Vol. 62 No. 96 Monday, May 19, 1997 p 27296 (Rule)
DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Parts 351, 353, and 355
Antidumping Duties; Countervailing Duties
AGENCY: International Trade Administration, Commerce.
ACTION: Final rule.
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.{1}
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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''); {2} 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
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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
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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
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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
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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
---- page 27345 ----
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
affiliated producers. In our view, these determinations are very much
fact-specific in nature, requiring a case-by-case analysis, as
reflected in the Department's determinations in actual cases, which are
published in the Federal Register.
With respect to the suggestion that not all of the factors
identified in paragraph (f) need be present in order to collapse
affiliated producers, to the extent that this suggestion is directed at
the factors relating to a significant potential for manipulation, we
agree. However, we believe that this principle already is clearly
reflected in proposed paragraph (f), and that an additional change is
not necessary.
On the other hand, the factors concerning a significant potential
for manipulation relate to only one of the two elements that must be
present in order to collapse affiliated producers. In addition to
finding a significant potential for manipulation, the Secretary also
must find the requisite type of production facilities. To clarify this
point, we have revised paragraph (f) so that paragraph (f)(1) refers to
the two basic elements, while paragraph (f)(2) contains the non-
exhaustive list of factors that the Secretary will consider in
determining whether there is a significant potential for manipulation.
With respect to the suggestion that the regulations clarify that
the Department will consider future manipulation as well as actual
manipulation in the past, we agree that the Department must consider
future manipulation. However, we believe the proposed regulation was
sufficiently clear on this point. In this regard, we selected the
standard of ``significant potential'' to deal with precisely this
point. In the past, the Department at times had used a standard of
``possible manipulation.'' As recognized recently by the Court of
International Trade, this latter standard may require evidence of
actual manipulation, whereas a standard based on the potential for
manipulation focuses on what may transpire in the future. FAG
Kugelfischer Georg Schafer KGaA v. United States, slip op. 96-108 at 23
(July 10, 1996).
In addition to the changes described above, the Department also has
changed what is now paragraph (f)(2)(ii) to clarify that the Department
will examine not only whether affiliated producers share management or
board members, but also whether they share board members or management
with, for example, a common parent.
Allocation of expenses and price adjustments: Proposed paragraph
(g) dealt with the treatment of expenses that are reported on an
allocated basis. In response to the substantial number of comments we
received concerning the subject of allocation, we have revised
paragraph (g) to provide greater clarity with respect to the allocation
of expenses. In addition, we have expanded the coverage of paragraph
(g) to include the allocation of price adjustments, and we have revised
the heading of paragraph (g) accordingly. Also, we have renumbered
proposed paragraph (g) as paragraph (g)(1).
By way of background, neither the pre-URAA statute nor the
Department's prior regulations addressed allocation methods, although
issues relating to allocation methods arose in almost every AD
investigation and review. Instead, the Department and the courts
resolved these issues on a case-by-case basis. The resulting absence of
guidelines has been responsible for a considerable amount of litigation
that increased the costs of AD proceedings for all parties involved,
including the Department. Therefore, the Department believes that its
administration of the AD law would be enhanced by the adoption of some
general guidelines on allocation methods that provide a greater measure
of certainty and predictability.
The statute, as amended by the URAA, continues to be silent on the
question of allocation methods. However, the SAA at 823-24 states that
``[t]he Administration does not intend to change Commerce's current
practice, sustained by the courts, of allowing companies to allocate
these expenses when transaction-specific reporting is not feasible,
provided that the allocation method used does not cause inaccuracies or
distortions.'' Although this statement was made in the context of
deductions from constructed export price for direct selling expenses,
we believe that the principle embodied in the statement applies equally
to price adjustments and other types of selling expenses, as well.
The commenters disagreed with respect to the Department's treatment
of allocated expenses and price adjustments and the interpretation to
be accorded the language in the SAA. Several commenters argued that all
allocations result in the attribution of expenses and price adjustments
to some sales that did not incur them, and remove them from some sales
that did. These commenters essentially argued that, as compared to
transaction-specific reporting, all allocation methods are defective.
Therefore, they asserted, the Department should consider all allocation
methods to be inaccurate or distortive within the meaning of the SAA.
