued on the basis of final results in
reviews initiated after the effective date of these regulations. As
noted previously, however, because this regulation merely codifies a
past practice, the Department will apply the assessment rate method in
those cases that are not technically subject to the regulation.
However, the Department will do so as a matter of practice, and not as
a regulatory requirement. The purpose of having an effective date is to
ensure that the Department is not required to amend old assessment
instructions based on reviews in which the Department did not collect
the necessary information.
Regional industry cases: As noted above, we received suggestions
from one commenter regarding proposed Sec. 351.211(c), which
established special procedures for proceedings in which the Commission
identified a regional industry. Under paragraph (c), which was designed
to implement sections 706(c) and 736(d) of the Act, the Secretary could
except from the assessment of duties merchandise of an exporter or
producer that did not supply the region during the POI.
While the commenter generally supported the procedures set forth in
Sec. 351.211(c), it suggested several improvements. First, it suggested
that the Department clarify that a petitioner has a right to respond to
certifications submitted by an exporter or producer. In its post-
hearing comments, this commenter further refined this suggestion by
proposing that the Department require certifications from foreign
exporters and producers to be submitted early in the investigation,
rather than at its end.
Second, for purposes of certifying and establishing whether an
exporter or producer exported subject merchandise for sale in the
region concerned during the POI, the commenter suggested that the
relevant POI be the ITC's POI. According to the commenter, the
Department's normal one-year POI is too short, and the Commission's
normal three-year POI is preferable.
Third, the commenter suggested that U.S. importers should be
required to certify to the Customs Service, upon entry into the United
States of merchandise from an exporter or producer whose merchandise
has been excepted from assessment, whether that merchandise will be
sold in the region concerned. If an importer certified that merchandise
would be sold in the region, the importer would be required to notify
the Department directly so that the Department could direct that
merchandise of the exporter or producer in question would be subject to
the assessment of duties.
Finally, in its post-hearing comments, the commenter suggested that
the certifications of exporters and producers should include the period
after the POI. In this regard, it noted that paragraph (c), as drafted,
required that the certifications of U.S. importers cover the period
after the POI.
We believe these suggestions have considerable merit, and with,
certain exceptions, we have incorporated them into these final
regulations. However, after reviewing the commenter's suggestions and
proposed Sec. 351.211(c), we came to the conclusion that instead of
creating an entirely new procedure, it would be more administrable for
the Department to consider requests for an exception from the
assessment of duties in the context of an existing procedural
mechanism. Among other things, this would ensure that domestic
interested parties have ample opportunity to comment on requests for an
exception, something which was one of the primary concerns of the
commenter. Entries of subject merchandise from an exporter or producer
that did not supply the region concerned during the original POI would
be subject to cash deposit requirements. However, because final duties
would not be levied if, in a review, the exporter or producer
established its eligibility for an exception from assessment, this
procedure is consistent with Article 4.2 of the AD Agreement and
Article 16.3 of the SCM Agreement.
Therefore, we have added a new paragraph (f) to Sec. 351.212 to
deal with requests for an exception from the assessment of duties in
regional industry cases. The procedures for obtaining an exception
would work as follows. First, paragraph (f)(1) sets forth the basic
standard for obtaining an exception, and incorporates some of the
suggestions of the commenter.
Paragraph (f)(2) provides that requests for an exception from
assessment will be considered in the context of an administrative
review or a new shipper review. Paragraph (f)(2)(i) provides that an
exporter or producer seeking an exception from assessment must request
an administrative review or a new shipper review under Sec. 351.213 or
Sec. 351.214, respectively. The request for review must be accompanied
by a request that the Secretary determine whether subject merchandise
of the exporter or producer satisfies the requirements of paragraph
(f)(1) and should be excepted from the assessment of duties. The
exporter or producer may request that the Secretary limit the review to
a determination as to whether an exception should be granted. In
addition, a request for review and exception from assessment must be
accompanied by the certifications described in paragraphs (f)(2)(i) (A)
and (B).
If the requirements of paragraph (f)(2)(i) and Sec. 351.213 or
Sec. 351.214, as the case may be, are satisfied, the Secretary will
initiate an administrative review or a new shipper review. The
Secretary will conduct the review in accordance with Sec. 351.221.
However, under paragraph (f)(2)(ii), the Secretary may limit the review
to a determination as to whether an exception from assessment should be
granted if requested to do so by the exporter or producer under
paragraph (f)(2)(i). Notwithstanding the submission of such a request,
the Secretary could decline to conduct a limited review if, for
example, a domestic interested party had requested an administrative
review of the particular exporter or producer.
Under paragraph (f)(3), if the Secretary determines that the
exporter or producer satisfies the requirements for an exception from
assessment, the Secretary will instruct the Customs Service to
liquidate entries without regard to antidumping or countervailing
duties. These instructions would apply only to entries of subject
merchandise of the exporter or producer concerned that were covered by
the review. Future entries of subject merchandise would remain subject
to cash deposit requirements for estimated duties, although the
exporter or producer could seek an exception from assessment for future
entries in a subsequent review.
Paragraph (f)(4) describes the actions that the Secretary will take
if the Secretary does not grant an exception from assessment. Under
paragraph (f)(4)(i), if the review was not limited to the question of
an exception from assessment, the Secretary will instruct the Customs
Service to assess duties in accordance with Sec. 351.212(b); i.e., to
assess duties in accordance with the results of the review. Under
paragraph (f)(4)(ii), however, if the review was limited to the
question of an exception from assessment, the Secretary will apply the
automatic assessment provisions of Sec. 351.212(c).
Returning to the commenter's suggestions, because we now have opted
[[Page 27316]]
to deal with requests for exception from assessment in the context of
reviews, we have not adopted the suggestion concerning the early
submission of certifications in an investigation. By dealing with
requests for an exception in the context of a review, domestic
interested parties should have ample opportunity to scrutinize, and
comment on, the certifications submitted by an exporter or producer.
In addition, we have not adopted the suggestion that we use the
Commission's POI. Neither section 703(c) nor section 706(d) expressly
state whether the relevant POI is the Department's or the ITC's.
However, we think that section 751(a)(2)(B) of the Act provides
guidance as to what Congress intended. Section 751(a)(2)(B), which
deals with new shipper reviews, refers to an
exporter or producer [that] did not export the merchandise * * * to
the United States (or, in the case of a regional industry, did not
export the subject merchandise for sale in the region concerned)
during the period of investigation. * * *
The Department interprets this section as referring to the
Department's period of investigation, because the section is directed
to the Department. If Congress had intended that the Department use the
Commission's POI for purposes of determining whether an exporter was a
new shipper under section 751(a)(2)(B), it would have said so
explicitly. Given the obvious interrelationship between section
751(a)(2)(B) and sections 706(c) and 736(d), the more reasonable
interpretation is that ``period of investigation,'' as used in the
latter two sections, means the Department's POI.
Provisional measures deposit cap: Although we have not revised
proposed paragraph (d) in these final regulations, the Department is
using this opportunity to clarify that the provisional measures deposit
cap contained in paragraph (d) will apply to entries subject to an AD
order secured by bonds as well as cash deposits, as stated in that
paragraph.
On July 29, 1991, the Court of International Trade (the CIT)
invalidated the Department's AD regulation on the provisional measures
deposit cap (19 CFR Sec. 353.23) in a case on televisions from Taiwan.
Zenith Electronics v. United States, 770 F. Supp. 648. The CIT followed
this precedent on July 28, 1992, in a challenge to a review of
televisions from Korea. Daewoo Electronics v. United States, 794 F.
Supp. 389 (Daewoo I). On September 30, 1993, the Court of Appeals for
the Federal Circuit reversed the CIT's decision in the Korean
television case, and upheld the regulation. Daewoo Electronics v.
United States, 6 Fed. 3d 1511 (Daewoo II). As a result of the Federal
Circuit's decision, the CIT subsequently vacated its July 29, 1991,
order in Taiwan televisions. The Department never amended its
regulation, and the original regulation (now replicated in paragraph
(d)) remains valid. For this and other reasons discussed below,
paragraph (d) and its predecessor provision should be applied to all
entries as though the CIT never invalidated it.
Section 733(d)(2) of the Act provides that an importer of
merchandise subject to an AD investigation must post bonds, cash
deposits, or other security for entries of the subject merchandise
between the Department's affirmative preliminary determination of sales
at less than fair value and the Commission's final injury
determination.
Assuming an AD order is imposed, a manufacturer or importer may
request an administrative review under section 751(a) of the Act to
determine the actual amount of antidumping duties due on the sales
during this period. Section 737(a)(1) of the Act provides that, if the
amount of a cash deposit collected as security for an estimated
antidumping duty is different from the amount of the antidumping duty
determined in the first section 751 administrative review, then the
difference shall be disregarded, to the extent that the cash deposit
collected is lower than the duty determined to be due under a section
751 administrative review. This is called the provisional measures
deposit cap, and applies to entries between publication of the
Department's preliminary determination and the Commission's final
determination of injury.
The provisional measures deposit cap for countervailing duties
(section 707 of the Act), on the other hand, explicitly provides that
the cap applies whether the entry is secured by a cash deposit or by a
bond or other security. That is, the Act at first glance appears to
apply the cap to entries secured both by cash deposits and by bonds in
CVD cases, but only by entries secured cash deposits in AD cases.
Since 1980, the Department, by regulation, took the position that
the difference between the AD and CVD provisions in the statute was an
oversight, and the agency thus applied the provisional cap to entries
secured both by bonds and by cash deposits in both AD and CVD cases. 19
C.F.R. Sec. 353.50 in pre-1989 regulations; 19 CFR Sec. 353.23 in the
post-1989 regulations.
On July 29, 1991, in a case involving televisions from Taiwan, the
CIT rejected the Department's interpretation that the statutory
differences between the AD and CVD provisions were an oversight, based
on its analysis of the statute and the Tokyo Round AD Code. It ruled
that, in AD cases, the provisional measures deposit cap applied only to
entries secured by cash deposits. Zenith.
The Department decided it would not appeal the decision when it
became final, and published notice of its acquiescence in the Federal
Register. 57 FR 45769 (1992). It also announced that, from the date of
the decision, it would apply the cap only to entries secured by cash
deposits in AD cases. However, the Department never amended its
regulations to be consistent with this position.
In 1992, the CIT followed its Taiwan television decision on the cap
in a case involving televisions from Korea. (Daewoo I) Respondents
appealed the decision on this issue to the Federal Circuit.
Although not directly before it, the Federal Circuit reviewed the
reasoning in the Zenith decision while deciding Daewoo II. The Federal
Circuit disagreed with the Zenith reasoning. It found that the statute
does not prohibit the application of the cap to bonds, that the
Department's interpretation was reasonable, and it overruled the CIT's
decision. On September 30, 1994, the Federal Circuit held that the
Department's regulation was valid, and that the cap can apply where
duties are secured by bonds as well as cash deposits. In footnote 17 of
its decision, the Federal Circuit noted with respect to the
Department's Federal Register notice:
After the Court of International Trade issued its opinion in
Zenith II [in 1991], Commerce indicated that it would follow that
holding, but prospectively only. The court here rejected that
limitation [to cash deposits]. In view of our resolution of this
issue, the changed regulation may have prospective application only
[from October 5, 1992 forward].
Thus, the Federal Circuit, erroneously treating our public notice
as an amendment to the Department's regulations, held that the
``amended regulation'' could only be applied prospectively from the
date it was adopted, October 5, 1992. It was not valid during the time
between the CIT decision in Zenith and the date of the Federal Register
notice. The Department's Federal Register notice, however, did not
amend its original regulation; it only stated that it did not intend to
appeal the Zenith decision and
[[Page 27317]]
would change its practice. Therefore, the original regulation remained
valid from the date the CIT overturned it to the present.
In addition, on October 21, 1994, when the Zenith decision became
final, the CIT vacated its original 1991 decision in Korean televisions
with regards to the cap. Zenith, Slip Op. 94-170.
Section 351.213
Section 351.213 deals with administrative reviews under section
751(a)(1) of the Act. We received a few comments concerning
Sec. 351.213.
Publication of preliminary dumping margins: One commenter suggested
that the Department refrain from including individual, company-specific
preliminary dumping margins in its published notices of preliminary
results of review. We have not adopted this suggestion, because, in our
view, section 777(i)(2)(A)(iii)(II) of the Act requires that individual
margins be included in the published notice of preliminary results.
Deferral of administrative reviews: To reduce burdens on parties
and the Department, in proposed Sec. 351.213(c) the Department
established a procedure by which the Secretary could defer the
initiation of an administrative review for one year if (i) the request
for review was accompanied by a request that the Secretary defer the
review; and (ii) no relevant party to the proceeding objected. One
commenter strongly supported this proposal, but two commenters opposed
it. According to the two opponents, deferral of reviews lacks a
statutory basis, is inconsistent with legislative intent, and may not
result in a reduction of burdens. In addition, the opposing commenters
argued that the requirement that no party object to deferral is an
inadequate procedural safeguard. They claim that the Department may
apply pressure on petitioners to acquiesce in requests for deferrals,
citing instances in which petitioners have requested postponements of
final determinations as an accommodation to the Department.
After considering the comments, we have left Sec. 351.213(c)
unchanged, except for (1) minor revisions to paragraph (c)(1)(ii) aimed
at improving the clarity of that provision; and (2) an addition to
paragraph (c)(3) that extends the deadline in Sec. 351.301(b)(2) for
submitting factual information. As stated by the commenter supporting
the change, we believe that the deferral process will save ``time and
money, for both the Department and the parties.'' In addition, we do
not think that it is inconsistent with the statute or legislative
intent to defer a review for one year where all parties consent. As for
the claim that the ``no objection'' requirement is an inadequate
safeguard, while it is true that the Department, at times, may take the
initiative in suggesting that parties request postponements or
extensions, the Department does not ``pressure'' parties into
submitting such requests. In the case of a request for a deferral, if a
deferral is not in the interests of a particular party, that party will
be free to object without risk of any adverse consequences.
Rescissions of administrative reviews: Commenting on proposed
Sec. 351.213(d)(1) and its 90-day limit on withdrawals of a request for
a review, one commenter suggested that the provision be modified so as
to allow the Department to rescind an administrative review after the
90-day period has expired if (1) the party that initially requested the
review withdraws its request, and (2) no other party objects to the
rescission within a reasonable period of time. According to the
commenter, such a rule would avoid the burden and expense of completing
reviews that none of the parties want.
We agree that the 90-day limitation may be too rigid. However, we
believe that the Department must have the final say concerning
rescissions of reviews requested after 90 days in order to prevent
abuse of the procedures for requesting and withdrawing a review. For
example, we are concerned with the situation in which a party requests
a review, the Department devotes considerable time and resources to the
review, and then the party withdraws its requests once it ascertains
that the results of the review are not likely to be in its favor. To
discourage this behavior, the Department must have the ability to deny
withdrawals of requests for review, even in situations where no party
objects.
Therefore, in Sec. 351.213(d)(1), we have retained the 90-day
requirement. In addition we have added a new sentence, taken from 19
CFR Secs. 353.22(a)(5) and 355.22(a)(3), that essentially provides that
if a request for rescission is made after the expiration of the 90-day
deadline, the decision to rescind a review will be at the Secretary's
discretion.
Extension of review period: One commenter suggested that if the
Department has the authority to defer the initiation of an
administrative review, it follows that it has the authority to begin an
administrative review early, or to extend the period of a particular
review beyond one year. This commenter stated that in certain
industries where prices change rapidly, it is important to have duty
deposit rates that are as current as possible. The commenter suggested
a revision to proposed Sec. 351.213(e)(1) that would permit the
Secretary to extend the period of an administrative review, for good
cause shown, up to the date on which questionnaire responses are due.
We believe that the regulation, as drafted, is sufficiently
flexible to address these concerns in extraordinary circumstances.
Section 351.213(e)(1)(i) states that the period of review ``normally''
will be linked to the anniversary month of the order. The use of
``normally'' indicates that the Secretary has the discretion to use
some other period in appropriate circumstances, but the Department will
exercise this discretion only in very unusual circumstances.
Duty absorption: Proposed paragraph (j) established administrative
review procedures for analyzing antidumping duty absorption. We have
made several changes to paragraph (j) in response to the comments
received.
Timing of the absorption inquiry: Three commenters argued that
proposed paragraph (j)(1) was unlawful to the extent that it allowed
for absorption inquiries during reviews other than those occurring in
the second and fourth years following the publication of an AD order.
In response, two other commenters argued that section 751(a)(4) of the
Act does not preclude parties from requesting, or the Department from
conducting, a duty absorption inquiry during administrative reviews
other than the second and fourth. One of these two commenters further
argued that the retention of the authority to conduct absorption
inquiries in any review would prevent automatic filings of requests by
petitioners in the second and fourth reviews.
A sixth commenter asserted that for orders entered in 1993, section
751(a)(4) provides for duty absorption determinations in reviews
commenced in 1995 and 1997. Therefore, in the view of this commenter,
proposed paragraph (j)(1) is inconsistent with the statute to the
extent that it provides for absorption inquiries in reviews commencing
in 1996 and 1998.
We have not revised paragraph (j)(1) in light of these comments.
Paragraph (j)(1), in accordance with section 751(a)(4), provides for
the conduct, upon request, of absorption inquiries in reviews initiated
two and four years after the publication of an AD order. As noted by
the commenters, paragraph (j)(1) also provides for such inquiries in
[[Page 27318]]
reviews initiated in the second and fourth years following the
continuation of an AD order as the result of a sunset review under
section 751(c) of the Act. The reason for this schedule is that (1)
duty absorption findings are intended for use in the five-year sunset
reviews conducted by the Department and the Commission (see SAA at
885), and (2) there will be subsequent sunset reviews of AD orders that
remain in place following the completion of an initial sunset review
(see section 751(a)(c)(1)(C) of the Act). Moreover, section 751(a)(4)
does not preclude the Department from conducting absorption inquiries
in reviews initiated in the second and fourth years after continuation.
With respect to the comment concerning AD orders published in 1993,
under section 751(c)(6)(C) of the Act, these orders constitute
``transition orders'' because they were in effect on January 1, 1995,
the date on which the WTO Agreement became effective with respect to
the United States. Under section 751(c)(6)(D) of the Act, the
Department is to treat transition orders, such as the 1993 orders in
question, as being issued on January 1, 1995. Therefore, paragraph
(j)(2) properly permits absorption inquiries for transition orders to
be requested in any administrative review initiated in 1996 or 1998,
because these are the second and fourth years after the date on which
transition orders are deemed to be issued.
Who can request an absorption inquiry: We have modified paragraph
(j)(1) to clarify that only domestic interested parties may request a
duty absorption inquiry. This is consistent with the Department's view
that one exporter or producer may not request an administrative review
of another exporter or producer.
Deadline and content of request: Two commenters supported as
reasonable the Department's proposal to impose a deadline of 30 days
after initiation on requests for absorption inquiries. One of these
commenters also suggested that the Department require requests for
absorption inquiries to be made on a respondent-specific basis.
Two other commenters argued that the Department should eliminate
the 30-day deadline. One of these two commenters argued that the 30-day
requirement was not reasonable in cases in which the necessary evidence
of absorption is already before the Department. The other commenter
stated that, because a respondent's questionnaire response would not be
available to a domestic interested party within the first 30 days of an
administrative review, the Department should extend the request period
until after the date on which questionnaire responses are filed.
A fifth commenter suggested that requests for duty absorption
inquiries should contain legitimate and substantial evidence of duty
absorption. In response, two other commenters argued that the
Department should not impose any special burden on a party requesting
an absorption inquiry, and that any such burden would be contrary to
section 751(a)(4).
With respect to these comments, we agree with the commenters who
stated that the 30-day deadline is reasonable. No change in the
deadline is necessary, because any domestic interested party requesting
an absorption inquiry will not have to supply any information to the
Department other than the name(s) of the respondent(s) to be examined
for duty absorption.
We also agree with the suggestion that absorption inquiry requests
be respondent-specific, and we have made appropriate revisions to
paragraph (j)(1). In the Department's view, a requirement that the
request identify the respondents to be examined is not unreasonable,
and such a requirement will spare the Department the burden of
conducting an absorption inquiry of respondents in which the domestic
industry is not interested.
Finally, we have not adopted the suggestion that requests for duty
absorption inquiries must be accompanied by evidence of duty
absorption. In our view, any such requirement would be contrary to
section 751(a)(4).
Substantive criteria: One commenter argued that the Department
should set forth in the regulations substantive criteria regarding duty
absorption. This commenter further proposed that as part of these
criteria, the Department should give an exporter or producer credit for
negative dumping margins.
A second commenter agreed with the need for substantive criteria,
and argued that the Department should find duty absorption whenever an
affiliated entity pays either estimated or final antidumping duties.
This commenter also asserted that the regulations should state
expressly that a finding of absorption does not result in the treatment
of the absorbed duties as a cost in the Department's calculations of
dumping margins.
A third commenter, also supporting the promulgation of substantive
criteria, suggested that the Department must develop a ``bright-line''
test to review and examine intracompany transfers of capital. This
commenter also asserted that the Department should make clear that the
duty absorption provision applies only to final, assessed antidumping
duties, not to estimated antidumping duty deposits.
We have not adopted the suggestions that we promulgate substantive
duty absorption criteria. The Department will need experience with
absorption inquiries before it is able to promulgate such criteria.
