64 FR 29818, June 3, 1999 DEPARTMENT OF COMMERCE International Trade Administration 19 CFR Part 351 [Docket No. 990521142-9142-01] RIN 0625-AA54 Proposed Regulation Concerning the Revocation of Antidumping Duty Orders AGENCY: Import Administration, International Trade Administration, Commerce. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: The Department of Commerce (the ``Department'' or ``DOC'') is proposing to amend 19 CFR 351.222(b), which governs the revocation of antidumping duty orders, in whole or in part, based upon an absence of dumping. The proposed regulation is intended to conform the existing regulation to the United States' obligations under Article 11 of the Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (``Antidumping Agreement'' or ``AD Agreement''). The proposed regulation, if adopted, would allow the Secretary to revoke an antidumping duty order if the Secretary concludes that producers or exporters did not sell subject merchandise at less than normal value for at least three consecutive years and that the continued application of the antidumping duty order as to those producers or exporters is no longer necessary to offset dumping. DATES: To be assured of consideration, written comments must be received not later than July 6, 1999. ADDRESSES: A signed original and two copies of each set of comments including reasons for any recommendation, along with a cover letter identifying the commenter's name and address, should be submitted to Robert S. LaRussa, Assistant Secretary for Import Administration, Central Records Unit, Room 1870, U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW, Washington, DC 20230. FOR FURTHER INFORMATION CONTACT: Melissa G. Skinner, Office of Policy, Import Administration, U.S. Department of Commerce, at (202) 482-1560, or Myles S. Getlan, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, at (202) 482-5052. SUPPLEMENTARY INFORMATION: Background: On July 24, 1997, the Department issued the final results of the third administrative review of the antidumping duty order on Dynamic Random Access Memory Semiconductors (DRAMs) Of One Megabit Or Above From Korea (62 FR 39809)(``DRAMs From Korea''), in which the Department considered the respondents'' request that the Department revoke the order, in part, under 19 CFR 353.25(a)(1996) (the precursor to 19 CFR 351.222(b)). Pursuant to this regulation, the Department may revoke an order, in whole or in part, if (1) producers and/or exporters have sold subject merchandise at not less than normal value for three consecutive years; and (2) the Secretary concludes that it is not likely that those producers and/or exporters will in the future sell subject merchandise at not less than normal value. Applying this regulation in DRAMs From Korea, the Department did not revoke the order because the second criterion had not been met. On January 29, 1999, a panel established by the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) determined that the [[Page 29819]] ``not likely'' standard contained in 19 CFR 353.25(a)(2) was inconsistent with the United States' obligations under Article 11.2 of the WTO Antidumping Agreement. The panel recommended that the United States ``bring section 353.25(a)(2)(ii) of the DOC regulations . . . into conformity with its obligations under Article 11.2 of the AD Agreement.'' The DSB adopted the panel report on March 19, 1999. On April 15, 1999, the United States announced its intention to implement the recommendations and rulings of the DSB. Consistent with section 123(g) of the Uruguay Round Agreements Act, which governs the Department's implementation of adverse panel reports, the Department is revising 19 CFR 351.222(b). Explanation of the Proposed Regulation Pursuant to 19 CFR Sec. 351.222(b)(1998), the Department may revoke an antidumping duty order, in its entirety or with respect to certain exporters or producers, if several criteria are met. In order to revoke an order, the Secretary must conclude that the exporter or producer has not sold subject merchandise at less than normal value for three consecutive years and that ``[i]t is not likely that those persons will in the future sell the subject merchandise at less than normal value.'' See 19 CFR 351.222(b)(1) and (2). In its report to the DSB, the Panel considered the consistency of the ``not likely'' standard described above with the obligations contained in Article 11.2 of the Antidumping Agreement. See United States--Anti-Dumping Duty On Dynamic Random Access Memory Semiconductors (DRAMS) Of One Megabit Or Above From Korea, WT/DS99/R (adopted March 19, 1999) (``Panel Report''). Article 11.2 of the Antidumping Agreement provides: The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue to recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately. As demonstrated by the language of Article 11.2, in reviewing the need for the continued application of an antidumping duty, the Department is obligated to terminate the duty if the Department concludes ``that the anti-dumping duty is no longer warranted.'' In interpreting the obligations contained in Article 11.2, the Panel concluded that an absence of dumping does not, in and of itself, require the revocation of an antidumping duty order. See Panel Report at para. 6.34. Thus, insofar as the Department's regulation requires exporters or producers requesting revocation to have sold subject merchandise at not less than normal value for at least three consecutive years prior to revocation, the Panel concluded that the Department's