With respect to these comments, the Department agrees that
allocated expenses or price adjustments may not be as exact as expenses
or price adjustments reported on a transaction-specific basis. However,
in our view, the drafters of the URAA and the SAA could not have
intended that all allocations are inherently distortive or inaccurate
for purposes of the AD law. Under such an interpretation (1) Congress
and the Administration permitted something less than transaction-
specific reporting, but (2) because allocation methods are per se
inaccurate and distortive, only transaction-specific reporting is
acceptable.
In our view, the drafters of the URAA and the SAA were not dealing
with abstract concepts, but instead were dealing with issues concerning
the application of a law to real life factual scenarios. As the Federal
Circuit stated many years ago in connection with this very issue: ``In
a purely metaphysical sense, Smith-Corona is correct in that the ad
expense cannot be directly correlated with specific sales. Yet, the
statute does not deal in imponderables.'' Smith-Corona Group v. United
States, 713 F.2d 1568, 1581 (1983). Therefore, when the drafters
referred to allocation methods as causing ``inaccuracies or
distortions,'' they must have been referring to allocation methods that
result in inaccuracies or distortions that are unreasonable in light of
the objectives of the AD law.
General rule: With the preceding discussion in mind, we now turn to
a discussion of the specific provisions of paragraph (g). Paragraph
(g)(1) contains the basic principle that the Department will follow in
dealing with allocated expenses and price adjustments, and continues to
establish a preference for transaction-specific reporting. There are
two principal changes from proposed paragraph (g).
First, we have revised paragraph (g)(1) to provide that the
Secretary will consider allocated expenses and price adjustments if the
Secretary is satisfied that the allocation method used ``does not cause
inaccuracies or distortions.'' As discussed above, because all
allocation methods are, in some sense, inexact, the Department intends
to reject only those allocations methods that produce unreasonable
inaccuracies or distortions.
Second, we have revised paragraph (g)(1) to cover the allocation of
price adjustments. As discussed in connection with Sec. 351.102(b) and
the new definition of the term ``price adjustments,'' price adjustments
are distinguishable from expenses.
---- page 27347 ----
In this regard, we received several comments that addressed the
relevance of Torrington v. United States, 82 F.3d 1039 (Fed. Cir.
1996), to the allocation of price adjustments. In that case, although
the Court appeared to question whether price adjustments constituted
expenses at all, id., at 1050, note 15, it held that assuming that the
price adjustments in question were expenses, they had to be treated as
direct selling expenses rather than indirect selling expenses.
According to the Court, ``[t]he allocation of expenses . . . does not
alter the relationship between the expenses and the sales under
consideration.'' Id., at 1051.
In our view, Torrington is of limited relevance to the instant
issue, because the Court did not address the propriety of the
allocation methods used in reporting the price adjustments in question.
Instead, it simply stated that regardless of the allocation methods
used, the Department could not treat the price adjustments as indirect
selling expenses. Moreover, these regulations are consistent with the
holding of the case, because, by distinguishing price adjustments from
expenses, we have ensured that the Department will not treat price
adjustments as any selling expenses, including indirect selling
expenses.
Reporting allocated expenses and price adjustments: Paragraph
(g)(2) deals with the information that a party must provide when
reporting an expense or a price adjustment on an allocated basis. One
commenter expressed concern that proposed paragraph (g) placed too much
emphasis on the Department's responsibility to verify an allocation
method, and insufficient emphasis on a respondent's obligation to
demonstrate its entitlement to an adjustment based on a particular
allocation method. We agree with the commenter, and have added
paragraph (g)(2) in order to address the commenter's concern.
First, the party must demonstrate to the Secretary's satisfaction
that it is not feasible to report the expense or price adjustment on a
more specific basis. Such a demonstration should include an explanation
of accounting systems, the manner in which the expenses or price
adjustments are incurred or granted, and an explanation of the
accounting practices in the industry in question.
In addition, paragraph (g)(2) also requires a party to explain why
the allocation method used does not cause inaccuracies or distortions.