However, we have added a new paragraph (j)(3) that clarifies that the
Department will limit the absorption inquiry to information pertaining
to antidumping duties determined in the administrative review in which
the absorption inquiry is requested. In our view, this limitation flows
directly from the objective of section 751(a)(4), which is to identify
producers or exporters that have affiliated importers and that continue
to dump while the affiliated importer pays the antidumping duties. See,
S. Rep. No. 412, 103d Cong., 2d Sess. 44 (1994). Limiting the inquiry
in this manner precludes any approach to duty absorption that attempts
to measure the degree to which the duties determined in a prior review
period were passed on to unaffiliated purchasers, and precludes basing
absorption on estimated antidumping duty deposits.
Exception from assessment of duties in regional industry cases: In
light of the revised procedure for obtaining an exception from the
assessment of duties in regional industry cases, discussed above in
connection with Sec. 351.212, we have added a new paragraph (l) that
cross-references Sec. 351.212(f).
Administrative reviews of CVD orders conducted on an aggregate
basis: With respect to requests for zero rates in administrative review
of CVD orders that are conducted on an aggregate basis, we revised
paragraph (k)(1)(iv) to clarify that in the case of a non-producing
exporter, the foreign government must certify that neither the exporter
nor the exporter's supplier received more than de minimis subsidies
during the review period.
Section 351.214
Proposed Sec. 351.214 established procedures for conducting new
shipper reviews, a new type of review provided for in section
751(a)(2)(B) of the Act. We received several comments concerning new
shipper reviews, some of which related to Sec. 351.214 and some of
which related to other sections. For ease of discussion, we will
address here those comments concerning other sections.
Initiation of a new shipper review: Three commenters suggested that
the regulations clarify that the Department may initiate a new shipper
review based
[[Page 27319]]
on an irrevocable offer for sale. They argue that if an irrevocable
offer is considered sufficient for purposes of initiating an
investigation, it should be considered sufficient for purposes of
initiating a new shipper review. In addition, they argued that the
statute does not preclude this approach, and they cited to one instance
in which the Department allegedly initiated a new shipper review based
on an irrevocable offer. Another commenter, however, argued in response
that the statute precludes the initiation of a new shipper review in
the absence of a sale or entry during the relevant review period,
although the commenter did not cite the particular provision of the
statute containing this preclusion. Yet another commenter suggested
that the Department clarify that a person can request a new shipper
review as long as there is a bona fide sale of subject merchandise to
the United States, even if that merchandise has not yet been shipped to
or entered the United States.
We agree that the Department should clarify the basis on which an
exporter or producer may request a new shipper review. Therefore, in
paragraph (b), we have added a new paragraph (b)(1) and have renumbered
the remainder of paragraph (b) accordingly. Under paragraph (b)(1), an
exporter or producer may request a new shipper review if it has
exported subject merchandise to the United States or if it has sold
subject merchandise for export to the United States. Thus, an exporter
or producer may request a new shipper review prior to the entry of
subject merchandise.
We have not adopted the suggestion that an irrevocable offer for
sale would suffice for purposes of initiating a new shipper review.
First, as discussed above in connection with Sec. 351.102(b) and the
definition of ``likely sale,'' we have deleted the irrevocable offer
standard from the regulations. More generally, however, we do not
believe it appropriate to base a new shipper review on anything short
of a sale. The initiation of new shipper reviews and the issuance of
questionnaires requires an expenditure of administrative resources by
the Department that is not inconsiderable when cumulated across all AD/
CVD proceedings. In our view, the Department should not expend these
resources unless there is a reasonable likelihood that there ultimately
will be a transaction for the Department to review; namely, as
discussed below, an entry and sale to an unaffiliated purchaser. In the
case of an offer, because the offer may or may not result in a sale, we
do not believe that there is a sufficient likelihood of an eventual
entry and sale to warrant the expenditure of resources on the
initiation of a new shipper review.
The same commenter requested that the regulations clarify that one
shipment or sale is sufficient for a new shipper to be entitled to a
review, assuming that the other requirements of Sec. 351.214(b) are
satisfied. While we do not disagree with the proposition that a new
shipper review may be initiated based on a single transaction, we
believe that the regulation, as proposed, makes this clear. As
discussed below, we have revised Sec. 351.214(f)(2) to provide that the
Secretary may rescind a new shipper review if there ``has not been an
entry and sale.'' In our view, the use of the singular indicates that a
single transaction is sufficient for purposes of initiating and
completing a new shipper review.
Citing the possibility of meritless claims for new shipper reviews,
one commenter, referring to proposed paragraph (b) (now paragraph
(b)(2)), suggested that the Department require additional documentation
from an exporter claiming to be a new shipper. Specifically, this
commenter stated that the Department should require: (1) Documentation
concerning the exporter's offers to sell merchandise in the United
States; (2) documentation identifying the exporter's sales activities
in the United States; (3) an identification of the complete
circumstances surrounding the exporter's sales to the United States, as
well as any home market or third country sales; (4) in the case of a
non-producing exporter, an explanation of the exporter's relationship
with its producer/supplier; (5) an identification of the exporter's
relationship to the first unrelated U.S. purchaser; and (6) a
certification from the purchaser that it did not purchase the subject
merchandise from the exporter during the POI of the original
investigation. Another commenter opposed this suggestion.
While the Department has no interest in dealing with meritless
claims for new shipper reviews, by the same token, we do not want to
discourage meritorious claims. The information requirements that this
commenter would impose might discourage legitimate new shippers from
requesting new shipper reviews. Moreover, some of the information
sought (e.g., the complete circumstances surrounding an exporter's home
market or third country sales) appears to be of little relevance in
determining whether an exporter is a new shipper to the United States.
Therefore, we have not adopted this suggestion.
Another commenter questioned the implication, in the case of a CVD
proceeding, that the foreign government will be required to provide a
full response to a Department questionnaire. Presumably, the commenter
was referring to proposed Sec. 351.214(b)(5) and the requirement that a
person requesting a new shipper review certify that it ``has informed
the government of the exporting country that the government will be
required to provide a full response to the Department's
questionnaire.'' According to the commenter, if the foreign government
cooperated during the original CVD investigation and provided a full
response to the Department's questionnaire, another questionnaire
response would not be necessary.
We have not revised Sec. 351.214(b)(5) in light of this comment,
because it overlooks the fact that the period of review in a new
shipper review will be different from the POI of the original CVD
investigation. Therefore, just as in the case of an administrative
review, the Department will require information from the foreign
government concerning any countervailable subsidies conferred during
the period of review. In addition, as stated in the AD Proposed
Regulations, the purpose of this particular certification requirement
is ``to minimize situations in which [the Department] will be forced to
rely upon the facts available.'' 61 FR at 7318.
Completion of a new shipper review: One commenter suggested that
the Department clarify that a sale to an unaffiliated person along with
an entry during the review period should be a prerequisite for
completing a new shipper review. This commenter interpreted the
references in proposed Sec. 351.214(f)(2) to ``entries, exports, or
sales'' as indicating that the Department might complete a new shipper
review even in the absence of an entry and sale to an unaffiliated
person during the review period.
In drafting proposed Sec. 351.214, our intent was that the
Department would complete a new shipper review only if there were an
entry during the review period and a sale to an unaffiliated person.
However, we appreciate that proposed Sec. 351.214(f)(2), as drafted,
does not accurately reflect this intent. Therefore, we have revised
Sec. 351.214(f)(2) to clarify this particular point.
Another commenter suggested that the Department modify proposed
Sec. 351.214(f)(2) to allow a review to continue if there were no
entries during the review period but an entry occurred within 30 days
after initiation. We have not adopted this suggestion. The
[[Page 27320]]
Department does not disagree with the notion that the Secretary should
have the discretion to expand the review period in appropriate cases.
However, given our lack of experience with this new procedure, we are
reluctant to select 30 days as the relevant cut-off point for all
cases. There may be cases in which the cut-off point should be greater
or lesser than 30 days. In our view, Sec. 351.214(f)(2)(ii)
appropriately provides the Department with a more flexible approach for
dealing with the types of problems envisioned by the commenter.
Conduct of new shipper reviews: One commenter also suggested that
the regulations should provide that, in each new shipper review, the
Department will send a questionnaire to the U.S. customer seeking
information concerning the bona fide nature of the new shipper
transaction. According to the commenter, such an approach would
safeguard against new shippers conspiring with an unaffiliated U.S.
customer to engage in a single transaction at a high price that would
generate a dumping margin and deposit and assessment rates of zero.
Again, another commenter opposed this suggestion.
We have not adopted this suggestion, because we believe that the
statutory and regulatory schemes provide adequate safeguards against
such manipulation, should it actually occur. It bears emphasis that in
the scenario described by the commenter, a new shipper obtaining a
dumping margin of zero would not be excluded from the order. Instead,
its merchandise would remain subject to the AD order, and if the new
shipper later began to sell at dumped prices, antidumping duties could
be assessed with interest for any underpayment of estimated duties.
The same commenter made a suggestion regarding proposed
Secs. 351.221(b)(3) and 351.307(b)(iv), which together provide that the
Department will conduct a verification in a new shipper review if the
Secretary determines that good cause for verification exists. The
commenter suggested that the regulations clarify that it will be the
Department's normal practice to conduction a verification in a new
shipper review.
We have not adopted this suggestion. While new shipper reviews
constitute a new procedure, new shippers themselves are not a new
phenomenon. Under the former statutory and regulatory scheme, the
Department reviewed new shippers and assigned them their own rates in
the context of reviews under section 751(a)(1) of the Act (now defined
in Sec. 351.102(b) as ``administrative reviews''). Under this scheme,
the Department would not automatically conduct a verification in any
review that involved a new shipper. We do not believe that the creation
of a separate review mechanism for new shippers, in and of itself,
warrants a departure from this practice. In addition, making
verification the norm in all new shipper reviews would impose a
considerable administrative burden on the Department. For these
reasons, therefore, we have not adopted the suggestion.
A different commenter suggested that the regulations provide that
the new shipper review period always will encompass all shipments of
the subject merchandise made by the new shipper during the period
preceding initiation of the review. This commenter cited the situation
in which, in an AD proceeding, a new shipper waits until the end of the
year following its first shipment to request a review. Because,
according to the commenter, the period of review in an AD new shipper
review may be the six-month period immediately preceding the
anniversary or semiannual anniversary month, the review would not
capture shipments, including the first shipment, made in the first six
months. In addition, the commenter argued that in a CVD proceeding,
because, under proposed Sec. 351.214(g)(2), the normal new shipper
review period would be the most recently completed calendar year, a
shipment made before initiation but outside the calendar year would not
be captured in the review period.
We have not adopted this suggestion, because we do not believe it
is necessary. In the case of AD proceedings, while Sec. 351.214(c)
permits a new shipper to wait one year before requesting a review, it
does not require a new shipper to do so. A new shipper can ensure that
its first shipment is covered by submitting a request for a review at
the earliest possible date. Moreover, in the case of new shipper
reviews initiated after the anniversary month of an order, the period
of review normally will be twelve, not six, months.
In the case of CVD proceedings, while it is possible that a review
period based on the most recently completed calendar year may not
capture a new shipper's first shipment because that shipment occurs
after the calendar year in question, we believe that
Sec. 351.213(e)(2), which is cross-referenced in Sec. 351.214(g)(2),
and Sec. 351.214(f)(2)(ii) provide the Department with sufficient
flexibility to resolve any problems that may arise by modifying the
standard review period.
This commenter also claimed that proposed paragraph (g) creates an
anomaly by providing for different review periods for AD and CVD
proceedings. The commenter suggested that the Department revise
paragraph (g) so that the review periods for both AD and CVD new
shipper reviews coincide.
The Department does not see any ``anomaly,'' because the POI and
POR for AD and CVD investigations and reviews normally are different.
See Secs. 351.204(b) and 351.213(e). Moreover, the commenter did not
offer any explanation as to why they should be identical. Therefore, we
have not adopted this suggestion.
Deadlines for completing new shipper reviews: Another commenter,
apparently referring to proposed Sec. 351.214(d), contended that the
timing of initiation of new shipper reviews was not consistent with the
intent that new shippers be accorded expedited reviews. This commenter
urged the Department to treat new shipper reviews more expeditiously,
and alleged that the AD Agreement provides for such reviews at any time
after an order is issued.
We have not adopted this suggestion, because, in our view,
Sec. 351.214(d) is consistent with section 751(a)(2)(B)(ii) of the Act,
which, in turn, is consistent with Article 9.5 of the AD Agreement.
Article 9.5 does not prescribe exactly when an authority must commence
a new shipper review, but simply requires that such a review be
``initiated * * * on an accelerated basis, compared to normal duty
assessment and review proceedings in the importing Member.'' This is
precisely what section 751(a)(2)(B)(ii) and Sec. 351.214(d) accomplish,
because they provide for initiation on an accelerated basis as compared
to an administrative review.
A different commenter suggested that to ensure that the Department
completes new shipper reviews within the statutory deadlines, the
regulations should provide that a new shipper would no longer have to
post a bond or make a cash deposit for subject merchandise if a new
shipper review extends beyond 270 days. According to the commenter,
such a provision is necessary because a new shipper allegedly has no
effective judicial remedy if a review extends beyond the 270-day
period. We have not adopted this suggestion, because we do not believe
that the Department has the authority (and the commenter does not cite
to any authority) to do what the commenter suggests.
Bonding requirements: One commenter, presumably referring to
proposed Sec. 351.214(e), suggested that instead of permitting the
posting of
[[Page 27321]]
bonds (in lieu of cash deposits) only when the Secretary initiates a
new shipper review, the Department should permit the posting of bonds
to be suspended immediately upon acceptance of a request for a new
shipper review. We have not adopted this suggestion, because section
751(a)(2)(B)(iii) of the Act provides that the Secretary may direct the
Customs Service to allow the posting of a bond ``at the time a review *
* * is initiated. * * *''
Another commenter suggested that upon the initiation of a new
shipper review, the new shipper should have the option of replacing its
estimated duty deposits with a bond or other security. Specifically,
this commenter suggested that in the case of merchandise entered prior
to the initiation of the new shipper review, the Department should
direct the Customs Service to refund all estimated duty deposits with
interest, provided that the new shipper replaces those deposits with a
bond or other security. We have not adopted this suggestion, because it
is required by neither the statute nor the AD Agreement, and its
implementation would result in a considerable administrative burden for
the Department and the Customs Service.
Citing to proposed Sec. 351.214(e) and the importer's option to
post a bond in lieu of a cash deposit, one commenter suggested that the
regulations provide for the payment of interest on liquidation, even
where the importer has opted to post bond in lieu of cash deposits. We
have not adopted this suggestion, because it would be inconsistent with
the Department's general approach that interest may not be imposed
where an importer has posted a bond or other security in lieu of a cash
deposit. The Federal Circuit sustained this approach in The Timken Co.
v. United States, 37 F.3d 1470 (1994), and the commenter did not offer
any justification for applying a different approach in the context of
new shipper reviews.
Duty assessments: One commenter suggested that the Department
revise Sec. 351.214 so as to ensure that the rate determined in a new
shipper review will apply to any entries that occurred before the new
shipper review period. The commenter proposed changes to paragraphs (b)
and (g).
We have not adopted this suggestion, because we do not believe that
it is necessary. Although Sec. 351.214 gives a new shipper the option
of waiting for up to one year before requesting a new shipper review,
it does not require a new shipper to do so. A new shipper can ensure
that its initial shipments are covered by the rates determined in a new
shipper review by promptly requesting a new shipper review at a
sufficiently early date.
Multiple reviews: One commenter objected to proposed
Sec. 351.214(j), which deals with situations where there are multiple
reviews (or requests for review) of merchandise from a particular
exporter or producer. According to the commenter, a new shipper should
be guaranteed a new shipper review when multiple reviews covering the
same merchandise are requested. The commenter cited Article 9.5 of the
AD Agreement and the requirement that new shippers must have an
opportunity for a review ``on an accelerated basis, compared to normal
duty assessment and review proceedings in the importing Member.'' The
commenter argued that the objective of Article 9.5 would be thwarted if
the Department chose to terminate or not initiate a new shipper review
in favor of a more protracted administrative review. The commenter
proposed revised language that would have guaranteed a new shipper
review if the request for review was made within six months of the
first shipment. If the request was made later than six months and the
merchandise already was the subject of a different type of review, the
Secretary could decline to initiate a new shipper review.
With respect to this suggestion, we are mindful of the requirements
of Article 9.5. In drafting a solution to the problem of multiple
reviews, our intent was to provide the Secretary with sufficient
flexibility so that the Secretary could opt to use the review mechanism
that, in light of the facts, would be most likely to provide a new
shipper with its own rate at the earliest possible date. Therefore, we
believe that our objective was not inconsistent with that of the
commenter.
On the other hand, as noted previously, new shipper reviews are a
new procedure with which we have little experience. In our view, the
proposal suggested by the commenter may be too rigid to accommodate all
of the possible permutations that may arise in actual cases. Therefore,
we have not adopted the suggestion, and have left Sec. 351.214(j)
somewhat open-ended in terms of the Secretary's discretion. We should
emphasize again, however, that our intent is that the Secretary will
exercise this discretion in a manner that provides a new shipper with
its own individual rate at the earliest possible date.
Expedited reviews in CVD proceedings for noninvestigated exporters:
In proposed paragraph (k), the Department established procedures for
expedited reviews in CVD proceedings of exporters that the Department
did not individually examine in the original CVD investigation. Upon
further review, we have made several revisions to paragraph (k).
First, we have consolidated proposed paragraphs (k)(1) and (k)(2)
into a single paragraph (k)(1). Paragraph (k)(1) continues to require
that a request for review be submitted within 30 days of the date of
publication in the Federal Register of the countervailing duty order.
In addition, instead of providing for the initiation of paragraph (k)
reviews in the semi-annual anniversary month or the anniversary month,
in a revised paragraph (k)(2) we have provided that the Secretary will
initiate a review in the month following the month in which a request
for review is due.
Second, we have made certain changes to paragraph (k)(3) to better
reflect the distinctions between a paragraph (k) review and a new
shipper review. Under paragraph (k)(3)(i), the period of review will be
the period of investigation used by the Secretary in the investigation
that gave rise to the CVD order. This change will enable the Department
to use government data from the original investigation, thereby
enabling the Department to truly expedite the review. The objective is
to provide a noninvestigated exporter with its own cash deposit rate
prior to the arrival of the first anniversary month of the order, at
which point the exporter may request an administrative review. In this
regard, in paragraph (k)(3)(iii) we have clarified that the final
results of a paragraph (k) review will not be the basis for the
assessment of countervailing duties, except, of course, under the
automatic assessment provisions of Sec. 351.212(c).
Finally, because the Department will be reviewing the original
period of investigation, we have provided in paragraph (k)(3)(iv) for
the exclusion from a CVD order of a firm for which the Secretary
determines an individual countervailable subsidy rate of zero or de
minimis. However, the Secretary will not exclude an exporter unless the
information on which the exclusion is based has been verified.
One commenter made two comments concerning proposed
Sec. 351.214(k). First, the commenter questioned the basis for not
extending the opportunity to post bonds to reviews conducted under
Sec. 351.214(k). Second, the commenter questioned the implication that
the foreign government will be required to provide a full response to
the Department's questionnaire.
[[Page 27322]]
With respect to the first comment, we have not extended the
opportunity to post a bond to these types of reviews because this
option is not required by either the statute or the SCM Agreement. With
respect to the second comment, for the reasons discussed in the
preceding paragraph, we do not agree with the comment. However, the
comment has identified a lack of precision in proposed (k)(1) regarding
the information to be provided by an exporter requesting a review of
this type. Therefore, we have added a new paragraph (k)(1)(iii) to
clarify that an exporter must certify that it has informed the
government of the exporting country that it will be required to provide
a full questionnaire response.
One commenter argued that paragraph (k) should be extended to
permit expedited reviews of exporters that were not investigated in an
antidumping investigation. With respect to this comment, as stated in
the AD Proposed Regulations, paragraph (k) implements Article 19.3 of
the SCM Agreement. 61 FR at 7318. Article 19.3 requires expedited
reviews for exporters that were not ``actually investigated'' in a CVD
investigation. Because the AD Agreement does not contain a similar
requirement, we have continued to limit paragraph (k) to CVD
proceedings.
Exception from assessment of duties in regional industry cases: In
light of the revised procedure for obtaining an exception from the
assessment of duties in regional industry cases, discussed above in
connection with Sec. 351.212, we have added a new paragraph (l) that
cross-references Sec. 351.212(f).
Section 351.216
Section 351.216 deals with changed circumstances reviews under
section 751(b) of the Act. In connection with Sec. 351.216, one
commenter suggested that the Department should adopt objective criteria
for determining changed circumstances that would take into account the
best interests of the current American industry rather than merely the
interests of the petitioner. The commenter then described a series of
scenarios for which, the commenter claimed, the regulations do not
provide express answers. The commenter appeared to be focusing on so-
called ``no-interest revocations.'' According to the commenter, the
regulations, as drafted, provide a petitioner with a veto.
We have not revised the regulations in light of this comment,
because we believe that the proposed regulations adequately take into
account the interests of domestic producers other than the petitioner.
First, Sec. 351.216(b) provides that any interested party may request a
changed circumstances review. Therefore, U.S. producers other than the
petitioner may request such a review. Second, insofar as no-interest
revocations are concerned, Sec. 351.222(g)(1)(i) states that the lack
of interest must be expressed by ``[p]roducers accounting for
substantially all of the production of the domestic like product to
which the order (or the part of the order to be revoked) or suspended
investigation pertains.* * *'' Thus, a petitioner does not acquire a
``veto'' due to its status as petitioner.