regulation is consistent with the United States' WTO obligations. The Panel then considered whether requiring a finding that a recurrence of dumping is ``not likely'' before revoking an order was consistent with Article 11.2. In this regard, the Panel noted that Article 11.2 requires authorities ``to examine whether the continued imposition of the duty is necessary to offset dumping.'' The Panel described this obligation as follows: We note that the necessity of the measure is a function of certain objective conditions being in place, i.e. whether circumstances require continued imposition of the anti-dumping duty. That being so, such continued imposition must, in our view, be essentially dependent on, and therefore assignable to, a foundation of positive evidence that circumstances demand it. In other words, the need for the continued imposition of the duty must be demonstrable on the basis of the evidence adduced. Panel Report at para. 6.42. As noted above, the Panel affirmed the Department's ability to maintain an antidumping duty order in the absence of present dumping, thus validating the Department's prospective analysis in determining the need for the continued application of an order. In addition, the Panel recognized that such a prospective analysis is inherently uncertain. However, while ``[m]athematical certainty is not required, . . . the conclusions should be demonstrable on the basis of the evidence adduced.'' Panel Report at para. 6.43. In this regard, the Panel determined that the Department's ``not likely'' standard does not provide a requisite degree of predictive assurance in performing a prospective analysis nor does it provide ``any demonstrable basis on which to reliably conclude that the continued imposition of the duty is necessary to offset dumping.'' Id. at para. 6.50. Thus, the Panel concluded that the ``not likely'' criterion contained in 19 CFR 353.25(a)(2)(ii) (currently 19 CFR 351.222(b)) is inconsistent with Article 11.2 of the Antidumping Agreement. In implementing the Panel's findings with respect to the revocation regulation, we sought to reform the regulation in a manner that will require the Department's determination of whether to revoke an order to be based upon positive evidence. In adopting the Panel Report, we recognize the Panel's conclusion that the ``not likely'' standard may, on its face, allow the Department in certain cases to maintain an order in the absence of positive evidence suggesting the necessity of maintaining the order to offset dumping. In this regard, we are confident that the revised standard provides the appropriate degree of predictive assurance required in a prospective analysis and provides a demonstrable basis upon which to reliably conclude whether maintaining the antidumping duty order is warranted. While the Panel interpreted ``not likely'' on the basis of its common meaning and usage, the Panel's ruling was not based upon the Department's application of the standard in DRAMs from Korea or any other prior case in which the standard was applied. In addition, the Panel affirmed the Department's prospective analysis in considering whether to revoke an antidumping duty order. We took these factors into account in revising the revocation regulation. The Department's analysis of whether to revoke antidumping duty orders based upon an absence of dumping has always implicitly addressed whether the continued application of an antidumping duty order is necessary to offset dumping. Therefore, since Article 11.2 itself provides a standard by which to measure the continued applicability of an antidumping duty order, promulgating an additional standard is not necessary to fulfill the United States' international obligations. Stated differently, the requirement contained in Article 11.2 that authorities examine the necessity of maintaining an antidumping duty constitutes a transparent, meaningful standard that can be incorporated into the Department's current statutory and regulatory scheme. In previous cases, the Department has applied 19 CFR 353.25(a)(2), now Sec. 351.222(b), in administrative reviews where an exporter or producer requested revocation and established that it had sold subject merchandise at not less than normal value for at least three consecutive years. The Department has consistently considered that an absence of dumping for three consecutive years was indicative that a [[Page 29820]] foreign respondent was ``not likely'' to sell at less than normal value in the future. Thus, the absence of dumping for three consecutive years served as a presumption in favor of revoking the order, which could be rebutted by positive evidence indicating that dumping may recur if the order were revoked. Such evidence reflected the likelihood that respondents would dump in the future. In this regard, we note that the Panel considered that evidence of likelihood of future dumping was relevant to a determination under Article 11.2, and suggested that one way to meet the requirements of the Antidumping Agreement would be to promulgate a standard which required a finding that respondents are likely to dump in the future before maintaining an order. See Panel Report at para. 6.48 n. 494. It is the Department's view that the Panel's findings with respect to the ``not likely'' standard does not necessitate a wholesale change in the practice described above. When requested to revoke an antidumping duty order based upon an absence of dumping for three consecutive years, the Department intends to continue its practice of