With respect to this latter requirement, it is not our intent to
require a party to ``prove a negative'' or demonstrate what the amount
of the expense or price adjustment would have been if transaction-
specific reporting had been used. However, the party must provide a
sufficiently detailed explanation of the allocation method used so that
the Department can make an initial judgment at the time when
information is submitted as to the reasonableness of the method and, if
necessary, issue a supplemental questionnaire. Of course, allocation
methods, like any other type of factual information, are subject to
verification.
In this regard, we have not identified in paragraph (g) itself
specific types of allocation methods that the Department would consider
as acceptable. Before doing so, we first would like to gain more
experience in applying paragraph (g) in actual cases. However, there
are certain types of allocation methods that we believe would be
acceptable.
One such allocation method applies to cases where the Department
uses averages, such as when using the average-to-average price
comparison method under section 777A(d)(1)(A)(i) of the Act and
Sec. 351.414(d). In such instances, we would consider as acceptable an
allocation method that allocates total expenses incurred, or total
price adjustments made, in connection with sales included within an
averaging group over those sales.
For example, assume that an averaging group consists of sales of
products X, Y, and Z. The respondent in question is able to identify
the warranty expenses incurred in connection with sales of X, Y, and Z
in the aggregate, but cannot identify the warranty expenses incurred on
a product-specific basis. In this situation, it would be acceptable for
the respondent to allocate the total warranty expenses over total sales
of products X, Y, and Z. Because the sales of products X, Y, and Z will
be averaged together, transaction-specific reporting, if it were
feasible, would achieve the same result as the allocation method just
described.
In addition, while not addressed in paragraph (g), the Department
normally will accept an allocation method that calculates expenses or
price adjustments on the same basis as the expenses were incurred or
the price adjustments granted. Thus, for example, where a producer
offers a rebate conditioned on the purchase of a certain amount of
merchandise, it would not be inaccurate or distortive to spread the
value of the rebate over the purchases needed to earn the rebate.
Similarly, if a producer granted a $100 rebate for a particular month,
it would not be inaccurate or distortive to apportion that $100 over
all sales made during that month. Such a method merely apportions the
price adjustment over the sales on which it was actually earned.
Feasibility: Paragraph (g)(3) deals with the factors the Secretary
will take into account in determining (1) whether transaction-specific
reporting is not feasible under paragraph (g)(1); or (2) whether an
allocation is calculated on as specific a basis as is feasible under
paragraph (g)(2). Paragraph (g)(3) provides that among the factors the
Secretary will take into account are: (i) the records maintained by the
firm in the ordinary course of its business; (ii) normal accounting
practices in the country and industry in question; and (iii) the number
of sales made by the firm during the period of investigation or review.
In this regard, one commenter suggested that the Department should
clarify that it will accept allocated expenses or price adjustments
where transaction-specific reporting is neither appropriate nor
``reasonably feasible.'' In response, another commenter objected to any
departure from the language of the SAA, which refers to ``feasible''
rather than ``reasonably feasible.''
With respect to these comments, the Department agrees with the
second commenter that the standard in the SAA is ``feasible,'' not
``reasonably feasible.'' On the other hand, the feasibility of
reporting transaction-specific information is not something that the
Department can analyze in the abstract, but instead is something that
the Department must consider on a case-by-case basis. For example, what
may be feasible for firms in one industry may not be feasible for firms
in another. In our view, paragraph (g)(3) appropriately reflects these
types of considerations.
Some commenters suggested that in assessing the feasibility of
transaction-specific reporting, the Department should look solely to
the records of the party in question to determine what level of
detailed reporting is feasible. The Department has not adopted this
suggestion, because it might provide an incentive for firms that are
(or are likely to be) subject to an AD proceeding to maintain their
records in a less specific manner than they otherwise would. Although
the Department will accept allocated expenses or price adjustments in
certain circumstances, the regulations still retain a preference for
transaction-specific information.
Allocation methods involving ``out-of-scope'' merchandise:
Paragraph (g)(4) deals with the issue of allocation methods that
involve ``out-of-scope'' merchandise. Specifically, paragraph (g)(4)
deals with situations in which an allocation includes expenses or price
---- page 27348 ----
adjustments that were incurred or made in connection with sales of
merchandise that is not ``subject merchandise'' or a ``foreign like
product.'' In some cases, the inclusion of ``out-of-scope'' merchandise
per se has been considered as rendering an allocation method as
distortive and, thus, automatically unacceptable.