Another commenter suggested that Sec. 351.216 be revised so as to
provide for a determination as to whether the domestic industry
supports the continuation of an order. We have not adopted this
suggestion, because it is inconsistent with legislative intent to
preclude reconsideration of support for a petition after the initiation
of an investigation. See sections 702(c)(4)(E) and 732(c)(4)(E) of the
Act; SAA at 863.
Several commenters argued that the Department's existing regulatory
procedures inadequately deal with situations of short supply. These
commenters proposed a number of substantive and procedural changes in
the areas of revocation, changed circumstances reviews, and temporary
relief. Other commenters opposed the creation of a regulatory short
supply provision. The commenters expressed concern that such a
provision would undermine the AD/CVD law by creating a huge loophole,
raising the cost of AD/CVD procedures, and interfering with the
economic impact of an order. These commenters argued that a short
supply provision would allow unfair low prices to continue and thereby
thwart U.S. companies from renewing production in those products. The
commenters also argued that no statutory authority exists in U.S. law
to create a short supply provision.
With respect to revocation, several commenters suggested that the
Department codify in the regulations its authority to revoke an order
(or terminate a suspended investigation) in part with respect to
particular products included within the scope of an order or suspended
investigation. Another commenter proposed that demonstration of a lack
of domestic availability would create a rebuttable presumption that the
continued inclusion of the product within an order does not serve the
purpose for which AD/CVD relief is granted, and, unless the petitioning
industry rebutted the presumption, the Department would revoke the
order with respect to the particular product. The commenter proposed
also that the regulations set forth specific standards and procedures
that would allow parties to demonstrate that a product covered by an
order is not available domestically.
With respect to changed circumstances reviews, several commenters
proposed that the regulations be amended to provide that lack of
domestic availability of a product constitutes a ``changed
circumstance'' sufficient to warrant a changed circumstance review.
Other commenters proposed that the regulations provide that the mere
allegation of lack of domestic availability is sufficient to trigger a
changed circumstances review. Commenters also proposed that lack of
domestic availability or, alternatively, an allegation of lack of
domestic availability, should constitute ``good cause'' under section
751(b)(4) of the Act to initiate a changed circumstances review less
than two years after the issuance of an order or the suspension of an
investigation.
Several commenters specifically objected to the proposal that lack
of domestic availability alone would trigger the initiation of a
changed circumstances review. These commenters argued that a lack of
interest or consent by the petitioning industry should be the only
factor relevant to the decision to initiate a changed circumstances
review of products alleged to be unavailable domestically. Other
commenters argued that an express lack of interest in continuing the
order is required to show ``good cause.'' They argued that, especially
in the first two years after issuance of an order, industries that had
been injured by dumped imports would be unable to begin or renew
production if they continued to confront dumped goods.
Additionally, with respect to changed circumstances reviews,
several commenters proposed specific regulatory deadlines governing the
initiation and completion of changed circumstances reviews in cases
based on lack of domestic availability. Another commenter also
suggested that the Department adopt internal deadlines now and consider
regulatory deadlines at a later date. Certain commenters also suggested
that the Department revise its regulations to allow industrial users or
consumers to file requests for changed circumstances reviews with
respect to particular products covered by an order or suspended
investigation.
With respect to temporary relief, several commenters proposed that
the Department establish procedures that
[[Page 27323]]
provide for temporary relief in appropriate cases. In a similar vein,
one commenter suggested that in the case of a suspension agreement
based on quantitative restraints, the regulations should require the
inclusion of a provision in the agreement that would permit the
Department to suspend temporarily quantitative restrictions on the
import of particular products that are not available domestically.
As is clear from these comments, the issues raised under the rubric
of ``domestic availability'' represent the positions of parties with
conflicting interests. The Department believes, however, that it is
possible to provide relief to industries from unfair trade practices
while also ensuring that products in which the affected industry has no
interest are properly removed from, or not included in the scope of an
order. As discussed in more detail below, through administrative
practice, the Department has developed procedures that, in our view,
adequately address the interests of both domestic producers and
domestic users. In these regulations, we have modified some of these
procedures in light of the comments received. In addition, we have
created two new procedures specifically to address parties' concerns.
Both the new and modified procedures are designed to ensure that
products in which the affected industry has no interest are removed
from, or not included in the scope of an order, without undermining the
Department's ability to effectively enforce the AD/CVD law.
Two important new procedures we will implement are intended to
avoid, in the first instance, situations where products in which the
domestic industry has no interest are included in the scope of an
order. These new procedures will, at the outset of a proceeding, focus
on the proposed scope of an investigation. The Department believes that
early attention to product coverage issues will alleviate the need to
revisit these issues in the future.
First, we will include in our checklist of items raised to
petitioners during pre-filing consultations, whether the proposed scope
of a proceeding is an accurate reflection of the product for which the
domestic industry is seeking relief. The Department's experience, in
some cases, has been that proposed product coverage may be
unintentionally over inclusive. This situation typically arises in
cases where the proposed scope of an investigation is worded broadly or
covers numerous HTS classification subheadings including subject and
nonsubject merchandise. Raising these types of coverage issues during
the pre-filing consultation period will give petitioners the
opportunity to focus the scope on those products causing injury to the
domestic industry. The resulting refined scope will contain a more
accurate reflection of intended product coverage. In addition, the
Department believes that beginning an investigation with more carefully
defined scope language and tariff classifications will reduce the need
to address product coverage issues later during the course of the
proceeding.
Even after reconsideration of product coverage based on pre-filing
consultations, petitioners may not be aware that the scope is over
inclusive until U.S. purchasers have an opportunity to review the scope
language and tariff classifications. As a result, as a second new
procedure, we also will set aside a specific period early in an
investigation for issues regarding product coverage to be raised. This
new specific comment period will provide parties with ample opportunity
to address product coverage issues. Petitioners will then have the
opportunity to reconsider product coverage and the Department can amend
the scope of the investigation if warranted. Given the timing of any
amendments, the ITC may be able to take the refined scope into account
in defining the domestic like product for injury purposes. In addition,
early amendment will partially alleviate the reporting burden on
respondents and avoid suspension of liquidation and posting of bonds or
cash deposits on products of no interest to petitioners.
No regulations are needed to implement these two new procedures. We
believe that affirmatively addressing product coverage, both pre-filing
and early in an investigation, is the single most effective means to
address the parties' concerns. This approach results in less ambiguity
over coverage and avoids problems inherent in later clarifications and
modifications to an order. In addition, resolution of product coverage
issues early in a proceeding reduces costs for all parties by
diminishing the necessity for later changed circumstances reviews or
scope inquiries.
With respect to revocation, we believe that, as a matter of
administrative practice, the Department's authority to issue such
partial revocations or terminations already is well-established. For
example, in New Steel Rail, Except Light Rail, from Canada, 61 FR 11607
(March 21, 1996), the Department issued a partial revocation with
respect to certain 100 lb. rail. Similarly, in Certain Cut-to-Length
Carbon Steel Plate from Canada, 61 FR 7471 (Feb. 28, 1996), the
Department issued a partial revocation with respect to certain cobalt
60-free steel. To make clear the Department's commitment to the use of
this established authority, we have codified this practice in section
351.222 (g). The Department, however, has not adopted the commenters'
suggestions with respect to temporary relief because we believe that
prompt and permanent revocation (or termination), where warranted by
the facts, has been an adequate mechanism and is one which provides
greater predictability for all parties. We will continue to consider
the efficacy of our approach as this issue arises in individual cases.
We have not adopted the proposal that demonstration of lack of
domestic availability creates a rebuttable presumption that, unless
rebutted by the petitioning industry, would lead to automatic
revocation of the order with respect to a particular product. Shifting
the burden of proof would constitute a dramatic change from the
Department's current practice.
We also have not adopted the proposal that lack of domestic
availability, or an allegation thereof, constitutes a ``changed
circumstance'' sufficient to warrant a changed circumstances review.
Nor have we adopted the proposal that lack of, or the alleged lack of
domestic availability automatically constitutes ``good cause'' to
initiate an expedited changed circumstances review. The Department has
an established practice of partially revoking an order after a changed
circumstances review in certain situations where an interested party
has alleged that a product should not be subject to an order and the
petitioner or the domestic industry expresses a lack of interest in
continuing the order with respect to the particular product.
Furthermore, the Department has, in appropriate circumstances,
initiated a changed circumstances review less than two years after the
issuance of an order where the petitioners agreed there was ``good
cause'' to conduct a review with respect to a particular product. See
Flat Panel Displays from Japan, 57 FR 58791 (1992). We believe that
Department practice, therefore, can adequately meet the needs of both
the domestic industry and the domestic users of the particular product.
With respect to the suggestion that the Department adopt specific
regulatory deadlines for changed circumstances reviews in cases where
an interested party has alleged that a particular product should not be
subject to an order, we agree that a deadline for
[[Page 27324]]
initiation is appropriate, and we have revised Sec. 351.216(b) to
provide for a 45-day deadline for initiation decisions. In addition, we
recognize that the Department can complete changed circumstances
reviews more quickly in cases in which there is agreement on the
issues. Therefore, we have revised Sec. 351.216(e) to require the
Secretary, in such cases, to issue final results of review within 45
days after initiation. As revised, these regulations would permit the
Secretary to issue final results within, roughly, 90 days of the
receipt of a request for review. However, because changed circumstances
reviews, by their nature, are fact-specific and often involve unique
issues, we continue to believe that in situations where there is no
agreement on the issues, a deadline of 270 days is appropriate for the
completion of a changed circumstances review.
Finally, the Department has not adopted the suggestion that
industrial users or consumers be allowed to file requests for changed
circumstances reviews because we believe that it would conflict with
the statutory scheme contemplated by Congress. Section 751(b)(1) of the
Act refers only to requests for a changed circumstances review from an
``interested party.'' In addition, the Act and the SAA make a clear
distinction between ``interested parties'' and other participants in an
AD/CVD proceeding. On the other hand, section 751(b)(1) of the Act
permits the Department to self-initiate a changed circumstances review
when it ``receives information * * * which shows changed circumstances
sufficient to warrant a review. * * * '' Nothing in these regulations
alters the Department's authority under that provision. Despite
statements that section 751(b) of the Act puts industrial users at a
disadvantage with regard to supply concerns, the Department's
experience has been that the requirements of the section have not
prevented requests for changed circumstance reviews.
Section 351.218
Section 351.218 deals with sunset reviews under section 751(c) of
the Act. We received a few comments concerning different aspects of
Sec. 351.218.
Initiation of sunset reviews: One commenter noted that proposed
Sec. 351.218(c) fails to account for sunset reviews other than the
first sunset review. We agree that this oversight should be corrected,
and we have revised paragraph (c) accordingly. In addition, we also
have added a reference in paragraph (c) to the statutory provisions
governing the initiation of sunset reviews of transition orders.
Another commenter suggested that the Department amend paragraph (c)
to ensure that the intent of initiating a sunset review prior to the
start of the last year of an order is made clearer. We have not revised
paragraph (c) in light of this comment, because, in our view, the
regulation already is clear that the Secretary, in certain
circumstances, may issue an early initiation of a sunset review.
Sunset review procedures: One commenter argued that there should be
no routine issuance of questionnaires in sunset reviews, and noted that
the proposed regulations were ambiguous on this point. The commenter
observed that proposed Sec. 351.221(b)(2), which applies to reviews
generally, calls for the issuance of questionnaires in every case. On
the other hand, proposed Sec. 351.221(c)(5)(i), which deals with sunset
reviews in particular, provides that the notice of initiation of a
sunset review will contain a request for information described in
section 751(c)(2) of the Act. According to the commenter, these
information requests may obviate the need for the Department to issue
questionnaires.
Although we have yet to conduct an actual sunset review, we agree
with the commenter that it may not be necessary to issue questionnaires
in every sunset review. Accordingly, we have revised Sec. 351.221(c)(5)
by adding a new paragraph (iii) which permits the Secretary to refrain
from issuing the questionnaires called for by Sec. 351.221(b)(2). Of
course, the Secretary would retain the discretion to issue
questionnaires in sunset reviews in appropriate situations.
The same commenter also argued that because it is not anticipated
that parties will have to submit much additional factual information in
a sunset review, there should be no need for the Department to conduct
verifications in sunset reviews. However, the commenter noted, proposed
Sec. 351.307(b)(1)(iii) requires a verification if the Department
determines to revoke an order as the result of a sunset review. The
commenter argued that verification should occur only for good cause,
and that Sec. 351.307(b)(1)(iii) should be revised to refer only to
revocations under section 751(d)(1) of the Act, and not to revocations
under section 751(d)(2) resulting from a sunset review.
We have not adopted this suggestion, because section 782(i)(2) of
the Act provides that the Department will verify all information relied
upon in making ``a revocation under section 751(d) of the Act''
(emphasis added). Thus, section 782(i)(2) does not distinguish between
revocations under section 751(d)(1) and revocations under section
751(d)(2).
Finally, this commenter suggested that the Department amend
proposed Sec. 351.218(e)(2) to set forth specifically the time limits
for transition orders. We have not adopted this suggestion. Because the
schedule in section 751(c)(6) of the Act for conducting sunset reviews
of transition orders refers to the completion of activity by both the
Department and the Commission, we believe it more appropriate to simply
include in paragraph (e)(2) a reference to the relevant provisions of
the statute.
Substantive guidelines: Three commenters suggested that
Sec. 351.218 should include standards and guidelines for determining
the likelihood of dumping in a sunset review. (One of these commenters
actually submitted its comment in connection with Sec. 351.222(i)). One
commenter simply noted the absence of standards and guidelines.
However, the other commenter, proceeding from the premise that there is
an internationally agreed preference for the revocation of old orders,
made specific suggestions concerning the contents of standards and
guidelines. At a minimum, this commenter suggested, the regulations
should incorporate the relevant discussion from the SAA. A third
commenter essentially suggested that the regulations should put the
burden of proof on the domestic industry, and that the Department
should consider arguments from petitioners valid only if the
preponderance of the evidence supports their claim.
We have not adopted these suggestions. Due to our lack of
experience with sunset reviews, we do not believe it appropriate at
this time to elaborate in regulations on the substantive standards to
be applied in determining whether dumping would be likely to continue
or resume if an order were revoked. As for the suggestion that we
incorporate into the regulations relevant language from the SAA, as
noted previously, we generally have refrained from repeating in these
regulations the language of the statute or the SAA.
We should note, however, that we do not agree with the statement by
the one commenter that there is an internationally agreed preference
for the revocation of old orders. The commenter does not elaborate on
the precise source of this preference, and we do not find one in either
the AD Agreement or the SCM Agreement. All that these agreements
require is that
[[Page 27325]]
national authorities periodically review an order or suspended
investigations to determine whether the maintenance of the order or
suspended investigation is necessary to remedy injurious dumping or
countervailable subsidization. In addition, we find no basis in either
the statute or the agreements for placing the burden of proof on the
domestic industry.
Section 351.221
Section 351.221 deals with review procedures. In paragraph
(c)(7)(i) of this section, we moved the word ``will'' from that
paragraph to the beginning of paragraph (c)(7).
We received one comment concerning Sec. 351.221(b), in which the
commenter stated that the regulation should provide that the results of
a review include the Department's factual and legal bases for the
determination. As noted previously in connection with a related
comment, we have not included this requirement in the regulations
because it already is clearly provided for in section 777(i) of the
Act.
One commenter suggested that proposed Sec. 351.221(c)(4) should be
revised so as to provide for the issuance of preliminary results of
review in the case of Article 8 Violation and Article 4/Article 7
reviews under section 751(g) of the Act and Sec. 351.217. According to
the commenter, while the Department should conduct these special
reviews on an expedited basis, this objective can be preserved without
eliminating an ``essential step'' in the review process.
We have not adopted this suggestion. In the case of an Article 8
Violation review, the review will be premised on a WTO ruling that the
foreign government in question has violated its international
obligations concerning the notification and use of so-called ``green
light'' subsidies. In our view, in this situation, it is important to
act as quickly as possible in order to provide the relevant domestic
industry the relief to which it is entitled.
In the case of Article 4/Article 7 reviews, we also believe that
swift action is essential to ensure that the United States promptly
implements its international obligations in situations where the United
States has prevailed in a dispute under Article 4 or Article 7 of the
SCM Agreement. Moreover, we believe that Article 4/Article 7 reviews
will be sufficiently straightforward so as to obviate the need for the
issuance of preliminary results.
Section 351.222
Section 351.222 deals with the revocation of orders and the
termination of suspended investigations. We received several comments
relating to certain aspects of Sec. 351.222.
Intervening periods: In proposed Sec. 351.222 (b) and (c), the
Department retained the requirement of the former regulations that an
order or suspended investigation may be revoked or terminated based on
the absence of dumping for three consecutive years or the absence of
countervailable subsidization for three (or in some cases five)
consecutive years. However, in proposed Sec. 351.222(d), the Department
established a new procedure under which a review of an ``intervening
year'' would not be necessary if (1) the Department conducted a review
of the first and third (or fifth) years and found no dumping or
countervailable subsidization for those time periods; and (2) the
Secretary is satisfied that during the unreviewed intervening years
there were exports to the United States in commercial quantities of
subject merchandise. As the Department explained, the purpose of
paragraph (d) was to reduce the Department's workload by removing the
incentive for companies to request reviews that they otherwise might
not request.
Several commenters supported paragraph (d), while others opposed
it. All of the commenters opposing paragraph (d) argued that it would
not reduce the Department's workload, because if the first
administrative review of an order or suspended investigation resulted
in a rate of zero, the domestic industry likely would request a review
in the second period to ensure that there was no dumping or
subsidization during intervening years. In addition, one opposing
commenter argued that paragraph (d) would allow a respondent to engage
in significant dumping and still secure revocation. Another commenter
suggested that a domestic interested party might not be in a position
to know whether a particular producer is selling in commercial
quantities. Yet another commenter argued that in cases where the
Department relied on sampling and applied sample rates to non-sampled
companies, there would be no basis for assuming that the non-sampled
companies were not dumping in the beginning and ending years, or in the
intervening years.
Having considered these comments carefully, we have retained
paragraph (d). While it may be true that in many instances a domestic
industry will request a review of an intervening year to ensure that
dumping margins or countervailable subsidy rates did, in fact, remain
at zero, we believe that there also will be cases where the domestic
industry, based on its own knowledge of what is going on in the
marketplace, will refrain from requesting a review because it is
satisfied that dumping or countervailable subsidization has ceased. In
terms of the Department's workload, this constitutes an improvement
over the existing situation, in which a respondent must request a
review for each year in order to obtain a revocation or termination.
As for the argument that a respondent might engage in significant
dumping during an intervening year, one of the opponents of paragraph
(d) admits that a domestic interested party could request a review if
it believed that this was taking place. Similarly, while a domestic
interested party may not know the precise volumes sold by a particular
company, we believe, based on our experience, that domestic interested
parties generally are sufficiently aware of marketplace developments so
as to know whether a company is selling in commercial quantities.
Finally, with respect to the comment concerning sampling, any sample
used by the Department must be statistically valid. Therefore, we do
not believe that it is illogical to extrapolate the results of sampling
in the beginning and ending years to intervening years.
One commenter suggested that if paragraph (d) is retained, the
Department should revise various paragraphs in Sec. 351.222(e) so as to
require, in addition to the certifications already required, that a
request for revocation be accompanied by information concerning the
volume and value of exports of subject merchandise during the initial
period of investigation and each of the last three (or five)
consecutive years. We have not adopted this suggestion, because we do
not believe that this information needs to be provided at the same time
as the request for revocation is submitted. However, the Department
intends to request this type of information in the course of its review
of the ending year in the three-or five-year period. Such information
would be necessary to fulfill the requirement of Sec. 351.222(d)(1)
that the Secretary ``must be satisfied that, during each of the three
(or five) years, there were exports to the United States in commercial
quantities of the subject merchandise to which a revocation or
termination will apply.''
Turning to supporters of paragraph (d), one supporter suggested
certain amendments. First, the commenter suggested that the Department
eliminate the requirement of commercial shipments during intervening
years. According to the commenter, the presence of shipments during the
[[Page 27326]]
intervening years is irrelevant because the U.S. industry would not
have been the victim of dumped or subsidized imports, and the available
evidence from the first and last reviews would indicate that AD or CVD
rates were not a factor in the absence of imports and that dumping or
subsidization had ceased.
We have not adopted this suggestion, because we do not accept the
premise that the absence of shipments in the intervening years is
irrelevant. The underlying assumption behind a revocation based on the
absence of dumping or countervailable subsidization is that a
respondent, by engaging in fair trade for a specified period of time,
has demonstrated that it will not resume its unfair trade practice
following the revocation of an order. If the respondent is not selling
in commercial quantities characteristic of that company or industry for
the duration of the specified period, this assumption becomes weaker.
Moreover, we believe that it is reasonable to presume that if
subject merchandise, shipped in commercial quantities, is being dumped
or subsidized, domestic interested parties will react by requesting an
administrative review to ensure that duties are assessed and that cash
deposit rates are revised upward from zero. If domestic interested
parties do not request a review, presumably it is because they
acknowledge that the subject merchandise continues to be fairly traded.