revoking orders in the absence of any other record evidence indicating that the continued application of the order is necessary to offset dumping. When additional evidence is placed on the record, the Department will fully consider all relevant factors as to whether the continued application of the order is necessary to offset dumping. Factors considered in prior cases relating to the likelihood of future dumping would still be deemed relevant under the ``necessary'' standard derived from Article 11.2 of the Antidumping Agreement. That is, the Department may consider trends in prices and costs, investment, currency movements, production capacity, as well as all other market and economic factors relevant to a particular case. An analysis of this evidence, we believe, provides a demonstrable basis upon which to reliably conclude whether the continued application of an antidumping duty order is necessary to offset dumping and provides the appropriate degree of predictive assurance required in a prospective analysis. Effective Date Pursuant to section 123(g)(2) of the Uruguay Round Agreements Act (``URAA'')(19 U.S.C. 3533(g)(2)), the final amended regulation may not become effective until the end of the 60-day period beginning on the date on which the Department and the Office of the U.S. Trade Representative undertake consultations with the appropriate congressional committees concerning the proposed contents of the final rule. Since the date of consultations has not yet been determined, we are unable to determine the effective date at this time. If the proposed regulation is adopted, we will publish the effective date in the notice of final rulemaking based upon the date on which the Office of the U.S. Trade Representative and the Department consults with Congress. Classification E.O. 12866 This proposed rule has been determined to be not significant under E.O. 12866. Paperwork Reduction Act This proposed rule contains no new collection of information subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. E.O. 12612 This proposed rule does not contain federalism implications warranting the preparation of a Federalism Assessment. Regulatory Flexibility Act The Chief Counsel for Regulation of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The Department's existing regulations provide a procedural and substantive process by which the Secretary considers whether to revoke an antidumping duty order. The proposed rule retains the current procedural process and revises the substantive standard used by the Secretary to make the appropriate revocation determination. As discussed above, the proposed regulation would not significantly change the Department's practice in determining whether to maintain an antidumping duty order. Moreover, as the proposed regulation only changes the standard by which the Department considers whether to revoke an antidumping duty order, this action, in and of itself, will not have a significant economic impact. Therefore, the Chief Counsel concluded that the proposed rule would not have a significant impact on a substantial number of small business entities, and a regulatory flexibility analysis was not prepared. List of Subjects in 19 CFR Part 351 Administrative practice and procedure, Antidumping duties, Business and industry, Cheese, Confidential business information, Countervailing duties, Investigations, Reporting and recordkeeping requirements. Dated: May 27, 1999. Robert S. LaRussa, Assistant Secretary for Import Administration. For the reasons stated, it is proposed that 19 CFR Sec. 351.222(b) is amended to read as follows: PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES Subpart A--Scope and Definitions 1. The authority citation for part 351 continues to read as follows: Authority: 5 U.S.C. 301, 19 U.S.C. 1202 note; 19 U.S.C. 1303 note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538. Subpart B--Antidumping and Countervailing Duty Procedures 2. Section 351.222 is amended by revising paragraph (b) to read as follows: Sec. 351.222 Revocation of orders; termination of suspended investigations * * * * * (b) Revocation or termination based on absence of dumping. (1) The Secretary may revoke an antidumping order or terminate a suspended antidumping investigation if the Secretary concludes that: (i) All exporters and producers covered at the time of revocation by the order or the suspension agreement have sold the subject merchandise at not less than normal value for a period of at least three consecutive years; and (ii) The continued application of the antidumping duty order is no longer necessary to offset dumping. (2) The Secretary may revoke an antidumping order in part if the Secretary concludes that: (i) One or more exporters or producers covered by the order have sold the merchandise at not less than normal value for a period of at least three consecutive years; (ii) The continued application of the antidumping duty order as to those persons is no longer necessary to offset dumping; and (iii) Provided that, for any exporter or producer that the Secretary previously has determined to have sold the subject merchandise at less than normal value, the exporter or producer agrees in writing to its immediate reinstatement [[Page 29821]] in the order, as long as any exporter or producer is subject to the order, if the Secretary concludes that the exporter or producer, subsequent to the revocation, sold the subject merchandise at less than normal value. * * * * * [FR Doc. 99-14098 Filed 6-2-99; 8:45 am] BILLING CODE 3510-DS-P