In our view, such a position is too extreme. An allocation method
that includes ``out-of-scope'' merchandise is distortive only where the
expenses or price adjustments likely are incurred or granted
disproportionately on the out-of-scope or the in-scope merchandise.
However, based on our experience, there is no basis for irrebuttably
presuming such disproportionality without regard to the facts of a
specific case.
Therefore, paragraph (g)(4) provides that the Secretary will not
reject an allocation method solely because the method includes ``out-
of-scope'' merchandise. Instead, the Secretary will apply the standards
of paragraph (g) to ensure that the allocation method used is not
inaccurate or distortive. However, in the case of these types of
allocation methods, it will be particularly important that a party
claiming an adjustment provide the explanation required under paragraph
(g)(2) as to why the allocation method used is not inaccurate or
distortive. In addition, the Secretary will pay special attention to
the extent to which the out-of-scope merchandise included in the
allocation pool is different from the in-scope merchandise in terms of
value, physical characteristics, and the manner in which it is sold.
Such information will be important in determining whether it is more or
less likely that expenses were incurred, or price adjustments were
made, in proportionate amounts with respect to sales of out-of-scope
and in-scope merchandise.
Additional comments: In connection with the topic of allocation
methods, many commenters made suggestions as to the manner in which the
Department should classify expenses and price adjustments as direct or
indirect. The Department has not adopted these suggestions for the
following reasons. First, insofar as expenses are concerned, the method
of allocating an expense does not dictate the nature of the expense.
Torrington, supra, at 1051. Second, with respect to price adjustments,
as discussed above, price adjustments are neither direct nor indirect
expenses, but rather are additions or deductions necessary to arrive at
the actual price paid by the customer.
Several commenters stated that the Department must be careful in
evaluating (1) a respondent's procedures for granting price
adjustments, and (2) the extent to which allocations used by a
respondent in its normal business records are non-distortive. According
to these commenters, if the Department sets standards that, in
practice, result in the rejection of most or all allocated price
adjustments and expenses, the result will be distorted comparisons.
The Department agrees with the notion that it should attempt to use
allocations that are based on the most precise information available in
light of a respondent's books and records. Such an approach helps to
avoid comparisons that do not reflect the actual prices paid by
customers or the actual expenses incurred by respondents. On the other
hand, the Department cannot allow a respondent's accounting procedures
to dictate the Department's methodology in a particular case. The
Department always must balance the reporting burdens of respondents
against the objective of obtaining accurate results. If a particular
allocation method is unreasonably inaccurate or distortive, the
Department cannot rely on that method simply because it is the only
method that the respondent's records will allow.
Another commenter stated that the professed ``need'' to allocate
price adjustments often flows from artificially narrow agency
determinations regarding the scope of a proceeding. In addition, this
commenter contended that the Department should expect foreign companies
found guilty of injuring an American industry to adjust their
accounting and bookkeeping practices to conform to the requirements of
the AD law.
With respect to this comment, we are not persuaded that there is
any relationship between the need to allocate adjustments and the
Department's alleged narrowing of the scope of a proceeding. Moreover,
the commenter appeared to be arguing more against the wisdom of
narrowing subject merchandise than the propriety of accepting
allocations. In our view, questions concerning the narrowness or
breadth of the scope of a particular proceeding are more appropriately
addressed on a case-by-case basis in actual AD proceedings. Finally,
with respect to the comment regarding changes in respondents' record
keeping practices, if the Department denies an adjustment because a
firm's record keeping practices do not permit it to use an acceptable
allocation method, we would expect that the firm would revise those
practices if it hopes to have the Department grant the adjustment in
some future segment of the particular proceeding.
Date of sale: Paragraph (i) deals with the identification of the
date of sale for sales of the subject merchandise and foreign like
product. Paragraph (i) continues to provide that the Secretary normally
will consider the date of invoice, as recorded in a firm's records kept
in the ordinary course of business, to be the date of sale.
Use of uniform date of sale: Several commenters supported the
notion of using a uniform date for purposes of identifying the date of
sale, and specifically endorsed the use of invoice date. According to
these commenters, the use of a uniform date of sale would promote
predictability.