However, neither presumption can be made when merchandise is not being
shipped in commercial quantities.
This same commenter also suggested that paragraph (d) be revised so
as to permit more than one intervening unreviewed year in an AD
proceeding or more than three unreviewed years in a CVD proceeding.
According to the commenter, there may be reasons why a respondent might
not request revocation at the earliest possible opportunity, such as
cash flow difficulties that would preclude the respondent from
incurring the expense of a review, or the respondent simply might miss
the deadline for requesting a review. The Department agrees with this
suggestion and has revised paragraphs (d)(2), (e)(1)(iii),
(e)(2)(ii)(C), and (e)(2)(iii)(C) accordingly.
Revocation based on absence of review requests: In the AD Proposed
Regulations, the Department eliminated its prior ``sunset revocation''
procedures based on the absence of requests for administrative reviews.
These procedures previously were set forth in 19 CFR Secs. 353.25(d)(4)
and 355.25(d)(4). One commenter asked that the Department reconsider
its elimination of these types of revocations.
The Department has reconsidered this matter, but continues to
believe that these types of revocations should be eliminated. The
procedures called for by Secs. 353.25(d)(4) and 355.25(d)(4) result in
a considerable administrative burden on Department staff, a burden that
is unnecessary in light of the new sunset review procedure contained in
section 751(c) of the Act and Sec. 351.218 of these regulations.
Nonproducing exporters: As in the case of exclusions, in the AD
Proposed Regulations, 61 FR at 7319, the Department requested
additional public comment on the issue of whether there should be
special revocation rules for firms, such as trading companies, that
export, but do not produce, subject merchandise. We noted that one
alternative would be to limit any revocation of a nonproducing exporter
to the subject merchandise produced by those producers that supplied
the exporter prior to revocation. The comments we received on this
issue mirrored those concerning special exclusion rules for
nonproducing exporters. For the same reasons discussed above with
respect to exclusions, the Department believes it is appropriate to
normally limit the revocation of a nonproducing exporter to that
exporter's exports of subject merchandise produced by those producers
that supplied the exporter during the years that formed the basis for
the revocation. Therefore, we have added paragraphs (b)(3) and (c)(4)
to provide that the partial revocation of an order with respect to a
nonproducing exporter will be limited to that exporter's exports of
subject merchandise produced or supplied by those companies that
supplied the exporter during the time period that formed the basis for
the revocation.
Other changes: In paragraph (g)(3)(vii), we corrected a
typographical error. Also, we revised the structure of paragraph (j) to
conform to Federal Register drafting guidelines.
Section 351.224
Section 351.224 deals with the disclosure of calculations and
procedures for the correction of ministerial errors.
Section 351.224(b) provides for automatic disclosure normally
within five days after the date of public announcement of the
preliminary or final determination or final results of review. One
commenter proposed that the regulations provide for release of
disclosure materials on the same day that the Department releases its
determination or results, and that comments on clerical errors be due
10 days thereafter. Another commenter proposed that the regulations
permit disclosure of draft preliminary determinations and draft final
determinations and results of review, and provide for filing of
comments identifying ministerial errors, prior to their public
announcement. A third commenter proposed that the regulations permit
disclosure and correction of ministerial errors before publication of
the Department's determination or results of review because an
interested party may file an appeal immediately upon publication of the
final, effectively removing jurisdiction from the Department and hence
requiring litigation and court approval for correction of ministerial
errors.
We have not adopted these proposals. In response to concerns about
needless litigation arising out of lengthy review of ministerial error
allegations, the Department has streamlined the disclosure and
ministerial error correction process by providing a 30-day time frame
for response to ministerial error allegations. While nothing prevents
the Department from, for example, releasing disclosure materials on the
day of public announcement, it is unlikely given the amount of work
necessary to prepare the Federal Register notice, draft decision
memoranda, finalize the computer programs, assemble the disclosure
materials, etc., that the Department would be able to shorten the
timing of disclosure even further.
Section 351.224(c) provides for filing of comments regarding
ministerial errors. Paragraph (c)(1) indicates that the Department will
not consider comments concerning ministerial errors made in the
preliminary results of review. One commenter proposed that the
regulations clarify that while the Department will not amend
preliminary results to correct ministerial errors, it will consider
comments concerning ministerial errors made in preliminary results in
parties' case briefs. The commenter is concerned that the language in
the proposed regulation suggests that the Department is prohibited from
considering comments concerning ministerial errors until after the
final results have been issued. The Department agrees that the language
in the proposed regulation could be misconstrued. It was not our
intention to suggest that the Department would not consider comments
concerning ministerial errors made in preliminary results of review
during the course of
[[Page 27327]]
the review. Rather, we meant only to indicate that the Department will
not issue amended preliminary results to correct ministerial errors.
Therefore, we have adopted the commenter's proposal and have amended
the regulation to clarify that we will consider comments concerning
ministerial errors made in a preliminary results of a review in a
party's case brief. The alleged errors, therefore, will be addressed in
the final results of review.
Two commenters proposed that the proposed regulations be amended to
provide for correction of ministerial errors in preliminary results
calculations because of ``significant commercial harm'' caused by
publication of erroneous preliminary dumping margins in administrative
reviews. We have not adopted this proposal. As the Department explained
in the preamble to the proposed regulations, unlike a preliminary
determination in an investigation, which may result in the suspension
of liquidation and the imposition of provisional measures, a
preliminary results of review has no immediate legal consequences. See
61 FR at 7321. As a result, a more judicious use of Department
resources is to correct any ministerial errors made in a preliminary
results of review in the final results. The Department is unable to
comment on the commenters' concern that not correcting ministerial
errors in preliminary results of review results in ``significant
commercial harm'' because the commenters offered no examples or further
explanation as to what they meant.
Section 351.224(c)(3) establishes the time limits for filing
replies to comments. One commenter proposed that the regulations permit
the filing of responses to allegations of ministerial errors in the
context of preliminary determinations because the proposed timetable
provides sufficient time for the Department to analyze such responses
in addition to the original submissions. We have not adopted this
proposal. Paragraph (c)(3) provides that replies to comments must be
filed not later than five days after the date on which such comments
are filed. There is an exception for replies to comments in connection
with a significant ministerial error in a preliminary determination. As
the Department explained in the preamble to the proposed regulations,
because of greater time constraints due, in part, to the fact that
Department personnel conduct verification soon after the announcement
of a preliminary determination, the Department will not consider
replies to comments in a preliminary determination. See 61 FR at 7321.
Given the short time between public announcement of a preliminary
determination and departure for verification, the Department disagrees
with the commenter's suggestion that the proposed timetable provides
sufficient time for the Department to analyze replies to comments in a
preliminary determination. Any reply that a party wishes to make
should, therefore, be included in that party's case brief so that the
Department may address the reply in its final determination.
Section 351.224(e) provides for the analysis of any comments
received and the announcement of the issuance of a correction notice
normally not later than 30 days after the date of public announcement
of the Department's preliminary or final determination or final results
of review. One commenter proposed that the proposed regulations be
modified to provide for announcement of the Department's decision on
ministerial error allegations no later than 25 days after publication
of the final in the Federal Register. Another commenter expressed
strong support for the 30-day time frame set forth in the proposed
regulations. The Department has not made any changes to the provision.
A period of 30 days after the date of public announcement (the
Department's regulation) or 25 days after publication in the Federal
Register (the commenter's proposal) is roughly the same because there
are typically three to seven days between the date of public
announcement of a Department decision and the date of publication of
that decision in the Federal Register. We have chosen to tie the
deadline for issuance of a correction notice to the date of public
announcement because the other deadlines in the ministerial regulation
are also tied to the date of public announcement.
Sections 351.224(g) and (f) define ministerial error and
significant ministerial error, respectively. One commenter proposes
that the regulations clarify that ministerial errors do not include
``substantive'' errors, i.e., errors which call a data submission into
question in terms of basic accuracy or credibility. The commenter also
proposed that the regulations state explicitly that parties are not
allowed to submit new evidence beyond the time frame for submitting
information to show or deny the existence of an error.
The Department has not adopted these proposals. The provisions of
Sec. 351.224--covering disclosure of the Department's calculations and
procedures for correction of ministerial errors--only apply to
ministerial errors, as defined in paragraphs (f) and (g), and, hence,
only to errors made by the Department. Errors made by respondents in
their submissions to the Department, such as transposing digits as a
result of a data input error or other computer errors resulting in the
omission of data cited as examples by the commenter, are not governed
by the provisions of Sec. 351.224. Prior to the deadline for submission
of factual information, the Department's practice normally is to accept
a respondent's correction of an error in its own data because the
Department has time to review, analyze, and where applicable, verify
the corrected data. Where a respondent alleges an error in its own data
only after the deadline for submission of factual information,
frequently after the preliminary determination or results of review,
the Department's longstanding practice has been to correct the
respondent's own clerical errors only if the Department can assess from
information already on the record that an error has been made, that the
error is obvious from the record, and that the correction is accurate.
See, e.g., Industrial Belts and Components and Parts Thereof, Whether
Cured or Uncured, From Italy, 57 FR 8295, 8297 (1992). In light of the
Federal Circuit's decision in NTN Bearing Corp. v. United States, Slip
Op. 94-1186 (1996), however, the Department is in the process of
reevaluating its policy for correcting clerical errors of respondents.
We believe that it is appropriate to develop such a policy through
practice. See Certain Fresh Cut Flowers From Colombia, 61 FR 42833,
42833-34 (August 19, 1996) (proposing a number of conditions under
which we would accept corrections of a respondent's own clerical
error). As a result, we do not believe that a regulation on this issue
would be appropriate at this time.
Section 351.225
Section 351.225 details the procedural and substantive rules for
scope rulings, including rulings involving the anticircumvention
provisions of section 781 of the Act. We have noted below the few
changes made from the AD Proposed Regulations.
Suspension of liquidation: In connection with proposed paragraph
(l), a number of commenters urged that, contrary to previous practice
and the proposed regulation, the Department should suspend liquidation
of possibly affected entries at the time of the formal initiation of a
scope inquiry, and that this suspension should continue unless and
until the Department makes a final negative ruling. These commenters
argued that proposed paragraph (l) is
[[Page 27328]]
contrary to the purpose of the statute, which is designed to provide
relief from imports of merchandise that, in the context of a scope
inquiry, the Department already has determined to have been dumped.
They noted that because scope rulings only clarify, and do not expand,
the scope of an order, the Department must view any merchandise that it
determines to be within the scope of an order as always having been
within the scope. Therefore, they asserted, the Department should
suspend liquidation when it initiates a formal scope inquiry (if
liquidation is not already suspended), and this suspension should apply
to all unliquidated entries. Finally, these commenters argued that the
Department should terminate suspension of liquidation only upon the
issuance of a negative final determination.
Another commenter suggested that to help address the problem of
imports escaping the assessment of duties, the Department should impose
a deadline on the formal initiation of scope inquiries following the
receipt of a request for a scope ruling or an anticircumvention
inquiry. In addition, one commenter asked the Department to specify
that the suspension of liquidation and the imposition of a cash deposit
requirement will apply prospectively from the date of an affirmative
scope ruling. Other commenters supported the suspension of liquidation
provisions in proposed paragraph (l).
The Department believes that, for the most part, the suspension of
liquidation rules in paragraph (l) are appropriate and has not changed
them. Suspension of liquidation is an action with a potentially
significant impact on the business of U.S. importers and foreign
exporters and producers. The Department should not exercise this
governmental authority before it has first given all parties a
meaningful opportunity to present relevant information and defend their
interests, and before the Department gives a reasoned explanation for
its action. Formal initiation of a scope inquiry by the Department
represents nothing more than a finding by the Department that it cannot
resolve the issue on the basis of the plain language of the scope
description or the clear history of the original investigation. It
would be extremely unfair to importers and exporters to subject entries
not already suspended to suspension of liquidation and possible duty
assessment with no prior notice and based on nothing more than a
domestic interested party's allegation. Because, when liquidation has
not been suspended, Customs, at least, and perhaps the Department as
well, have viewed the merchandise as not being within the scope of an
order, importers are justified in relying upon that view, at least
until the Department rules otherwise. Therefore, the Department will
not order the suspension of liquidation until it makes either a
preliminary or final affirmative scope ruling, whichever occurs first.
Nonetheless, the Department is cognizant of the concerns expressed
on this issue by representatives of domestic interested parties. In
particular, the Department is concerned that significant delays in
initiating scope inquiries can be harmful. Accordingly, we have amended
paragraph (c), in accordance with a suggestion made by one commenter,
to impose a time limit of 45 days, from the date of receipt of a
request for a scope ruling, on the determination whether to initiate a
formal scope inquiry under Sec. 351.225. This deadline will apply to
all scope requests, including requests relating to circumvention.
Although the Department will continue to resolve scope questions, where
it can, on the basis of the plain language of the scope description and
the clear history of the original investigation without initiating a
formal inquiry, the Department will do so in 45 days or less.
In further recognition of the concerns expressed by domestic
interested parties, the Department also has revised paragraph (l) to
make a suspension of liquidation, when ordered in conjunction with a
preliminary or final affirmative ruling, effective as to entries of all
affected merchandise that are made on or after the date of initiation
of the scope inquiry and that remain unliquidated as of the date of
publication of the affirmative ruling.
Anticircumvention/Major input rule: Several commenters noted a
discrepancy between proposed paragraphs (g) and (h) relating to the
application of the ``major input'' rule under section 773(f)(3) of the
Act. Under proposed paragraph (g), which deals with products completed
or assembled in the United States, the application of the major input
rule was discretionary when valuing parts or components acquired from
an affiliated person. Under proposed paragraph (h), the application of
the major input rule was mandatory in dealing with products completed
or assembled in other foreign countries. One commenter suggested that
use of the major input rule be mandatory in all cases. Another
suggested that it be discretionary in all cases.
The SAA at 894 states that affiliation ``* * * can result in
application of the major input rule * * *'' (emphasis added).
Therefore, the Department has revised paragraph (h) to make application
of the rule discretionary for purposes of both U.S. and third country
assembly. We also have corrected a typographical error in the last
sentence of paragraph (g).
Several commenters suggested that, in applying paragraphs (g) and
(h), the Department should not apply the major input rule in
determining the value of parts and components originating in the
country subject to the order. They argued that the statute requires a
determination of whether such parts and components constitute a
significant percentage of the final value of the finished product.
Because the major input rule provides for the use of cost of production
to value such parts or components, use of the rule, they asserted,
necessarily would omit a profit element, thereby understating the value
of the parts or components.
The Department has not made the change suggested by these
commenters. First, the SAA, as noted above, clearly contemplates the
use of the major input rule in appropriate circumstances. Second, the
statute clearly states that in dealing with inputs from affiliated
persons, the Department may use the higher of transfer price, market
value, or cost of production to ``determine the value of the major
input. * * *'' Thus, cost of production may be used as the basis of the
``value'' of such an input. Finally, as noted above, the application of
the major input rule is discretionary. Should the Department encounter
a case in which the application of this rule would, in our judgment, be
inappropriate, we will explore other methods of valuing such parts or
components.
Anticircumvention/Other issues: Several commenters suggested that
the Department should provide more definitive guidance on what
constitutes circumvention. One commenter suggested a ``safe harbor'' of
35 percent value added in determining whether the value added in a
process of assembly or completion in the United States or a third
country is ``significant.'' Another commenter suggested the adoption of
value-added ranges for what the Department will consider
``significant'' in examining assembly or completion or assembly in the
United States or a third country. Another suggested that the Department
adopt a standard of considering production in the United States or a
third country as ``significant'' and simple assembly as not
``significant''. Still another commenter proposed that the Department
develop a framework for analyzing scope issues
[[Page 27329]]
and a comprehensive set of factors within that framework.
The Department has not adopted these suggestions because we believe
that the wide variety of products and processes encountered in AD/CVD
proceedings makes the adoption of any more specific standards
inadvisable at this time. To establish a ``safe harbor'' or specific
guidelines might result in the incorrect classification of substantial
production operations as ``insignificant'' and ``screwdriver''
operations as ``significant.'' As we gain more experience, we will
consider promulgating more detailed rules.
One commenter suggested that for purposes of determining whether
completion or assembly processes in the United States or a third
country are minor or insignificant, the Department should require all
relevant factors in sections 781(a)(2) and 781(b)(2) to be present and
demonstrably insignificant before finding that circumvention exists.
The Department has not adopted this suggestion, because we believe it
to be at odds with the statute, which requires only that all the listed
factors be taken into account. Adoption of this suggestion would, we
believe, restrict the application of the anticircumvention provisions
in a manner contrary to the intent of the law.
Another commenter suggested that the regulations (1) provide that
all anticircumvention inquiries will encompass at least the four most
recent fiscal quarters of any respondent subject to the inquiry, and
(2) make verification mandatory in all anticircumvention inquiries. The
Department has not adopted these suggestions because we believe that
the exact periods appropriately covered in an anticircumvention inquiry
may vary widely and are best left to a case-by-case judgment. Also,
verification can and will be conducted whenever the Department believes
it appropriate, but it is unnecessary to mandate it in every case.
One commenter argued that because the emphasis in anticircumvention
inquiries concerning completion or assembly in the United States or a
third country is now on whether that process is minor or insignificant,
any parts or components sourced from third countries should not be
included in making that judgment. We have not adopted this suggestion.
The commenter is correct about the change in emphasis in
anticircumvention inquiries. However, the Department also must
determine whether the value of the parts or components from the subject
country is a significant portion of the total value of the merchandise.
Any parts or components sourced from a third country necessarily form
part of the total value of any such merchandise.
Another commenter suggested that the regulations make clear that
the requirement that merchandise circumventing an order be of the same
``class or kind'' as the merchandise subject to the order be broadly
construed to include within the same class or kind of merchandise a
component and a finished product. According to the commenter, such a
construction is necessary to effectuate Congress' intent and is fully
consistent with the terms of the statute, the Department's past
practice and judicial precedent.
The Department has not adopted this suggestion. As we stated in the
AD Proposed Regulations, 61 FR at 7322, ``the term ``class or kind'' in
the circumvention context is not broader than the merchandise covered
by an order for other purposes of the statute.
One commenter suggested that the Department include in the
regulations the factors for applying section 781(c) of the Act, the
``minor alterations in the merchandise'' provisions, that are
enumerated in the Senate Report on the URAA. The Department believes
that the adoption of this suggestion would be inappropriate. While the
Department may apply them in practice, formal adoption of them might be
so restrictive as to make it more difficult to reach sound decisions on
such questions, given the widely varying fact patterns encountered in
such inquiries.
Scope procedures: One commenter suggested that the final
regulations clarify that the Department has the authority to self-
initiate anticircumvention and other types of scope inquiries.
According to the commenter, the proposed regulation did not state
expressly that the Department could self-initiate a scope inquiry.
The Department has not adopted this suggestion, because we believe
that the regulation as proposed is clear that the Department has the
authority to self-initiate an anticircumvention inquiry, as well as any
other type of scope inquiry. The proposed regulation makes clear that
the term ``scope ruling'' includes rulings relating to
anticircumvention, and Sec. 351.225(b) clearly provides for self-
initiated scope inquiries.
Another commenter requested that the four-month time limit for
resolving formally initiated scope inquiries run from the date of
receipt of a request for a ruling, not the date of initiation of an
inquiry. The Department believes that such a change would so compress
the time available for making scope decisions as to hamper our ability
to make decisions that are both timely and proper. Accordingly, we have
not adopted this suggestion. However, as noted above, we have adopted a
45-day time limit on the initiation of scope inquiries to ensure that
there are no undue delays in the resolution of scope issues.
One commenter suggested, in the context of comments regarding scope
issues, that the Department establish presumptions concerning the
domestic unavailability of a product at issue. According to the
commenter, these presumptions would be based upon allegations by
petitioners and the products produced by them. With respect to this
comment, the Department has addressed it in the section of this notice
dealing with comments relating to lack of domestic availability.
Another commenter suggested that the Department specify in the
regulations that scope rulings are clarifications, not modifications,
of the scope of an order. We have not adopted this suggestion, because
we believe that this principle is so well-established that a regulation
is not necessary.
One commenter suggested that the regulations be revised to require
the Department, after issuing an affirmative scope ruling, to (1)
canvas known importers to detect covered imports, and (2) then advise
Customs to proceed to suspend liquidation on entries of such
merchandise. The same commenter requested a regulation that would
require immediate electronic transmission from the Department to the
Customs Service of all final scope rulings.
The Department believes that a canvassing process would be an
enormous burden, and one that is neither contemplated in the statute or
its legislative history nor necessary for effective enforcement of the
law. Accordingly, we have not adopted this suggestion. To the extent
that electronic transmittals of scope rulings to the Customs Service is
meritorious, it is unnecessary and inappropriate to provide for this in
the regulations.
Two commenters asked the Department to revise the regulations to
clarify that in the case of an industrial user that has participated in
any segment of a proceeding, the Department will include the industrial
user on the scope service list and will notify the industrial user of a
ruling under Sec. 351.225(d). With respect to this suggestion, it was
our intent in the proposed regulations that all persons, whether
interested parties, industrial users, or a representative consumer
group, would be included on the scope service list and would be
notified of
[[Page 27330]]
scope rulings. Therefore, we are modifying the language in paragraphs
(d) and (n) of Sec. 351.225 to clarify this intent.
One commenter suggested that the Department require service on all
parties included on the scope service list only in the case of an
application for a scope ruling. This commenter suggested that other
documents should be served only on those parties that entered an
appearance in the scope inquiry. According to the commenter, proposed
Sec. 351.225(n) and Sec. 351.303(f) both require service of all
documents on all parties included on the scope service list.
The Department does not believe that a revision of Sec. 351.225(n)
is necessary. In our view, paragraph (n) makes clear that the term
``scope service list'' differs from the term ``service list,'' and that
only applications for scope rulings need to be served on all parties
included on the scope service list. As for service of all other
submitted documents, the requirements of Sec. 351.303(f) apply, which
require only service on parties included on the normal ``service list';
i.e., those parties that have entered an appearance and, in the case of
business proprietary information, have obtained an APO for the
particular scope inquiry. As noted above, we have modified
Sec. 351.225(d) so that all parties included on the scope service list
will be notified of scope rulings.
The same commenter made a suggestion concerning paragraph (l)(4),
which provides for the inclusion of a product within a pending review
if, within 90 days after initiation of the review, the Secretary issues
a final scope ruling that the product is included within the scope. The
commenter suggested that we should extend the 90-day period if the
Secretary extends the time for a preliminary determination in the
review.
The Department has not adopted this suggestion because the decision
to extend the time for a preliminary review determination often comes
only a short time before the expiration of the normal time limit and
well after the expiration of 90 days. Therefore, we could not implement
the proposal in a manner that would allow the Department to request and
receive the needed additional information in a timely manner.
Another commenter made a suggestion regarding proposed
Sec. 351.225(l)(4). Paragraph (l)(4) provides, among other things, that
if the Secretary determines after 90 days of the initiation of a review
that a product is included within the scope of an order or suspended
investigation, the Secretary may decline to seek sales information
concerning the product for purposes of the review. The commenter
suggested that although it may not be practicable, for purposes of an
ongoing review, to collect information on sales found to be within the
scope of an order, the Department should collect this information for
use in a subsequent review.
The Department has not adopted this suggestion, because we do not
believe it appropriate to collect information for a review that has not
yet been, and may never be, requested. However, paragraph (l)(4) makes
clear that while the Department may not collect information regarding
sales of a particular product, it will not disregard those sales for
purposes of the ongoing review. Instead, the Department will calculate
dumping margins or CVD rates, and will issue appropriate assessment
instructions, for sales of such products on the basis of non-adverse
facts available. Moreover, during the next requested review, if any,
the Department will examine all sales of the products determined to be
within the scope of the order or suspended investigation that were sold
during the time period covered by that review.
Finally, in connection with proposed Sec. 351.225(k), one commenter
suggested that the Department should revise its scope criteria by
developing a framework for analyzing scope issues, and then developing
a comprehensive set of factors within that framework. In particular,
according to this commenter, to provide greater certainty for
industrial users of merchandise that may be covered by an investigation
or order, the Department should include factors that examine both
consumption and production substitutability.
In our view, this suggestion relates to the broader topic of
domestic non-availability. Accordingly, we have addressed this
suggestion in the portion of this notice dealing with issues relating
to domestic non-availability.
Other Procedural Comments
In addition to the comments discussed above, we received other
comments relating to AD/CVD procedures that were not necessarily tied
to a particular provision of the AD Proposed Regulations. These
comments are addressed below.
Publication of remand determinations: Numerous commenters
representing both domestic and foreign interests suggested that the
Department should make remand determinations more accessible to the
public, although the details of the particular suggestions differed.
Some commenters argued that the Department should publish remand
determinations in the Federal Register, or at least publish a notice
indicating the existence of a remand determination. Others argued that,
at a minimum, the Department should make remand determinations more
easily obtainable once their existence is known.
The Department agrees that remand determinations constitute an
important source of precedential material, and that currently it is
unduly difficult for private parties to obtain access to remand
determinations. Indeed, in some instances, it has proven unduly
difficult for Department personnel to obtain copies of these documents.
Therefore, we agree that new procedures are necessary.
On the other hand, we do not agree with the assertion that, as a
legal matter, remand determinations must be published in the Federal
Register, and we are reluctant to incur the expense of such publication
when less expensive alternatives are available. In addition, we do not
believe that it is necessary to publish a Federal Register notice
announcing the existence of a remand determination, because the court
or binational panel opinion giving rise to the remand determination
will indicate to the public that a case has been remanded and that a
remand determination will be forthcoming.
Accordingly, the Department intends to take the following steps to
make remand determinations more readily accessible. First, the
Department will place the public version of each remand determination
on its Internet page so that remand determinations will be available
electronically. While this step may not permit electronic research, if
there is sufficient interest in conducting such research we would
expect that one or more of the commercial online research systems would
begin to include remand determinations in their databases, just as they
do in the case of ITC determinations that are not published in the
Federal Register.
Second, the Department will place the public version of a remand
determination in the public file (located in the Department's Central
Records Unit) for the AD/CVD proceeding to which the determination
pertains. In addition, to further facilitate access, the Central
Records Unit also will maintain a separate, chronological file
containing public versions of all remand determinations.
The Department hopes that through these steps it will have
addressed the concerns giving rise to the comments. If these steps
prove to be inadequate, we
[[Page 27331]]
remain open to further suggestions on improvement.
Third country AD petitions: One commenter suggested that the
Department include in its regulations a provision for implementing new
section 783 of the Act, which deals with third country antidumping
petitions. The commenter also suggested that any regulation should
expressly provide that such petitions may be filed on behalf of a
regional industry or industries in the third country. We have not
adopted this suggestion because we believe that it is more
appropriately addressed to the Office of the U.S. Trade Representative.
Binding ruling procedure: A few commenters proposed that the
Department should institute a system for issuing binding letter rulings
under which persons could obtain advance rulings regarding the
application of the Act and the regulations to particular factual
scenarios. Absent misrepresented, incomplete, or changed facts, these
rulings would be binding for purposes of an AD/CVD proceeding, unless
revoked. Even when revoked, the revocation of the ruling would have
prospective effect only.
We have not adopted this proposal for several reasons. First, the
proponents of this binding letter ruling system contemplated an
essentially ex parte procedure in which the Department would issue
binding rulings within 30 days of receipt of a request for a ruling. In
our view, such a procedure would conflict with the numerous procedural
safeguards in the Act that are designed to ensure that all sides
involved in an AD/CVD proceeding have an equal opportunity to affect
the outcome.
These procedural shortcomings cannot be overcome by the fact that
parties would be able to challenge the validity of the ruling in, for
example, an administrative review in order to have the ruling revoked.
Because, under the proposal, the revocation of the ruling would have
prospective, rather than retroactive, effect, a successful challenger
still would have been denied the opportunity to have input concerning
the application of the AD/CVD law to imports covered by a ruling prior
to its revocation.
In addition to these procedural defects, we have serious doubts as
to the compatibility of a binding letter ruling system with the
requirements of section 751(a) of the Act. Section 751(a)(2)(C) of the
Act provides that the Department must assess antidumping and
countervailing duties (and establish cash deposit rates) in accordance
with the results of reviews under section 751(a). Thus, a letter ruling
could affect the rate at which entries are liquidated only to the
extent that (1) the facts upon which the ruling was based are
consistent with the administrative record established in the review,
and (2) the Department adopts in the review the policies set forth in
the ruling. With certain limited exceptions, it is doubtful that the
Department could bind itself to apply the results of a letter ruling in
a review.
Having said this, we would consider the adoption of a non-binding
ruling procedure. At this point, however, we are uncertain as to
whether parties would find such a procedure useful. In addition, the
resource requirements that such a procedure would entail could be
substantial. Nevertheless, we intend to continue the dialogue with
persons having an interest in a possible letter ruling procedure. In
addition, if a sufficient number of persons indicate an interest, we
will convene a hearing on this topic.
Subpart C--Information and Argument
Subpart C of part 351 deals with collection of information and
presentation of arguments to the Department.
Section 351.301
Section 351.301 sets forth the time limits for submission of
factual information in investigations and reviews.
Time limits for submission of factual information in investigations
and reviews: Section 351.301(b)(1) provides that with respect to
investigations, submission of factual information is due no later than
seven days before the verification of any person is scheduled to
commence. Several commenters suggested that the deadline be revised to
provide for submission of factual information no later than seven days
before the verification of the respondent to which the information
applies is scheduled to commence. The commenters expressed concern that
the proposed regulation unjustly penalizes respondents whose
information will not be verified until very late in the verification
schedule and that where there are multiple respondents, the different
respondents may not be aware of the other respondents' verification
schedules.
We have not adopted this suggestion. In the past there has been
some confusion over the deadline for submission of factual information.
In furtherance of the goal of simplifying the Department's procedures,
the regulations clarify that the deadline for submission of factual
information is identical for all parties. Contrary to the suggestion
that this penalizes respondents scheduled for verification late in the
verification schedule, a single deadline ensures fairness in that all
parties have an equal amount of time to submit factual information to
the Department. Furthermore, a single deadline ensures that Department
analysts have time to review submitted information before they depart
for verification, particularly where they are scheduled to perform
consecutive verifications of different respondents. The Department
recognizes the concern that different respondents may not be aware of
other respondents' verification schedules and, as such, will respond
promptly to inquiries as to the date on which the first verification is
scheduled to commence once that date has been set.
Section 351.301(b)(2) provides that with respect to administrative
reviews, submission of factual information is due no later than 140
days after the last day of the anniversary month. One commenter
suggested that the deadline for submission of factual information in
administrative reviews be triggered by publication of the notice of
initiation as are the deadlines for submission of factual information
in other types of reviews. Another commenter suggested that the
Department allow for submission of factual information in
administrative reviews up to 30 days after the publication of the
preliminary determination. A number of commenters also suggested that
the Department should automatically extend the deadline for submission
of factual information whenever it extends the deadline for the
preliminary or final determinations in an administrative review.
We have not adopted these suggestions. The deadline for submission
of factual information in administrative reviews is tied to the
anniversary month because the statutory deadlines for preliminary and
final determinations are tied to the anniversary month (see section
751(a)(3) of the Act). In contrast, the deadlines for submission of
factual information in other types of reviews such as new shipper,
changed circumstances, or sunset reviews are tied to the publication of
the notice of initiation because the statutory deadlines for
preliminary and/or final determinations in these proceedings are either
tied to initiation or not prescribed (see, e.g., paragraphs (a)(1)(B),
(b), and (c) of section 751 of the Act). Furthermore, because the
Department normally conducts verification prior to issuing its
preliminary determination in an administrative review, a deadline for
submission of factual information of up
[[Page 27332]]
to 30 days after the preliminary determination would not allow
sufficient time for analysis and, if necessary, further submissions
upon request prior to any scheduled verifications. Finally, although
the regulations do not provide for automatic extension of the deadline
for submission of factual information in reviews whenever the deadline
for the preliminary or final determinations is extended, the Department
may extend any time limit, including deadlines for submission of
factual information, for good cause (see Sec. 351.302). Because the
Department's decision to extend the deadline for its determination in
an administrative review may be based on the fact that, for example,
there are a significant number of respondents to review or a number of
complicated issues to resolve, automatic extension of the deadline for
submission of factual information might result in the filing of
additional information requiring further analysis and review, thereby
frustrating the objective of the Department to allow additional time
for making its determination.
Proposed sections 351.301(b) (1)-(4) provided that where
verification is scheduled for a person, factual information requested
by verifying officials will be due no later than seven days after the
date on which the verification of that person is complete. Two
commenters suggested that the seven-day deadline be eliminated and that
Department analysts be allowed to establish the deadlines for such
submissions on a case-by-case basis. One commenter suggested in the
alternative that the regulations should qualify the deadline with the
word ``normally'' to make it clear that the deadline can be extended
where appropriate.
We have not eliminated the seven-day deadline for post-verification
submissions; however, we have added the word ``normally'' to the
regulations to clarify that the deadline can be extended where
appropriate. The seven-day deadline provides an equal amount of time
for all parties to file post-verification submissions upon request and
provides guidance to other parties to the proceeding, including
petitioners, as to when such submissions can be expected. Whether or
not a regulation includes the qualifier ``normally,'' the Department
retains the authority to extend any time limit established in these
regulations unless precluded by statute (see Sec. 351.302(b)). As
stated in the preamble to the proposed regulations, ``[p]arties should
not draw an inference that simply because a particular deadline does
not explicitly address the Department's authority to extend such
deadline that the Department may not do so. Unless expressly precluded
by statute, the Secretary may extend any deadline for good cause'' (61
FR at 7325).
One commenter proposed that the regulations provide that
petitioners are required to submit any pre-verification comments at
least seven days before verification. We have not adopted this
proposal. There is no limitation on the submission of comments--as
opposed to new factual information--prior to verification. Written
argument may be submitted at any time during the course of an AD/CVD
duty proceeding through the submission of case and rebuttal briefs (see
Sec. 351.309 (note that Sec. 351.309(c)(2) provides that the case brief
must present all arguments that a party wants the Department to
consider in its final determination or final results of review)). While
it may be in a party's interest to submit pre-verification comments at
least seven days before verification so that the Department has
sufficient time to consider them prior to verification, it is not
required.
Time limits for certain submissions: Section 351.301(c) sets forth
the time limits for certain submissions, including information to
rebut, clarify, or correct factual information submitted by another
party, information in questionnaire responses, and publicly available
information to obtain values for factors in nonmarket economy AD cases.
Submission of factual information to rebut, clarify, or correct
factual information: Section 351.301(c)(1) provides that any interested
party may submit factual information to rebut, clarify, or correct
factual information submitted by any other interested party at any time
prior to the applicable deadline for submission of such factual
information or, if later, 10 days after the date such factual
information is served on the interested party or, if appropriate, made
available under APO to the authorized applicant. Upon further review,
we have revised this provision to eliminate potentially confusing
language and to clarify that in no case will a party have less than 10
days to submit factual information to rebut, clarify, or correct
factual information submitted by any other interested party.
Two commenters proposed that the regulations provide that only
domestic interested parties be allowed to submit new factual
information to rebut, clarify, or correct factual information submitted
by foreign interested parties. According to the commenters, this would
avoid the selective provision of rebuttal information by foreign
interested parties. Another commenter proposed that the 10-calendar day
deadline be changed to 10 business days.
We have not adopted either of these proposals. The prior
regulations allowed only domestic interested parties to rebut, clarify,
or correct factual information submitted by respondent interested
parties. However, the Department reconsidered the regulation and the
rationale behind it and determined that the goal of accurate
determinations is enhanced by allowing any interested party and, as now
provided in Sec. 351.312, industrial users and consumers, to comment on
submissions of factual information. One commenter specifically
expressed support for this change. Additionally, the Department has
maintained the 10-calendar day deadline. This deadline is relevant only
where factual information is submitted less than 10 days before, on, or
after (normally, only with the Department's permission) the applicable
deadline for submission of factual information; at this point in the
proceeding, the Department and the parties have an interest in
finalizing the addition of new factual information to the record. The
Department believes that 10 calendar days provide ample time for an
interested party to rebut, clarify, or correct factual information
submitted by another interested party.
Two commenters proposed that the regulations provide that any
interested party may submit factual information to rebut, clarify, or
correct factual information contained in the Department's verification
reports. We have not adopted this proposal. Verification is the process
by which the Department checks, reviews, and corroborates factual
information previously submitted. Parties are free to comment on
verification reports and to make arguments concerning information in
the reports up to and including the filing of case and rebuttal briefs
(note that Sec. 351.309(c)(2) provides that the case brief must present
all arguments that a party wants the Department to consider in its
final determination or final results of review). In making their
arguments, parties may use factual information already on the record or
may draw on information in the public realm to highlight any perceived
inaccuracies in a report. Though comment on the Department's
verification findings is appropriate, submission of new factual
information at this stage in the proceeding is not, because the
Department is unable to verify post-verification submissions of new
factual information.
[[Page 27333]]
Questionnaire responses: Section 351.301(c)(2) deals with
questionnaire responses and other submissions on request. Section
351.301(c)(2)(ii) provides that the Department must give notice of
certain requirements to each interested party from whom the Department
requests information.
One commenter proposed that the Department should review and revise
its questionnaire to reduce reporting burdens. In addition, the
commenter suggested that the Department accept the reporting of
financial data in the form consistent with the generally accepted
accounting principles of the respondent's country of origin. The
Department already has significantly revised its standard questionnaire
to make it more ``user friendly'' and efficient by simplifying
information requests and reducing reporting burdens. One of the areas
in which the Department has simplified reporting burdens is in the
reporting of cost data. Consistent with past practice and section
773(f)(1)(A) of the Act, the Department normally will calculate costs
based on a respondent's records, if such records are kept in accordance
with the generally accepted accounting principles of respondent's
country of origin and reasonably reflect the costs associated with the
production and sale of the merchandise. As such, much of the required
reporting of cost and financial data is consistent with a respondent's
normal books and records. However, given the requirements of the AD
law, it is not always possible to accept the reporting of financial or
cost data in the form such data are maintained in a respondent's books
and records. To the extent that a party has specific suggestions for
improvements in the Department's questionnaire and reporting
requirements, the Department welcomes those suggestions. Also, if a
questionnaire requirement poses specific difficulties in a particular
proceeding, the respondent can request the Department to modify the
requirement on an ad hoc basis.
One commenter proposed that the regulations provide a deadline for
the introduction of issues so that respondents would have adequate time
to research, draft, and translate a complete response. The Department
has not adopted this proposal. Barring specific statutory or regulatory
deadlines or subject matter constraints, parties may raise relevant
issues which may arise throughout the course of an AD/CVD duty
proceeding. A generalized deadline on raising issues would have
unforeseeable consequences such that we do not feel confident in
foreclosing debate on them in advance. Furthermore, the Department may
request any person to submit factual information at any time during a
proceeding (see Sec. 351.301(c)(2)(i)).
Two commenters proposed that the regulations indicate that the
Department is required to rapidly respond to a respondent's request for
clarification of an information request. One of the commenters proposed
a three-day deadline for response, which, if not met, would lead to an
automatic extension of the time for the respondent to supply the
information in question by the length on time it took the Department to
provide the necessary clarification. The Department has not adopted
this proposal. The Department makes every effort to respond to requests
for clarifications as soon as possible. Hence, a specific regulatory
deadline is unnecessary. While it is possible that the Department might
find good cause for granting a request for an extension where response
to a clarification request was delayed, an automatic extension
provision could lead to the filing of clarification requests simply to
extend the deadline for filing a questionnaire response or other
submission.
One commenter proposed that the regulations provide that the
Department must notify a party if the information it submitted is
deficient and provide the party with an opportunity to remedy the
deficiency. The Department has not adopted this proposal as this issue
is covered specifically in the statute (see section 782(d) of the Act),
and, as noted above, the Department has sought to avoid repeating the
statute in the regulations. Parties will be informed in the initial
questionnaire, and in supplemental questionnaires, that failure to
submit requested information in the requested form and manner by the
date specified may result in the use of facts available under section
776 of the Act and Sec. 351.308. The Department's practice is to send a
respondent a supplemental questionnaire where the Department needs
clarification of a response or the Department seeks additional
information to address questions arising out of reported information.
The Department, however, will not necessarily repeat a precise or
direct question that the respondent has not answered. The decision to
specifically inform a party that information it submitted is deficient
is a decision that can only be made on a case-by-case basis taking into
consideration the Department's initial information request and the
party's response to that request.
One commenter suggested that the Department reduce the scope of
supplemental questionnaires to curb the use of data demands as a
tactical measure by petitioners to harass respondents by imposing
additional financial burdens on them. The Department disagrees with the
characterization of the issuance of supplemental questionnaires as a
method to harass respondents. In its supplemental questionnaires, the
Department typically seeks clarification of reported information or
seeks responses to questions precipitated by reported information. In
drafting its supplemental questionnaires, the Department may
incorporate lines of questioning based on input from petitioners.
However, where the Department chooses to use input from petitioners, it
does so precisely because such input is constructive. The Department
only requests information it deems to be necessary and will continue to
do so. However, a blanket requirement that supplemental data requests
be reduced is inconsistent with the Department's obligation to conduct
a thorough investigation based on the necessary facts.
Section 351.301(c)(2)(iii) provides that interested parties shall
have at least 30 days from the date of receipt to respond to the full
initial questionnaire. This subparagraph also provided that the ``date
of receipt'' will be seven days from the date on which the initial
questionnaire was ``transmitted.''
One commenter proposed that the regulations require the Department
to release the questionnaire within five days after initiation. We have
not adopted this proposal. Release of the questionnaire immediately
after initiation, particularly in investigations, often is not possible
because the Department needs input from companies, for example, to
identify appropriate respondents, tailor information requests, and
format requirements to the specific merchandise under investigation.
The Department will continue its current practice of releasing the
questionnaire as soon as possible.
Another commenter proposed that the regulations provide a mechanism
under which the Department would consult with the parties and decide
certain issues--such as date of sale, product matching criteria, the
identity of affiliated parties, whether downstream sales by affiliated
parties in the home market should be reported, and whether affiliated
party transactions are at arm's length--prior to the issuance of the
questionnaire. The Department has not adopted this proposal. Consistent
with its normal practice, the Department already consults with parties
and decides certain issues prior to issuance
[[Page 27334]]
of the questionnaire. For example, the Department normally consults
with the parties to identify appropriate respondents or model matching
criteria. However, deciding all of the issues listed by the commenter
prior to release of the questionnaire is not feasible. Either an issue
cannot be decided until the Department has reviewed and analyzed all of
the submitted data or it is not practicable to gather all of the data
necessary to decide the issue prior to release of the questionnaire
given the statutory time limits for conduct of investigations and
reviews.