Other commenters, however, opposed the use of a uniform date.
According to these commenters, the use of a uniform date of sale is
inconsistent with Article 2.4.1, note 8 of the AD Agreement. They also
suggested that a reasonable reading of the statute does not support
using the date of invoice, because that is not necessarily the date on
which price and quantity are established, and, thus is not the date on
which the domestic industry lost the ability to make a sale to a U.S.
customer. In addition, some of these commenters argued that in
situations where exchange rates fluctuate between the date on which the
terms of sale are established and the date of invoice, the results of
the Department's calculations will become less, rather than more,
predictable.
In these final regulations, we have retained the preference for
using a single date of sale for each respondent, rather than a
different date of sale for each sale. Contrary to suggestions made by
some of the commenters, this has been the Department's practice in the
past.
Moreover, there are several valid reasons for this practice. First,
by simplifying the reporting and verification of information, the use
of a uniform date of sale makes more efficient use of the Department's
resources and enhances the predictability of outcomes.
Second, as a matter of commercial reality, the date on which the
terms of a sale are first agreed is not necessarily the date on which
those terms are finally established. In the Department's experience,
price and quantity are often subject to continued negotiation between
the buyer and the seller until a sale is invoiced. The existence of an
enforceable sales agreement between the buyer and the seller does not
alter the fact that, as a practical matter, customers frequently change
their
---- page 27349 ----
minds and sellers are responsive to those changes. The Department also
has found that in many industries, even though a buyer and seller may
initially agree on the terms of a sale, those terms remain negotiable
and are not finally established until the sale is invoiced. Thus, the
date on which the buyer and seller appear to agree on the terms of a
sale is not necessarily the date on which the terms of sale actually
are established. The Department also has found that in most industries,
the negotiation of a sale can be a complex process in which the details
often are not committed to writing. In such situations, the Department
lacks a firm basis for determining when the material terms were
established. In fact, it is not uncommon for the buyer and seller
themselves to disagree about the exact date on which the terms became
final. However, for them, this theoretical date usually has little, if
any, relevance. From their perspective, the relevant issue is that the
terms be fixed when the seller demands payment (i.e., when the sale is
invoiced).
Finally, with respect to the arguments that the date on which
material terms are established is the date on which the domestic
industry is injured and the date on which respondents rely for exchange
rate purposes, in our view, these arguments beg the question of ``when
are material terms established?'' In paragraph (i), we merely have
provided that, absent satisfactory evidence that the terms of sale were
finally established on a different date, the Department will presume
that the date of sale is the date of invoice.
Therefore, for the foregoing reasons, we have continued to provide
for the use of a uniform date of sale, which normally will be the date
of invoice. However, we have revised paragraph (i) in response to
suggestions that the Department clarify its authority to use a date
other than date of invoice in appropriate cases. In some cases, it may
be inappropriate to rely on the date of invoice as the date of sale,
because the evidence may indicate that, for a particular respondent,
the material terms of sale usually are established on some date other
than the date of invoice. In proposed paragraph (i), we had intended
this type of flexible approach through our use of the word
``normally.'' In light of the comments, however, we have revised
paragraph (i) to provide that ``the Secretary may use a date other than
the date of invoice if the Secretary is satisfied that a different date
better reflects the date on which the exporter or producer establishes
the material terms of sale.''
Although the date of invoice will be the presumptive date of sale
under paragraph (i), the Department intends to continue to require that
a respondent provide a full description of its selling processes. Among
other things, this information will permit domestic interested parties
to submit comments concerning the selection of the date of sale in
individual cases. Of course, a respondent also will be free to argue
that the Department should use some date other than the date of
invoice, but the respondent must submit information that supports the
use of a different date. Finally, a respondent's description of its
selling processes, like any other item of information, will be subject
to verification.
If the Department is presented with satisfactory evidence that the
material terms of sale are finally established on a date other than the
date of invoice, the Department will use that alternative date as the
date of sale. For example, in situations involving large custom-made
merchandise in which the parties engage in formal negotiation and
contracting procedures, the Department usually will use a date other
than the date of invoice. However, the Department emphasizes that in
these situations, the terms of sale must be firmly established and not
merely proposed. A preliminary agreement on terms, even if reduced to
writing, in an industry where renegotiation is common does not provide
any reliable indication that the terms are truly ``established'' in the
minds of the buyer and seller. This holds even if, for a particular
sale, the terms were not renegotiated.