Two commenters proposed that the regulations provide interested
parties at least 30 days to respond to a questionnaire or any part of a
questionnaire. Other commenters proposed that the regulations provide
for at least 45 days to respond to the questionnaire or for automatic
15-day extensions upon request. Finally, another commenter proposed
that the regulations provide for an additional 30 days to respond to a
questionnaire that requests information on two administrative reviews
in situations where the Department has deferred initiation of an
administrative review for one year and that all deadlines for the
deferred administrative review are counted with respect to the later
POR's anniversary month. The SAA, at 866, provides that interested
parties shall have at least 30 days from the date of receipt to respond
to the full initial questionnaire. As the Department explained in the
preamble to the proposed regulations, 61 FR at 7324, the time limit for
response to individual sections of the questionnaire, if the Secretary
requests a separate response to such sections, may be less than the 30
days allotted for response to the full questionnaire. For example, the
Department anticipates that the response to section A of an AD
questionnaire, which seeks general information about a company, will be
due before the expiration of the 30-day period. The Department's
ability to timely identify appropriate respondents, in particular,
would be hampered were the Department to delay the deadline for
submission of this information. The Department, therefore, has not
adopted the proposal that parties be granted 30 days to respond to any
part of the questionnaire. Likewise, the Department has not adopted the
proposal that the regulatory deadline for questionnaire responses be
extended to 45 days. Only with prompt responses will the Department be
able to meet its statutory obligations of conducting timely
investigations and administrative reviews. Parties can, if necessary,
request an extension of the time limit for submission of a
questionnaire response under Sec. 351.302. The Department also has not
adopted the proposal that the regulations provide a 60-day deadline for
submission of questionnaire responses where the Department has deferred
initiation of an administrative review. While the Department will
examine and would like to adopt schedules that allow a longer
questionnaire response time for deferred reviews, it is reluctant to
adopt such a regulation prior to gaining experience in administering
deferred reviews. The Department also believes that it is appropriate
to determine a deadline on a case-by-case basis taking into
consideration the companies and merchandise under review. Because the
Department has no experience yet with the deferred administrative
review provision and, hence, cannot foresee every timing issue that
might arise, it has not codified in the regulations the proposal that
all deadlines for the deferred administrative review be counted with
respect to the later POR's anniversary month. The proposal on its face
makes sense, however, and the Department will attempt to implement it
in practice.
With respect to the ``transmission'' of the questionnaire, one
commenter proposed that the regulations define ``transmitted'' and
provide for notification of parties when ``transmission'' occurs.
Another commenter proposed that the regulations provide that seven days
should be added to the date of transmission of the questionnaire to
calculate receipt date only where the agency does not have evidence
that the questionnaire was actually received at an earlier date. One
commenter opposed this second proposal.
We have not adopted either proposal. The Department considers the
date of transmission to be the date the Department indicates on the
questionnaire. Thus, it is obvious from looking at the document when
``transmission'' has ccurred, and, as such, it is not necessary to
codify this definition in the regulations. The Department has not
adopted the second proposal because it is not practicable for the
Department to try and keep track of a possible range of receipt dates.
Section 351.301(c)(2)(iv) provides a 14-day deadline for
notification by an interested party, under section 782(c)(1) of the
Act, of difficulties in submitting a questionnaire response. Section
782(c)(1) of the Act provides that, if promptly asked to do so by an
interested party, the Department may modify its requests for
information to avoid imposing an unreasonable burden on that party.
One commenter proposed that the regulations recognize that the
Department's questionnaire may be modified to reduce reporting burdens
under certain circumstances pursuant to section 782(c)(1) of the Act.
In our view, section 351.301(c)(2)(iv) of these regulations does just
that.
Another commenter proposed that any notification by a foreign
interested party of difficulties in submitting information in response
to the Department's questionnaire must be placed formally on the record
of the proceeding. With respect to this suggestion, it was always the
Department's intent under Sec. 351.301(c)(2)(iv) to require
notification in writing. However, to avoid any confusion, the final
regulation clarifies that such notification is to be submitted ``in
writing.''
One commenter suggested that the regulations provide petitioners
with a right to comment on requests to modify an original questionnaire
at the time the request is made. The Department has not adopted this
proposal. As the Department explained in the preamble to the proposed
regulations, parties have the right generally to submit comments on any
relevant issue throughout the course of a proceeding. As such, the
Department does not believe that a specific regulation addressing this
issue is necessary. See 61 FR at 7324.
One commenter proposed that the regulations ensure that
difficulties experienced by interested parties (in particular, small
companies) will be taken into account when the Department requests
information and plans and conducts verification. In addition, the
commenter proposed that the regulations include provisions that the
Department will take into account the size of the respondent in
assessing the adequacy of a response and also in determining whether
facts available should be applied, and, if so, whether an adverse
inference should be drawn.
With respect to these suggestions, section 782(c)(2) of the Act
provides that the Department will take into account difficulties
experienced by interested parties, particularly small companies, in
supplying information, and will provide any assistance that is
practicable. The statute does not indicate that the Department is
specifically required to take into account the size of the company in
assessing the adequacy of the response or whether application of
adverse facts available is applicable. Rather, section 776(b) of the
Act provides for use of an
[[Page 27335]]
adverse inference where the Department finds that an interested party
``has failed to cooperate by not acting to the best of its ability to
comply with a request for information.'' Under this standard the
Department may consider the size of a company in determining whether it
acted to the best of its ability. Any decision to do so would be made
on a case-by-case basis.
One commenter proposed that the regulations provide that the 14-day
deadline for notifying the Department under section 782(c)(1) of the
Act of difficulties in submitting information in response to a
questionnaire is subject to extension upon request and that the request
need not be made within the 14-day period. We have not adopted this
proposal. Section 351.302 of these regulations contains the general
provision for extensions of time limits upon request. As such, a
specific provision regarding the 14-day deadline is unnecessary.
Whether the Department would grant an extension of the 14-day period
where the request for the extension was filed after the 14-day period
had expired can only be determined on a case-by-case basis upon review
of the party's explanation of the ``good cause'' for such a request and
for the lateness of the request.
Section 351.301(c)(2)(v) indicates that a respondent interested
party may request that the Department conduct a questionnaire
presentation during which Department officials will explain the
requirements of the questionnaire. One commenter proposed that the
regulations clarify that explanations provided during a questionnaire
presentation are not intended as a modification of the questionnaire or
as an ``understanding'' between the Department and any respondent
regarding the questionnaire, except as expressly provided in the
questionnaire or subsequent modifications and supplements to the
questionnaire. Furthermore, the commenter proposed that the regulations
provide that the substance of a questionnaire presentation be
memorialized for the record.
The Department agrees in principle with these proposals but does
not believe that a specific regulation is necessary. Any modifications
or supplements to the questionnaire, or any agreed-upon changes in
reporting requirements between a respondent and the Department will be
reflected in the record.
Submission of publicly available information to value factors:
Section 351.301(c)(3) contains the time limits for submission of
publicly available information to obtain values for factors in
nonmarket economy AD cases. One commenter expressed support for the
proposed deadlines. Another commenter proposed changing the deadline
for such submissions to the date the case briefs are due. The commenter
argued that this minor difference (the proposed deadlines are
approximately 10 days before the date for submission of case briefs)
will still allow the other parties to comment on the new information in
their rebuttal briefs, while permitting the potential submitting
parties to make the decision on what information is relevant, worth
obtaining or placing on the record at a time when arguments in the case
brief have been drafted, thus preventing missed documents or cluttering
of the record with documents ultimately deemed unnecessary by the
submitter.
While the Department agrees with some of the commenter's reasoning,
it has not adopted this proposal for several reasons. First, the
Department is concerned that the short deadline for filing rebuttal
briefs, i.e., five calendar days after case briefs are filed, will not
allow parties enough time to prepare rebuttal arguments and review and
comment on new factor information. Second, the Department does not
believe that inclusion of new factual information with submission of
arguments in case briefs allows for thorough analysis by the
Department. Finally, inclusion of new factual information in case
briefs is not consistent with the purpose of case briefs; namely to
comment on what the Department did in its preliminary determination and
to place before the Department any arguments that continue, in the
submitter's view, to be relevant to the Secretary's final determination
or results of review.
Time limits for certain allegations: Section 351.301(d) sets forth
the time limits for certain allegations, including allegations
concerning market viability, allegations of sales at prices below the
cost of production, countervailable subsidy allegations, and upstream
subsidy allegations. In response to suggestions from several
commenters, we have added a time limit for allegations of purchases of
major inputs from an affiliated party at prices below the affiliated
party's cost of production.
Allegations regarding market viability: Section 351.301(d)(1)
establishes a deadline for allegations regarding market viability of 40
days after the date on which the initial questionnaire was transmitted.
Several commenters proposed a longer alternative deadline of 120 days
after initiation. Another commenter proposed that the deadline for
allegations regarding market viability be tied to the receipt of the
response to the relevant section of the questionnaire instead of to the
date of transmittal of the initial questionnaire.
We have not adopted either proposal. The information necessary to
make allegations concerning market viability typically is contained in
a respondent's section A response. Normally section A responses are due
no later than 21 days after transmittal of the initial questionnaire.
The 40-day deadline, therefore, should allow parties sufficient time to
review the questionnaire responses and, if desired, make market
viability allegations. The regulation makes clear that the Secretary
may alter this time limit. The Secretary is likely to do so where the
deadline for section A responses is extended, the responses themselves
are so incomplete as to hinder a party's ability to make a market
viability allegation, or the information necessary to make a market
viability allegation is not available as part of the section A
response.
Allegations of sales at prices below the cost of production:
Section 351.301(d)(2) establishes the time limits in investigations and
reviews for allegations of sales at prices below the cost of production
(COP) under section 773(b) of the Act.
One commenter proposed that the deadline for cost allegations be
extended by seven days to take into account the additional seven days
for receipt of the questionnaire. We have not adopted this proposal
because the proposed deadlines already take into account the seven days
for receipt of the questionnaire by tying the deadline to the date of
receipt of the relevant questionnaire response. Country-wide
allegations do not depend on information contained in questionnaire
responses.
A number of other commenters proposed eliminating entirely the
notion of company-specific cost allegations for a number of reasons.
One commenter argued that company-specific costs are not likely to be
reasonably available to petitioner even after submission of the Section
B response.
The Department has not adopted this proposal. Complete company-
specific costs normally are not placed on the record until the
Department requests them, i.e., typically after the Department has
initiated a cost investigation. Nonetheless, the Department commonly
receives adequate company-specific cost allegations based on data that
are reasonably available to the petitioner. In making company-specific
cost allegations, petitioners often use data provided for difference in
merchandise adjustments and data from a
[[Page 27336]]
respondent's financial statements which are submitted with a
respondent's section A and B questionnaire responses. In addition, a
domestic interested party may compare company-specific home market
prices from a respondent's section B response with its own adjusted
cost data in order to make a company-specific cost allegation (see
section 773(b)(2)(A)(i) of the Act).
Two other commenters reasoned that country-wide cost allegations
may provide reasonable grounds for an investigation of all respondents
even if submitted after receipt of all sales responses because, for
example, the allegation could demonstrate that prices among producers
are similar and could be based on the cost data of the most efficient
producer. The Department believes that where company-specific
information has been placed on the record, any subsequent sales below
cost allegation must take into consideration such information. As the
Department noted in the preamble to the proposed regulations, the SAA
at 833 states that the standard for initiation of a sales below cost
investigation is the same as the standard for initiating an AD
investigation. The Department interprets this to mean that an
allegation of sales below cost, like an allegation of dumping, must be
supported by information reasonably available to petitioner, including
information already on the record. See 61 FR at 7324. Therefore,
demonstrating that one company's sales are below cost does not
demonstrate that other companies' sales are below cost if the other
companies' information is reasonably available.
Finally, two additional commenters argued that respondents will do
everything possible to avoid submitting responses that could form the
grounds for the filing of a COP allegation. It is our experience that
respondents do not behave in such a manner. We believe that it is
unlikely respondents would intentionally submit grossly deficient
responses simply to avoid providing data sufficient to form the basis
for a cost allegation. To do so might subject them to the application
of adverse facts available, surely a more daunting prospect than the
possible initiation of a cost investigation.
One commenter argued that cost allegations on a country-wide basis
are not permitted under the statute because the statutory ``reasonable
grounds to believe or suspect'' standard for initiating a cost
investigation has not changed since the Department adopted a policy of
entertaining only company-specific allegations under the CIT's holding
in Al Tech Specialty Steel Corp. v. United States, 575 F. Supp. 1277,
1281 (1983). Contrary to the commenter's suggestion, the SAA at 833
specifically provides for the consideration of cost allegations on a
country-wide basis. The commenter also argued that a country-wide
allegation must contain some demonstration of the representativeness of
the presented data where there are substantial variants of the subject
merchandise under investigation. The Department agrees that a country-
wide allegation should contain some demonstration of the
representativeness of the presented data, but only to the extent that
pertinent data are reasonably available to the petitioner.
Allegations of purchases of major inputs from an affiliated party
at prices below the affiliated party's cost of production: In response
to several comments, we have added a new provision in these final
regulations establishing deadlines for allegations under section
773(f)(3) of the Act regarding purchases of major inputs from an
affiliated party at prices below the affiliated party's cost of
production. One commenter proposed that the regulations provide that
such allegations are due within seven days after a COP response is
filed. Another commenter proposed that the deadlines be identical to
the deadlines for cost allegations.
We have not adopted either of these proposed deadlines. Instead,
new Sec. 351.301(d)(3) provides for filing such allegations within 20
days after a respondent files a response to the relevant section of the
questionnaire; i.e., the section D response containing cost data. The
applicability of this provision is limited, however. Specifically,
because the Department's normal practice is to analyze an affiliated
supplier's production cost data for major inputs whenever it conducts a
cost investigation, this provision is only applicable where the
Department has determined to base foreign market value on constructed
value for reasons other than that sales were disregarded under the cost
test.
Two commenters additionally proposed that the regulations establish
a deadline for determining which inputs are deemed to be ``major.'' We
have not adopted this proposal. The determination of which inputs are
``major'' must be made on a case-by-case basis taking into
consideration the nature of the product, its inputs, and the company-
specific information on the record.
Countervailable subsidy and upstream subsidy allegations: Proposed
Sec. 351.301(d)(3), now renumbered as Sec. 351.301(d)(4), sets forth
the time limits for countervailable subsidy allegations in
investigations and reviews and upstream subsidy allegations in
investigations. We received one comment regarding this provision which
was supportive of the Department's treatment of this issue. After a
further review of this provision, we have left it unchanged except for
the change in numbering.
Targeted dumping allegations: Proposed Sec. 351.301(d)(4), now
renumbered as Sec. 351.301(d)(5), sets forth the time limit for a
targeted dumping allegation in an AD investigation. A number of
commenters proposed that the deadline for targeted dumping allegations
be eliminated, or, at a minimum, revised so as to merely require that
an allegation of targeted dumping be made no later than the date case
briefs are due. Two commenters reasoned that a targeted dumping
analysis does not require the collection of additional data not
requested in the questionnaire. Two other commenters reasoned that the
deadline should be eliminated because the Department should always test
for targeted dumping. One commenter supported the maintenance of a
deadline for targeted dumping allegations. The Department has not
adopted the proposals eliminating or changing the proposed deadline for
targeted dumping allegations. The Department believes that the deadline
of 30 days before the scheduled date of the preliminary determination
will provide petitioners with sufficient time to analyze the applicable
data and submit an allegation if appropriate. To extend the deadline
would make it difficult for the Department to consider the allegation
for the preliminary determination. However, the Department recognizes
the burden such a deadline may place on domestic interested parties in
some situations and intends to be flexible with respect to the deadline
where appropriate. For example, if the timing of responses does not
permit adequate time for analysis, the Department will consider that
``good cause'' to extend the deadline under Sec. 351.302. Additional
comments concerning the substantive targeted dumping provisions are
discussed below in connection with Sec. 351.414(f).
Section 351.302
Section 351.302 sets forth the procedures for requesting an
extension of a time limit and clarifies the Department's authority to
grant extensions. In addition, this section explains when and how the
Department will reject untimely or unsolicited submissions.
[[Page 27337]]
Extension of time limits: Sections 351.302 (b) and (c) provide that
the Department may extend a regulatory deadline based upon its own
determination that there is good cause to do so or where an interested
party shows good cause for such extension. One commenter expressed
support for this provision. Another commenter proposed that extensions
of up to 15 days will normally be granted upon a reasonable showing of
good cause. A third commenter argued that the regulation providing for
extensions for ``good cause shown'' is too restrictive and suggested
that the regulation provide that the Department will grant an extension
where it would not delay the completion of an investigation or review
or cause other interested parties difficulties in representing their
interests.
The Department has not specifically adopted these suggestions, but
does recognize that some of these concepts factor into its decision as
to whether good cause has been shown. As the Department indicated in
the preamble to the proposed regulations, decisions regarding the
possibility of extensions will be based on the ability of the party to
respond within the original deadline and the parties' and the
Department's ability to accommodate the requested extension. Thus, the
Department believes that it is appropriate to determine whether to
grant an extension, and for how long, based upon the facts in a
particular proceeding. 61 FR at 7326.
Section 351.303
Section 351.303 contains the procedural rules regarding filing,
format, service, translation, and certification of documents.
Time of filing: One commenter proposed that the regulations provide
that in computing any period of time prescribed or allowed by the
statute, the regulations, or the instructions of the Department, when
the last day of the period is not a business day, the period runs to
the first business day. In our view, the regulations as drafted
accommodate the commenter's proposition. Specifically, Sec. 351.303(b)
provides that if the applicable time limit expires on a non-business
day, the Secretary will accept documents that are filed on the next
business day (see also Sec. 351.103 describing the location and
function of Import Administration's Central Records Unit).
The commenter also proposed that the regulations provide that
whenever a period is less than 11 days, intermediate non-business days
are excluded from the count. The Department has not adopted this
proposal. The very few deadlines in these regulations of less than 11
days were specifically established by the Department after
consideration of related timing issues.
Filing of submissions: One commenter suggested that the regulations
provide that the additional copies of APO documents should be filed
within the applicable time limits for filing business proprietary
versions instead of waiting for the one-day lag rule so that analysts
have an extra day to review the documents. The Department has not
adopted this suggestion. A principal reason that the Department revised
and codified the one-day lag rule in the regulations was to avoid the
problem of analysts working from documents with mistakes in bracketing
of business proprietary information. As a result, Sec. 351.303(c)(2)(i)
provides for filing of only one copy of the business proprietary
version of a document within the applicable time limit;
Sec. 351.303(c)(2)(ii) provides for filing of six copies of the
complete, final business proprietary version, i.e., with bracketing
mistakes corrected, on the next business day. This final version is the
one distributed internally to the analysts. If parties wish to send
additional courtesy copies directly to the analysts, they should
similarly send this complete, final business proprietary version.
Document markings: We have made a minor change to
Sec. 351.303(d)(2)(v) to clarify that only the business proprietary
version of a document filed under Sec. 351.303(c)(2)(i) of the one-day
lag rule should include the warning ``Bracketing of Business
Proprietary Information is Not Final for One Business Day After Date of
Filing'' on pages containing business proprietary information.
Translation to English: Section 351.303(e) requires that documents
submitted in a foreign language be accompanied by an English
translation. One commenter proposed that regulations provide that
English language summaries of foreign language documents may be
submitted in lieu of complete translations. We have not adopted this
proposal. When parties are unable to comply with the English-
translation requirement, the Department will work with them on an
acceptable alternative. Furthermore, as explained in the preamble to
the proposed regulations, parties may submit an English translation of
pertinent portions of a non-English language document. 61 FR at 7326.
Another commenter proposed that the regulations include this latter
clarification. We agree that the clarification that parties may submit
an English translation of only pertinent portions of a document, as
opposed to the entire document, is helpful and have included it in the
final regulations. The regulation makes clear, however, that parties
must obtain the Department's approval for submission of an English
translation of only portions of a document prior to submission to the
Department.
Service of copies on other persons: Section 351.303(f) provides for
service of documents filed with the Department on all other persons on
the service list. The Department has received a number of informal
suggestions and comments by parties seeking permission to serve certain
documents by facsimile or other electronic transmission processes. The
Department believes that under certain conditions, service by means
other than personal service or first class mail is permissible. As a
result, we have added new paragraph (f)(1)(ii) to provide for service
of public versions and business proprietary versions containing only
the server's own business proprietary information on other persons on
the service list by facsimile or other electronic means, such as e-
mail, where the intended recipient consents to such service. This
provision does not apply to filing documents with the Department.
Proposed paragraph (f)(1) has been renumbered as paragraph (f)(1)(i).
One commenter proposed that the regulations require the Department
to serve all parties on the service list copies of any document that
the Department transmits to another party in the proceeding. The
commenter also proposed that the regulations require the Department to
notify immediately all parties whenever it transmits a document to a
party. A second commenter supported these proposals.
The Department has not adopted these proposals. We recognize the
importance of making documents available to parties and believe that
the current mechanisms for making documents available are adequate.
Specifically, for documents the Department releases under APO, under
the terms of the APO application (where parties may ask to receive all
memoranda generated by the Department) the Department releases such
documents to all parties under APO. All public documents, including
public versions of documents containing business proprietary
information, generated by the Department are made available to parties
in our Central Records Unit (see Sec. 351.103). As circumstances
warrant, the Department also releases public
[[Page 27338]]
documents directly to parties other than the recipient and will
continue to do so.
Certifications: Section 351.303(g) provides that each submission
containing factual information must be accompanied by the appropriate
certification regarding the accuracy of the information. One commenter
proposed that the regulations provide that the required party
certification may be submitted for the first time when the party files
its public version and any corrections to its proprietary version. The
Department has not adopted this proposal. A person must file the
applicable certification(s) with each submission of factual
information, including the original business proprietary version of a
document filed with the Department, within the applicable time limits
pursuant to Sec. 351.303(c)(2). The public version and the final
business proprietary version filed on the following business day must
be identical to the business proprietary version filed the previous day
except for any bracketing corrections. Therefore, there is no reason
why the certification should change.
Another commenter proposed that to authenticate the date of
certification, the Department should require an original dated
certification sworn before an authorized equivalent to a notary public
for each submission. One commenter opposed this proposal. We have not
adopted this proposal. The Department believes that such a regulation
would not provide substantially greater assurance of completeness and
accuracy of submitted information, yet it would further complicate the
process of submitting information. We assume that legal counsel, other
representatives, and company officials are acting in good faith when
they certify to the completeness and accuracy of a specific submission.
For this reason, we also have not adopted regulations authorizing
sanctions for certification violations as proposed by two commenters.
Section 351.304 [Reserved--APO]
Section 351.305 [Reserved--APO]
Section 351.306 [Reserved--APO]
Section 351.307
Section 351.307 deals with verification of information.
Conducting verification: One commenter suggested that there is no
need for automatic verifications where the Department intends to revoke
an order as the result of a sunset review. The commenter proposed that
the regulations clarify that verifications for sunset reviews should
occur only for good cause. The Department has not adopted this
suggestion. Section 782(i) of the Act mandates that the Department
conduct verification before revoking an order as the result of a sunset
review.
Another commenter proposed that the regulations establish 30 days
after receipt of the supplemental response as the deadline for
verification requests. The commenter was concerned that because the
Department frequently grants extensions to respondents to answer
questionnaires and supplemental questionnaires, the ability of domestic
interested parties to demonstrate the requisite ``good cause'' would be
hampered by time constraints.
The Department has not adopted this suggestion. While the
regulations establish a deadline for requesting verification in an
administrative review upon request where no verification was conducted
during either of the two immediately preceding administrative reviews
(Sec. 351.307(b)(1)(v)), there is no deadline for requesting
verification in an administrative review based on good cause
(Sec. 351.307(b)(1)(iv)). Thus, nothing prevents domestic interested
parties from making good cause arguments at any point in the review,
including after supplemental responses are filed. However, the
Department's practice is to conduct verification in administrative
reviews prior to issuing its preliminary results. Good cause arguments
made late in the proceeding may not allow sufficient time for the
Department to conduct verification. The third-year verification
provision has a deadline for domestic interested parties to request
verification of 100 days after publication of the notice of initiation
of review. This timeframe allows the Department sufficient time to
prepare for verification.
Verification of a sample: Section 351.307(b)(3) provides that the
Department may select and verify a sample of exporters and producers
where it is impracticable to verify relevant factual information for
each person due to the large number of exporters or producers included
in an investigation or administrative review. One commenter proposed
that the regulation be revised to provide that sample verifications
will be relied upon in only exceptional circumstances, and that it is
the Department's intention, in cases involving numerous potential
respondents, to select a reasonable number of companies that can be
examined and verified.
The Department has not adopted this proposal. As provided in the
regulation, the Department may verify a sample of respondents where it
is impracticable to verify every respondent due to the large number of
companies included in an investigation or review. A decision as to
whether it is impracticable to verify every respondent is made on a
case-by-case basis, considering the circumstances particular to a
specific investigation or review.
Verification report: Section 351.307(c) provides that the
Department will issue a verification report. One commenter proposed
that the regulations require the Department to issue a verification
report normally no later than 30 days after completion of verification
in an investigation, and no later than 14 days prior to the issuance of
preliminary results in an administrative review. Another commenter
proposed that the regulations provide that documents that are retained
by the Department and designated as verification exhibits in the
verification report be served within 48 hours after service of the
verification report.
The Department has not adopted these proposals. Because the
Department's standard practice is to issue verification reports and
require service of verification exhibits as soon as possible after
verification, the Department does not believe that specific regulatory
deadlines are necessary.
Another commenter proposed that the regulations provide that
verification reports will not be released to respondent's counsel for
comments on bracketing proprietary information before release to
domestic industry counsel because to do so allows respondents to obtain
an unfair head-start on preparation of verification comments, case
briefs, etc. An additional commenter proposed that draft verification
reports, as well as the final report, should be included on the record.
The Department has not adopted either proposal. Because they are
not final, draft verification reports, including reports where
bracketing has not been finalized, are not included in the record or
released generally to all interested parties. Furthermore, release of
an unfinished version of the final document risks inadvertent release
of business proprietary information belonging to the verified
respondent. The sole purpose of providing this draft is to allow a
respondent to comment on proper bracketing..
One commenter suggested that regulations should provide that within
seven days of the completion of verification, the verifying official
should memorialize for the administrative record all requests for new
information as a result of the completed verification, the date
verification for that company was completed, and any other official
[[Page 27339]]
requests for adjustments to the database relied on in the preliminary
phase of the proceeding, whether or not considered new information. In
addition, the commenter proposed that in a cover letter transmitting
the requested information the government or person supplying the
requested information should be required to separately identify every
change to the computer database from the database relied on by the
Department in the preliminary phase, identify every change to the
computer database made as a result of the verifying officials' request,
and certify that no changes have been made to the database relied on by
the Department in the preliminary phase with the exception of those
noted in the cover letter.
The Department does not believe that additional specific
regulations are necessary, because Department practice already
incorporates many of the commenters' suggestions. The Department
intends to incorporate the remaining suggestions into its practice
because they represent improvements to the verification process.
Procedures for verification: Section 351.307(d) describes certain
procedures for verification. A number of commenters proposed that the
regulations require the Department to provide respondents with the
complete verification outline, including the date and place of
verification, the information to be verified, and a detailed outline of
verification steps to be followed, by a particular date prior to the
commencement of verification. Some commenters proposed seven days;
others proposed 14 days.
With respect to these suggestions, the Department in practice
issues the verification outline normally not less than seven days prior
to the commencement of verification. Thus, a specific regulation on
this issue is unnecessary.
One commenter proposed that the regulations provide that any member
of the verification team who is not an officer of the U.S. government
must agree to be subject to the APO. We have not adopted this
suggestion, because as part of the Department's standard practice,
individuals that are not Department employees, such as interpreters or
embassy personnel, are required to sign a standard non-disclosure
agreement regarding limited disclosure of business proprietary
information.
Two commenters opposed the Department's stated intention to require
respondents to submit any computer programs used to identify sales
subject to review in advance of verification. One commenter argued that
the computer program was not likely to be helpful because it would
reflect the unique aspects of each company's computer systems and it
would be very difficult for someone not familiar with the company's
computer system to understand the program. The other commenter argued
that the record consists of the sales listing and not the programs used
to generate that listing. A third commenter expressed support for the
Department's intention to request the computer programs.
With respect to these suggestions, where helpful, the Department
intends to require that, prior to the commencement of verification,
respondents submit any computer programs used to identify the sales
subject to investigation or review. If, over time, it becomes clear
that nothing helpful to the verification process is gained by reviewing
these computer programs, the Department will end this practice.
Another commenter proposed that the regulations provide that all
parties have an opportunity to comment on significant aspects of
verification, such as notice of verification and the verification
outline. Another commenter proposed that the regulations provide that
petitioners must submit any pre-verification comments no later than 14
days before the scheduled starting date of any verification.
We have not adopted these suggestions, because subject to the
applicable statutory, regulatory, or submission-specific deadlines,
parties are free to comment on any aspect of verification.
One commenter proposed that the regulations clarify that the scope
of verification is limited to reviewing the accuracy of factual
information submitted by respondents and that the Department will pay
deference to the verification reports prepared by its analysts. The
Department has not adopted these proposals. Consistent with section
782(i) of the Act, the Department will verify, where applicable,
information relied on in making its final determination. The SAA at 868
states that the Department is not precluded from requesting further
information during a verification. Contrary to the commenter's
suggestion, therefore, the Department is not limited during
verification to reviewing only the accuracy of factual information
previously submitted by respondents. We agree that verification reports
are evidence on the record that the Department must consider in making
its final determination along with all other relevant information on
the record.
Another commenter proposed that the regulations provide that if the
Department is not able to trace information in the responses to
documents generated by the company or government in the normal course
of business or is not able to reconcile the cost of production response
to the company's financial statements, the Department will reject the
response and use facts available.
Section 776(a)(2)(D) of the Act provides that the Department may
use facts available where a person provides information that cannot be
verified. In the interest of not repeating statutory provisions in the
regulations, the Department has not adopted this proposal.
Other comments: One commenter correctly pointed out that the
preamble to the proposed regulations, 61 FR at 7327, incorrectly states
that Sec. 351.307(d)(2) provides for access to the records of persons
not affiliated with respondents. The correct provision is
Sec. 351.307(d)(3).
Several commenters expressed support for the Department's rejection
of suggestions by several other commenters that the Department allow a
neutral third party to attend verification, copy all documentation
relied upon in verification, allow all parties to review all draft
verification reports, include in the record both the draft and final
versions of the verification reports, conduct verification in
Washington, and permit domestic counsel and consultants to participate
at verification. See 61 FR at 7327 (discussing the Department's
original response to these suggestions in the preamble to the proposed
regulations). We continue to believe that the original suggestions
should not be adopted in the final regulations.
Section 351.308
Section 351.308 deals with determinations on the basis of the facts
available.
When to apply facts available: Section 351.308(b) provides that the
Department may make a determination based on facts available in
accordance with section 776(a) of the Act.
Two commenters proposed that the regulations provide that the
Department should take into account the magnitude of the deficiencies
or the effect on the margin in applying facts available. One of the
commenters suggested that total facts available normally should not be
applied unless there is a consistent pattern of inaccurate and
unverifiable information which affects the reliability of a substantial
portion of the information on which the Department
[[Page 27340]]
must rely for its determination. Another commenter proposed that the
Department only apply total facts available under extreme
circumstances, for example, where a respondent fails to answer a
questionnaire, refuses to allow verification, or totally fails
verification. An additional commenter proposed that the regulations
require the use of facts available when the government or person
objects to verification. Another commenter proposed that the
regulations provide that facts available may be used to fill gaps in
the record. Another commenter proposed that the regulations provide
that partial facts available should only be used where the information
deemed inaccurate or unverifiable affects a large number of the
necessary costs or price comparisons, the information deemed to be
inaccurate or unverifiable is likely to have a material effect on the
outcome of the calculation, and insufficient transactions remain
unaffected by the deficiency to base the dumping margins on those
transactions alone.
We have not adopted these suggestions. Some suggestions
unnecessarily limit the application of facts available; others already
are directly covered by the statute or regulations.
Section 776(a) of the Act provides that the Department may make
determinations on the basis of the facts available whenever necessary
information is not available on the record, an interested party or any
other person withholds or fails to provide information requested in a
timely manner and in the form required or significantly impedes a
proceeding, or the Secretary is unable to verify submitted information.
In addition, Sec. 351.307(b)(4) provides that if a person or government
objects to verification, the Department may disregard any or all
information submitted by the person in favor of use of facts available.
One commenter proposed that the regulations clarify that where
information has been submitted on the record as to a particular issue,
facts available will be used only if the information does not meet the
requirements of section 782(e) of the Act. The commenter also suggested
that Sec. 351.308(a) should be modified to clarify that the use of
facts available is subject to sections 782 (c)(1) and (e) of the Act
regarding the Department's modification of certain information
requirements and paragraph (e) of Sec. 351.308.
We have not adopted these suggestions. Section 351.308(e) provides
that the Department will not decline to consider information that is
submitted by an interested party and is necessary to the determination
but does not meet all the applicable requirements established by the
Department if the conditions listed under section 782(e) of the Act are
met. This is different from the commenter's proposal that facts
available will only be used if information does not meet the
requirements of section 782(e) of the Act. Where the Department agrees
to modifications of certain information requirements under sections
782(c)(1) of the Act, it would have no reason to apply facts available
to a respondent that complied fully with the modified information
requirements, barring other problems involving, for example, failure of
verification completely or in part.
When to make an adverse inference: Section 776(b) of the Act
provides that the Department may use an inference adverse to the
interests of a party in selecting facts available where the Department
finds that that party ``has failed to cooperate by not acting to the
best of its ability to comply with a request for information.''
One commenter recognized that the regulations provide the
Department with significant discretion in determining when a respondent
is ``acting to the best of its ability,'' and urged the Department to
apply this standard reasonably and fairly in actual practice. Other
commenters proposed that the regulations provide that when a respondent
fails to cooperate, the imposition of adverse inferences should be
mandatory, not discretionary. These commenters argued that application
of neutral facts available when a respondent fails to cooperate with
requests for information would undermine the Department's ability to
obtain complete, timely, and accurate information when carrying out its
statutory obligations.
The Department does not agree that the imposition of adverse
inferences is mandatory. Section 776(b) of the Act provides that if the
Department finds that an interested party has failed to cooperate by
not acting to the best of its ability to comply with a request for
information, the Department, in reaching its determination, ``may use
an inference that is adverse to the interests of that party in
selecting from the facts otherwise available.''
A number of commenters proposed that the regulations should provide
that generally a good faith effort to provide information responsive to
the Department's request meets the ``best of its ability'' requirement.
Several parties opposed the ``good faith effort'' standard, arguing
that good faith has nothing to do with ``best of its ability.'' One
commenter proposed that the regulations provide that in determining
whether a respondent has acted to the best of its ability to supply
requested data, the Department should take into account all information
submitted by respondents. Another commenter suggested that the
regulations provide that in determining whether a respondent's failure
to provide certain data constitutes grounds for adverse inferences, the
Department will consider all circumstances of the respondent's
position, including the number of reviews in which identical
information has been requested. One commenter proposed that the
regulations provide that the Department is required to identify
affirmative evidence of a respondent's bad faith before making an
adverse inference. One commenter also proposed that the regulations
provide that where the Department determines that an interested party
has not made a good faith effort, the Department should be required to
state on the record the reasons for its conclusion that the interested
party had not made a good faith effort before drawing an adverse
inference.
The Department has not adopted these proposals. As the Department
explained in the preamble to the proposed regulations, the
determination of whether a company has acted to the best of its ability
will be decided on a fact- and case-specific basis. The Department will
consider whether a failure to respond was due to practical difficulties
that made the company unable to respond by the specified deadline. It
is clear, however, that affirmative evidence of bad faith on the part
of a respondent is not required before the Department may make an
adverse inference. See 61 FR at 7327-28.
One commenter suggested that the regulations reserve ``punitive''
use of facts available for cases of deliberate misrepresentation of
facts because it is not fair to penalize a company for making an
economically rational decision about the costs and benefits of whether
to participate in a proceeding. Two other commenters proposed that the
regulations provide that no adverse inference should be drawn if a
party submits information that is in the form that is regularly kept
for corporate records, provided that such information is substantially
equivalent to the information requested and the party shows that
submitting the information requested in the required form would pose a
significant burden. Another commenter proposed that the regulations
clarify that if late in the
[[Page 27341]]
proceeding the Department disagrees with a respondent's methodology, as
a result of which the necessary information is not on the record, no
adverse inference should be drawn if there is no time to supplement the
record. Other commenters proposed that the regulations require that
where the Department disagrees with a respondent's methodology on a
given adjustment or issue, the Department will provide respondents with
a reasonable opportunity to provide any data necessary so that the
Department's revised methodology can be based on the company's actual
data rather than on adverse facts available.
The Department has not adopted these proposals. As discussed above,
the Department will make its determination of whether to apply facts
available on a fact- and case-specific basis. The determination of
whether a company has acted to the best of its ability to comply with
an information request can only be made based on the record evidence in
a particular proceeding.
One commenter proposed that the regulations provide that the
Department may conclude that a party has ``failed to cooperate by not
acting to the best of its ability'' even though it has submitted some
information to the agency, if it has not submitted other information
requested or failed to clarify an inconsistency the agency identifies.
In addition, the commenter proposed that the regulations provide that
the Department may use available data in an adverse manner when the
Department has determined that a party has failed to cooperate and when
no alternative ``adverse'' information is available. The commenter was
concerned that respondents may fail to cooperate by deliberately
withholding information requested by the Department until verification,
but then benefit from use of the information discovered at verification
without an adverse inference being made because it becomes the only
information available on the record.
While we do not disagree with the substance of the comment, we do
not believe that this specific addition to the regulation is necessary.
Under section 776 of the Act and Sec. 351.308, the Department has the
authority to adequately address these types of situations as they
arise.
Another commenter proposed that the regulations provide that
respondents must certify that their responses comply with prior
Department rulings as to reporting requirements applicable to their
company. The commenter also suggests that the regulations provide that
the Department will make an adverse inference whenever a respondent
fails to comply with prior Department rulings with regard to that
company without identifying and justifying such non-compliance.
The Department has not adopted these proposals. The Department may
reconsider its position on an issue during the course of a proceeding
in light of the facts and arguments presented by the parties. Parties
are entitled, at the risk of the Department determining otherwise, to
argue against a prior Department determination.
Two commenters proposed that the regulations provide that failure
to produce data from ``affiliated'' parties, over which a respondent
has no real leverage or control, would not justify the use of adverse
inferences. Another commenter proposed that the regulations should
provide that where a respondent has made a good faith effort to obtain
information from an affiliate, failure of the affiliate to provide the
information should not give rise to an adverse inference. One commenter
proposed that the Department avoid use of adverse facts available when
a foreign law prohibits or constrains an affiliated party from
providing to the respondent information requested by the Department.
Several commenters also suggested that the regulations provide that
failure to produce data where the timeframe for compiling data is
unduly short, mistakes in calculations and unintentional errors of
commission or omission, and failures to produce all requested documents
should not justify the use of adverse inferences.
While we do not disagree with the substance of some of these
comments, we do not believe the addition of these specific provisions
is warranted. The Department will make determinations on the basis of
the facts available and determine whether to apply adverse inferences
on a fact- and case-specific basis.
What to use as facts available: One commenter urged the Department
to apply its new regulations regarding the selection of facts available
in a fair and flexible manner so as to faithfully implement the spirit
of the law. Two other commenters proposed that the regulations provide
that the Department should consider information submitted by
respondents for use as facts available even if it is not ideal in all
respects. Another commenter proposed that the regulations provide that
in determining what data should be applied as facts available, the
Department will take into account all information and arguments
supplied by the parties including comments concerning the accuracy of
the data to be used as facts available.
With respect to these suggestions, the Department will consider all
information on the record, including comments from the parties, in
determining what to use as facts available. No additional regulation is
necessary to accomplish this.
Another commenter proposed that the regulations make clear that the
Department will not follow its previous policy of applying the highest
rate ever applied to the respondent to particular sales as ``partial
BIA.'' This would be an unlawful use of an adverse inference, because
the respondent would have provided information to allow the calculation
of margins on the majority of its sales and thus presumably has
cooperated to the best of its ability. We have not adopted this
suggestion because, the fact that the Department has not adopted the
two-tiered methodology for selecting BIA developed under the old law
(see 61 FR at 7327) does not preclude the Department from applying
information in a similar manner under the new facts available provision
where such application would be consistent with the new law and
regulations.
Several commenters proposed that the regulations provide that all
respondents, regardless of the degree to which they are deemed to have
cooperated, are entitled to submit comments on what to use as facts
available, and to propose independent sources for use as secondary
information. Another commenter opposed the proposition that
noncomplying respondents be entitled to comment on what information
should be used as facts available.
Although the Department has not adopted a specific regulation as
suggested, nothing prevents parties from filing comments regarding what
to use as facts available. Furthermore, the statute does not limit the
specific sources from which the Department can obtain facts available.
One commenter proposed that the regulations provide that data
contained in a petition will not be used if it is based on unreasonable
and unsubstantiated assumptions, is otherwise distorted or is not
corroborated. Another commenter proposed that the regulations provide
that information in the petition should only be used as a last resort
or when all parties agree to the use of such information, and that
petition information may only be used to the extent that it is
verifiable and consistent with findings in the investigation or review.
We have not adopted these proposals. Section 776(c) of the Act
provides that,
[[Page 27342]]
to the extent practicable, the Department will corroborate secondary
information, which includes the petition, from independent sources that
are reasonably at the disposal of the Department. The Department
believes the suggested additional restraints on the use of such
information are not warranted.
Corroboration of secondary information: Section 351.308(d) provides
that where the Department relies on secondary information, to the
extent practicable the Department will corroborate that information
from independent sources, such as published price lists, official
import statistics and customs data, and information obtained from
interested parties during the instant investigation or review.
One commenter expressed support for the Department's rejection of
the suggestion that information from a petition be deemed corroborated.
The commenter suggested that the final regulations retain the
requirement that information from a petition, like information from any
other secondary source, must be corroborated.
We have retained this requirement. Consistent with the SAA at 870
and section 776(c) of the Act, Secs. 351.308(c) and (d) provide that,
to the extent practicable, the Department will corroborate secondary
information, including information derived from a petition.