Date of invoice versus date of shipment: Several commenters argued
that if the Department uses a uniform date of sale, it should use date
of shipment rather than date of invoice. These commenters claimed that
because respondents can control the timing of invoice issuance, they
will be able to manipulate the Department's dumping calculations by
manipulating the date of sale. According to these commenters, date of
shipment is ``manipulation-proof,'' because the date on which
merchandise is shipped is largely determined by the needs of the
customer.
For several reasons, the Department has not adopted this
suggestion. First, date of shipment is not among the possible dates of
sale specified in note 8 of the AD Agreement. Second, based on the
Department's experience, date of shipment rarely represents the date on
which the material terms of sale are established. Third, unlike
invoices, which can usually be tied to a company's books and records,
firms rarely use shipment documents as the basis for preparation of
financial reports. Thus, reliance on date of shipment would make
verification more difficult.
Finally, with respect to the commenters' concerns regarding
possible manipulation, we do not believe that these concerns warrant
substituting date of shipment for date of invoice as the presumptive
date of sale. As explained above, the Department will continue to
require respondents to provide a full description of their sales
processes. Moreover, these descriptions will be subject to
verification, and we are confident that we will be able to uncover,
through verification, attempts at manipulation. For example, the
Department can verify the average length of time between invoice date
and shipment date, and can scrutinize deviations from the norm. In
addition, most firms have a standard invoicing practice (e.g., three
days after shipment, every two weeks). Where a firm does not have such
a practice, or where it changes that practice, the Department will be
particularly attentive to the possibility of manipulation of dates of
sale.
Early resolution of date of sale issues: One commenter suggested
that because issues surrounding date of sale must be resolved in the
early stages of an investigation or review, the regulations should
provide a mechanism under which the Department consults with the
parties and decides these issues prior to the issuance of a request for
information. This commenter was concerned that unilateral judgments by
a respondent as to the appropriate date of sale can result in the
unfair and prejudicial use of ``facts available'' should the Department
ultimately disagree with that judgment.
The Department has not adopted this suggestion. While we recognize
that it is preferable to settle issues regarding the date of sale early
in an investigation or review, we believe that the mechanisms in place
are adequate. First, the response to the section of the Department's
questionnaire that addresses general selling practices, including
selling processes, is due to the Department earlier than those sections
that require information pertaining to specific sales, thereby allowing
parties an early opportunity to comment on date of sale. Second,
paragraph (i) will put parties on notice that, in the absence of
information to the contrary, the Department will use date of invoice as
the date of sale.
Finally, there is a limit on the Department's ability to guarantee
that date of sale issues are always resolved
---- page 27350 ----
definitively at the outset of an investigation or review. Among other
things, domestic interested parties must have an opportunity to comment
on information describing a respondent's selling processes. In
addition, the Department also must verify this information. In some
cases, the Department may be persuaded by the arguments of domestic
interested parties or the results of verification that its initial
identification of the date of sale was in error.
Indirect export price: One commenter proposed that the Department
make clear that its method for identifying the date of sale will not
change the determination of when a sale constitutes an ``indirect
export price'' sale. Although the Department has not revised the final
regulations in light of this comment, we agree that the method for
identifying the date of sale does not affect the method for determining
whether a particular sale constitutes an ``indirect export price''
sale.
Long-term contracts: Several commenters raised issues concerning
long-term contracts. One commenter suggested that the Department codify
in the regulations its statement in the AD Proposed Regulations, 61 FR
at 7330-7331, that the Department will continue to determine the date
of sale for long-term contracts on a case-by-case basis, without
presuming that date of invoice is the date of sale. Another commenter
suggested that the Department should presume that the date of invoice
is the date of sale in the case of long-term contracts.
The Department has not adopted either of these suggestions. Because
of the unusual nature of long-term contracts, whereby merchandise may
not enter the United States until long after the date of contract, the
Department will continue to review these situations carefully on a
case-by-case basis. In our view, paragraph (i) is sufficiently flexible
so as to eliminate the need for a separate provision addressing long-
term contracts. We should note, however, that date of invoice normally
would not be an appropriate date of sale for such contracts. The date
on which the material terms of sale are finally set would be the
appropriate date of sale for such contracts.