Another commenter proposed that the regulations provide that in
determining what facts available to use, the Department will choose the
most probative facts available. The Department has not adopted this
proposal. The SAA at 870 explains that corroborate means that the
Department must satisfy itself that secondary information to be used as
facts available has probative value, not that the Department must
choose the most probative information as facts available.
One commenter proposed that the regulations provide that the
Department may consider information provided by industrial users and
consumers in corroborating secondary information. Section 351.308(d)
provides that independent sources used to corroborate secondary
information ``may include, but are not limited to, published price
lists, official import statistics and customs data, and information
obtained from interested parties during the instant investigation or
review.'' The Department has not amended the regulation to include
information provided by industrial users and consumers because it is
unnecessary. The Department agrees with the commenter that the
Department may also consider information provided by industrial users
and consumers in corroborating secondary information. The regulation is
clear that the list is not an exhaustive list of independent sources.
Section 351.309
Section 351.309 deals with written argument. We have made a minor
change to paragraphs (c)(2) and (d)(2) to encourage parties to include
a table of statutes, regulations, and cases cited in their case and
rebuttal briefs in addition to summaries of their arguments.
Several commenters proposed that the Department accept reply briefs
after a hearing. With respect to this proposal, in certain
circumstances, the Department may request parties to file reply briefs
after a hearing. The Department will decide whether to do so on a case-
by-case basis.
Another commenter proposed that the deadline for filing rebuttal
briefs in investigations and reviews, under Sec. 351.309(d), be five
business days after the filing of case briefs, instead of five calendar
days. We have not adopted this proposal. Given the statutory time frame
for completion of investigations and reviews, the Department has
determined that five calendar days is appropriate.
Section 351.310
Section 351.310 deals with matters related to hearings.
One commenter proposed that the regulations retain the provision
that certain high-level employees chair the hearing to ensure that the
hearings are effective and useful. The commenter also proposed that the
regulations provide that all Department employees who have been
involved in the investigation or review normally will be present at the
hearing to ensure that those individuals involved in the decision-
making process will be familiar with all relevant issues prior to
reaching the final determination.
While we agree with the substance of the comments, we do not
believe that a specific regulation on this point is necessary. The
Department's practice is to have a high-level employee chair the
hearing and to ensure that employees involved in the proceeding attend
the hearing.
Two commenters proposed that parties should be allowed to comment
on any issue raised in the proceeding during the hearing, whether or
not that issue is specifically addressed in the party's case brief or
rebuttal brief. One commenter proposed that the regulations allow for
witness testimony and the collection of new evidence at hearings.
The Department has not adopted these proposals. The introduction of
testimony, other new evidence, and new arguments at the hearing is not
feasible given that parties will have no way to prepare rebuttals or
respond to introduction of new information and argument. Furthermore,
the Department would have difficulty analyzing and verifying such new
information and argument at this stage of the proceeding.
A number of commenters supported the proposed improvements to the
hearing process including allowing for closed hearing sessions to
discuss proprietary data. One commenter proposed that Sec. 351.310(f)
be revised to allow for consolidated hearings only if all interested
parties in each case agree. The Department has not adopted this
proposal. However, the Department certainly will take into
consideration any opposition to consolidation of hearings in making is
decision.
Another commenter proposed that the regulations provide that
parties will be notified in advance of the hearing of the issues of
concern to the Department. We have not adopted this proposal. The
Department has on occasion requested that parties brief specific issues
of concern to the Department and will continue to do so where
necessary.
Section 351.311
Section 351.311 deals with countervailable subsidy practices
discovered during an investigation or review. We received one comment
regarding Sec. 351.311 to the effect that the Department should: (1)
clarify that Sec. 351.311 covers a broad array of subsidies and subsidy
practices; (2) clarify that petitioners do not carry the burden of
establishing that a newly discovered subsidy is countervailable, but
rather than a subsidy need only be potentially countervailable; and (3)
specify how much time is insufficient to preclude the Department from
considering a practice in the course of the proceeding. One commenter
opposed these suggestions.
We have not adopted these suggestions. With respect to (1), we do
not believe that the requested change is necessary, because
Sec. 351.311 is not limited by its terms to particular types of
subsidies. With respect to (2), we believe that the phrase ``appears to
provide a countervailable subsidy with respect to the subject
merchandise'' adequately covers practices for which there may not have
been a definitive determination of countervailability. Finally, with
respect to (3), we agree with the opposing commenter that the time
necessary to investigate a
[[Page 27343]]
particular subsidy practice will vary from case to case.
Section 351.312
Section 351.312 clarifies the regulatory provisions under which
industrial users and consumers are entitled to provide information and
comments and clarifies that all such submissions are subject to the
Department's standard filing requirements.
One commenter proposed that the phrase ``concerning dumping or a
countervailable subsidy'' be deleted from Sec. 351.312(b) because it
could be interpreted to limit the right of industrial users and
consumers to comment or file information on only the existence or
amount of dumping or subsidization. Another commenter proposed that the
regulations provide that there is no limitation on the issues that
industrial users may address. A third commenter proposed that the
regulations define ``relevant factual information'' as used in
Sec. 351.312(b) to include information relevant strictly to the
substantive issues before the Department, the sections of the statute
involved, and the statutory mission of the Department so as to not
allow already complex proceedings to be sidetracked because of
information and argument submitted on irrelevant issues, such as the
impact of orders on consumer prices. The commenter also proposed that
the regulations provide for the return of information and briefs that
go beyond this definition so that domestic interested parties would not
feel obliged to rebut irrelevant argumentation.
We have not adopted these proposals. The language in Sec. 351.312,
which provides that industrial users and consumers may submit
``relevant factual information and written argument * * * concerning
dumping or a countervailable subsidy'' parallels language in section
777(h) of the Act. The SAA at 871 also states that industrial users and
consumers comments ``must concern matters relevant to a particular
determination of dumping [or] subsidization * * *.'' This language is
intended to clarify that submissions and comments by industrial users
and consumers should focus on matters within the purview of the
Department's statutory authority to investigate and review dumping and
subsidization. In order to address the concerns raised by the
commenters, we wish to clarify that industrial users and consumers are
not limited to commenting on only the existence or amount of dumping,
and, for example, are entitled to comment on the scope of an
investigation. However, the Department will not consider comments on
matters not within the Department's purview in antidumping and
countervailing duty proceedings to be ``relevant.'' Although we
recognize the concern raised by the third commenter regarding
submissions on ``irrelevant'' issues, we do not consider it appropriate
to have a regulation providing for the rejection of information or
argument not ``relevant'' to the proceeding because the requisite
subjective determinations concerning the relevancy of submissions or
parts of submissions throughout the course of the proceeding would be
too time consuming.
Proposed Sec. 351.312(b) provided for the submission of relevant
factual information and argument to the Department under
Sec. 351.301(b) and paragraphs (c) and (d) of Sec. 351.309. Two
commenters proposed that the regulations allow for submission of
factual information and argument under all provisions of Sec. 351.301
and Sec. 351.309.
Upon further review, we have modified Sec. 351.312(b) to allow for
submission of relevant factual information and written argument by
industrial users and consumers also under Sec. 351.301(c)(1), providing
for rebuttal, clarification, or correction of factual information
submitted by another party, and under Sec. 351.301(c)(3), providing for
the submission of publicly available information to value factors under
Sec. 351.408(c). These provisions, in addition to the ones previously
listed in Sec. 351.312(b) provide industrial users and consumers the
opportunity to submit relevant information and argument to the
Department to assist us in our determinations. In addition, we note
that nothing in the regulations or the statute precludes industrial
users and consumers from making written submissions upon request from
the Department.
One commenter proposed that the Department formally establish a
practice of seeking industrial users' comments on the issue of industry
support for a petition. With respect to this suggestion, section
732(c)(4)(E) of the Act provides for pre-initiation filing of comments
on the issue of industry support for a petition only by those who would
qualify as an ``interested party'' if an investigation were initiated.
As a result, we have not adopted this proposal. However, the Department
has the authority to seek comments from any person, including
industrial users, and will determine whether to do so on a case-by-case
basis.
Subpart D--Calculation of Export Price, Constructed Export Price, Fair
Value, and Normal Value
Subpart D, which corresponds to subpart D of part 353 of the
Department's prior regulations, deals with what is commonly referred to
as ``AD methodology.'' Specifically, subpart D sets forth rules
concerning the calculation of export price (``EP''), constructed export
price (``CEP'') and normal value (``NV'').
Section 351.401
Section 351.401 deals with principles common to the calculation of
export price, constructed export price and normal value.
Adjustments in general: Section 351.401(b) sets forth certain
general principles that the Department will apply with respect to the
adjustments that go into the calculation of export price, constructed
export price, and normal value. We have revised paragraph (b) by
inserting ``and'' between paragraphs (b)(1) and (b)(2). In addition,
for the reasons discussed below, we have revised paragraph (b)(1).
Proposed paragraph (b)(1) stated that the party claiming an
adjustment must establish the claim to the satisfaction of the
Secretary. In connection with this paragraph, two commenters suggested
that the Department expressly provide that the respondent bears the
burden of establishing that selling expenses incurred in connection
with home market sales are direct expenses and that selling expenses
incurred in connection with U.S. sales are indirect expenses. These
commenters also argued that the regulations should state that the
respondent has the burden of establishing its entitlement to any
downward adjustment to normal value and any upward adjustment to export
price or constructed export price. They argued that, as drafted,
proposed paragraph (b)(1) could be construed as placing on domestic
interested parties the burden of establishing any downward adjustment
to export price or constructed export price.
In drafting proposed paragraph (b)(1), our intent was not to break
new ground, but rather to codify an established principle developed and
applied over the years by the Department and the courts. According to
this principle, the party in possession of the relevant information has
the burden of establishing to the satisfaction of the Secretary the
amount and nature of a particular adjustment. In the context of
adjustments to normal value, this rule was reflected in 19 CFR
Sec. 353.54 (1995) of the former regulations, which served
[[Page 27344]]
as the model for proposed paragraph (b)(1). Section 353.54 stated:
``Any interested party that claims an adjustment under Secs. 353.55
through 353.58 must establish the claim to the satisfaction of the
Secretary.''
Section 353.54, however, dealt only with adjustments to foreign
market value (now normal value), whereas in proposed paragraph (b)(1),
the Department was seeking to articulate a principle that would be
applicable to the calculation of both normal value and export price (or
constructed export price). Unfortunately, in the context of adjustments
to the U.S. side of the AD equation, proposed paragraph (b)(1), as
drafted, could be interpreted as shifting the burden to domestic
interested parties, something that was not our intent.
Accordingly, we have revised paragraph (b)(1) to accurately reflect
the principle discussed above. In particular, instead of referring to a
``claim'' for an adjustment in an undifferentiated manner, we have
referred to the two separate components of an adjustment: The amount
and the nature of an adjustment. With respect to establishing the
``nature'' of the adjustment, it is our intent to codify the well-
established principle that the Secretary will treat a selling expense
related to a U.S. sale as a direct expense unless a respondent
interested party establishes to the Secretary's satisfaction that the
expense is an indirect selling expense in nature. Conversely, the
Secretary will treat a selling expense related to a foreign market sale
as an indirect expense unless a respondent interested party establishes
that the expense is direct in nature. As the courts have recognized,
this assignment of the burden of proof is necessary to provide those in
possession of the relevant information with an incentive to produce it.
See, e.g., RHP Bearings v. United States, 875 F. Supp. 854, 859 (Ct.
Int'l Trade 1995), and cases cited therein.
A different commenter maintained that proposed paragraph (b)(1)
appropriately reflected the Department's practice of requiring a
respondent to provide sufficient support for claimed adjustments
without, at the same time, imposing rigid presumptions concerning the
nature of adjustments. This commenter suggested, however, that the
Department should further clarify paragraph (b)(1) by stating that the
Department will consider both the nature of the expense and the
individual circumstances of each respondent's records and accounting
system when determining whether a respondent has provided sufficient
support for an adjustment at issue.
This comment relates to another comment addressed in the section
entitled ``Other Comments'' at the end of our discussion of subpart D.
The issue common to both comments is the extent to which a firm's
internal record keeping procedures should dictate the results of an AD
analysis. As we state below with respect to the other comment, we have
sought, and will continue to seek, ways in which the AD process can be
made less onerous for all parties involved. However, the statute
imposes certain standards, such as standards relating to adjustments to
normal value and export price and constructed export price, that the
Department is not free to revise in order to accommodate a particular
respondent's accounting practices. Thus, while we certainly would take
a respondent's records and accounting systems into consideration in
determining whether that respondent had cooperated to the best of its
ability, we have not adopted this suggestion to revise paragraph
(b)(1).
Price adjustments: Proposed paragraph (c) restated the Department's
practice with respect to price adjustments, such as discounts and
rebates. The comments we received demonstrated a certain amount of
confusion concerning the meaning of paragraph (c), as well as the
nature of ``price adjustments'' in general. This confusion may be due,
in part, to a lack of precision in the Department's terminology over
the years.
In these final regulations, the Department has taken several steps
aimed at alleviating that confusion. First, we have added a definition
of the term ``price adjustment'' in Sec. 351.102. As discussed above,
contrary to the assumption of many commenters, price adjustments are
not expenses, either direct or indirect. Instead, price adjustments
include such things as discounts and rebates that do not constitute
part of the net price actually paid by a customer.
Second, we have made a clarification in paragraph (c) itself.
Paragraph (c) now provides that in calculating export price,
constructed export price, or a price-based normal value, the Secretary
will use a price that is net of any price adjustment that is reasonably
attributable to the subject merchandise or the foreign like product.
This use of a net price is consistent with the view that discounts,
rebates and similar price adjustments are not expenses, but instead are
items taken into account to derive the price paid by the purchaser.
The third clarification relates to the Department's policy
regarding the allocation of price adjustments. The Department's policy
concerning the allocation of both expenses and price adjustments is now
contained in a single paragraph, paragraph (g), and is discussed in
more detail below.
One commenter suggested that, at least for purposes of normal
value, the regulations should clarify that the only rebates Commerce
will consider are ones that were contemplated at the time of sale. This
commenter argued that foreign producers should not be allowed to
eliminate dumping margins by providing ``rebates'' only after the
existence of margins becomes apparent.
The Department has not adopted this suggestion at this time. We do
not disagree with the proposition that exporters or producers will not
be allowed to eliminate dumping margins by providing price adjustments
``after the fact.'' However, as discussed above, the Department's
treatment of price adjustments in general has been the subject of
considerable confusion. In resolving this confusion, we intend to
proceed cautiously and incrementally. The regulatory revisions
contained in these final rules constitute a first step at clarifying
our treatment of price adjustments. We will consider adding other
regulatory refinements at a later date.
Movement expenses: Paragraph (e) deals with adjustments for
movement expenses. At the outset, we should note that the Department
has restructured paragraph (e) so that paragraph (e)(1) now deals with
the term ``original place of shipment'' and paragraph (e)(2) deals with
warehousing expenses.
In discussing proposed paragraph (e)(2) (now paragraph (e)(1)), the
Department explained that in situations where the Department bases
export price, constructed export price, or normal value on sales made
by an unaffiliated reseller, the Department intended to measure the
movement adjustment from the place of shipment by a reseller, as
opposed to the production facility. See AD Proposed Regulations, 61 FR
at 7330. One commenter observed that this was only a partial
explanation, because it did not reflect the principle objective of the
statute, which is, according to the commenter, to measure the deduction
of movement expenses from both U.S. and foreign market prices from the
point of production. Accordingly, the commenter proposed that the
Department restate the general rule, as well as the application of the
rule in a reseller situation.
The Department recognizes that the term ``seller'' in the proposed
paragraph (e)(2) was subject to misinterpretation. Therefore, the
Department has modified
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this paragraph (which, again, is now paragraph (e)(1)) to clarify that,
where the Department bases export price, constructed export price, or
normal value on sales by the producer of the subject merchandise or
foreign like product, the Department will deduct all movement expenses
(including all warehousing) that the producer incurred after the goods
left the production facility. However, in situations where the
Department uses sales by an unaffiliated reseller (i.e., a person that
purchased, rather than produced, the subject merchandise or foreign
like product and that is not affiliated with the producer), the
Secretary may limit the deduction to movement and related expenses that
the reseller incurred after the goods left the place of shipment of the
reseller.
The purpose of distinguishing between sales by a producer and sales
by an unaffiliated reseller is to avoid deducting expenses that form
part of the reseller's cost of acquisition. In this regard, however,
one commenter noted that there may be different delivery patterns for
home market sales and sales to the United States. In response to this
comment, the Department has made paragraph (e)(1) permissive, in order
to maintain the flexibility needed to address certain delivery patterns
by resellers that differ by market.
Another commenter suggested that paragraph (e) should require
expressly that the Department limit adjustments to normal value to
movement expenses that are shown to be reasonably attributable to sales
of the foreign like product. In addition, the same commenter argued
that the Department should not limit adjustments to EP or CEP in any
way unless a respondent demonstrates that certain expenses are not
reasonably attributable to sales of subject merchandise.
In our view, the issues raised by this commenter involve the
allocation of expenses, a topic that the Department has dealt with
under paragraph (g), discussed below. Therefore, the Department has not
adopted this suggestion to revise paragraph (e).
Another commenter proposed that the Department modify paragraph
(e)(1) (now paragraph (e)(2)) to eliminate the reference to warehousing
expenses, because whether a particular direct warehouse cost is a
movement expense or a selling expense is a fact-specific inquiry. This
commenter argued that the proposed rule misleadingly suggested that all
warehousing expenses are movement expenses, a concept that is at odds
with past Department practice, unwarranted by case law, and unwarranted
given commercial practices. According to the commenter, the proposed
rule constituted a change in law and practice that was not intended in
the URAA. As with all expenses and adjustments, the Department can seek
information regarding the nature of any warehousing expenses in its
questionnaire, instruct respondents accordingly, and make an
appropriate determination, based on the record in each case, as to
whether a particular expense qualifies as a movement expense or a
selling expense.
The Department has not adopted this suggestion. The URAA specified,
for the first time, that the Department is to deduct movement and
related expenses from export price, constructed export price, and
normal value, and that this deduction should account for all such
expenses incurred after the merchandise left the place of production.
In this regard, the SAA at 823 specifies that in calculating EP and
CEP, the Department is to deduct ``transportation and other expenses,
including warehousing expenses, incurred in bringing the subject
merchandise from the original place of shipment in the exporting
country to the place of delivery in the United States.'' (Emphasis
added). The SAA includes similar language with respect to the
corresponding adjustment to normal value. SAA at 827. In addition, the
requirement to deduct warehousing expenses as movement expenses is made
even more plain by the language of the Senate Report, which states that
the Department must ``when included in the price used to establish
normal value, deduct * * * transportation, warehousing, and other
expenses incurred in bringing the merchandise from the original place
of shipment in the exporting country to the place of delivery in the
exporting country or a third country.'' S. Rep. No. 412, 103d Cong., 2d
Sess. 70 (1994).
In light of these clear legislative instructions, the Department
has continued to provide in paragraph (e)(2) for the treatment of
warehousing expenses as movement expenses. However, the Department has
modified this paragraph to clarify that the Department will not deduct
factory warehousing as a movement expense.
Collapsing of producers: Proposed paragraph (f) described the
circumstances under which the Department will treat two or more
affiliated producers as a single entity (i.e., ``collapse'' the
producers). Proposed paragraph (f) provided for the collapsing of
affiliated producers if (1) the producers have production facilities
for similar or identical products that would not require substantial
retooling of either facility in order to restructure manufacturing
priorities; and (2) there is a significant potential for the
manipulation of price or production. In addition, paragraph (f)
contained a non-exhaustive list of the factors to be considered in
identifying a significant potential for the manipulation of price or
production.
With respect to paragraph (f), several commenters suggested that
the Department should provide that it will collapse affiliated
producers only in extraordinary circumstances, an approach which, the
commenters alleged, is the Department's current practice. These
commenters also proposed that the regulations contain illustrations of
the extraordinary circumstances in which the Department will collapse
affiliated producers.
Other commenters urged that, in connection with the potential for
manipulation, the Department delete the word ``significant.'' According
to these commenters, this constitutes an unduly high threshold for
collapsing, in conflict with what these commenters alleged to be the
Department's existing practice.
Finally, one commenter suggested that the Department clarify that
(1) not all of the criteria of paragraph (f) need to be present in
order to collapse affiliated producers, and (2) the Department will
look to the potential for future price manipulation.
The differing descriptions of the Department's practice offered by
the commenters indicates that there has been a degree of confusion
concerning the Department's practice of collapsing affiliated
producers. We have promulgated paragraph (f) in order to clarify this
practice. In particular, the Department has codified the ``significant
potential'' criterion. The Department has not adopted the suggestion
that it will collapse only in ``extraordinary'' circumstances. A
determination of whether to collapse should be based upon an evaluation
of the factors listed in paragraph (f), and not upon whether fact
patterns calling for collapsing are commonly or rarely encountered.
On the other hand, we have retained the word ``significant'' with
respect to the potential for manipulation. The suggestion that the
Department collapse upon finding any potential for price manipulation
would lead to collapsing in almost all circumstances in which the
Department finds producers to be affiliated. This is neither the
Department's current nor intended practice. As indicated in paragraph
(f), collapsing requires a finding of more than mere affiliation.
We also have declined to include in the regulations examples of
situations in which the Department will collapse
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