Effect on reviews: One commenter argued that in implementing
paragraph (i), the Department should ensure that, in conducting
administrative reviews, it does not omit sales in those proceedings
where some date other than invoice date was used as the date of sale in
prior segments of the proceeding. Another commenter suggested that the
Department should permit parties to continue to use the date of sale
method established in prior segments.
Although we have not revised the regulations in light of these
comments, the Department will be particularly attentive to the
possibility that sales may be missed in administrative reviews in which
the date of sale changes due to the implementation of paragraph (i).
The Department will address these types of issues on a case-by-case
basis to ensure that all sales are reviewed.
Currency conversions: One commenter proposed that the Department
retain its prior practice, without adopting the date of invoice
presumption, for purposes of establishing the date on which currency
will be converted. Essentially, this commenter suggested that the
Department establish two dates of sale, one for purposes of determining
which sales to report, and a different one for exchange rate purposes.
We have not adopted this suggestion. There is no indication in the
statute, the SAA, or the AD Agreement that the Department should use
different dates of sale for different purposes. For all purposes, the
date of sale is the date on which the material terms of sale are
established. In promulgating paragraph (i), the Department merely has
adopted a rebuttable presumption that this date is the date of invoice.
The Department cannot adopt a system under which two different dates
are identified as being the date on which the material terms of sale
were established.
Other Comments Concerning Sec. 351.401
Fair comparison: Two commenters contended that the AD Agreement and
the URAA require that a dumping margin be based on a ``fair
comparison.'' They believed that this requirement for a fair comparison
should be carried forward into the regulations, which should state
clearly that the Department will apply this principle to all aspects of
its AD methodology, including decisions regarding the prices to be
compared and the type and amount of adjustments to make to those
prices. Another commenter suggested that the regulations, or at least
the preamble, refer to a ``fair comparison'' as a fundamental
requirement.
In response, another commenter, while agreeing that the purpose of
the AD law is to reach a ``fair comparison'' between the sales being
compared, argued that there is no reason to insert into the agency's
regulations a requirement that, in the commenter's view, was vague.
According to the commenter, in the statute Congress identified in
detail the method for accomplishing a ``fair comparison.''
In our view, the regulations do not require any further
clarification on this particular issue. Congress dealt explicitly with
this question in the statute itself. Specifically, section 773(a) of
the Act provides: ``In determining under this title whether subject
merchandise is being, or is likely to be, sold at less than fair value,
a fair comparison shall be made between the export price or constructed
export price and normal value. In order to achieve a fair comparison
with the export price or constructed export price, normal value shall
be determined as follows: [i.e., in accordance with the provisions
discussing the calculation of normal value].'' The House Report on the
URAA provided further clarification by stating: ``The requirement of
Article 2.4 of the Agreement that a fair comparison be made between the
export price or constructed export price, and normal value is stated in
and implemented by new section 773.'' H.R. Rep. No. 826, Pt. 1, 103d
Cong., 2d Sess. 82 (1994) (emphasis added). Given the clarity of the
statute and the legislative history on this point, we do not believe
that additional elaboration in the regulations is necessary.
Indirect export price: One commenter suggested that the Department
codify in the regulations its four-factor test for determining whether
sales made through an affiliate located in the United States are
classifiable as ``export price'' (formerly ``purchase price'')
transactions. According to the commenter, this test for identifying so-
called ``indirect export price sales'' is firmly rooted in Department
practice, has been repeatedly approved by the courts, and was endorsed
by Congress in the URAA. The commenter argued that because this test
involves a fundamental issue in AD proceedings, the public would
benefit from the codification of the test in the regulations.
A second commenter, however, objected to codification of the test.
According to this commenter, because the four factors of the indirect
export price test continue to be subject to interpretation, the
Department should not restrict its discretion at this time by issuing a
regulation. This commenter also disagreed specifically with the first
commenter's articulation of some of the factors. Finally, referring to
the factor dealing with inventory, this commenter suggested that if the
Department should include the test in the regulations, the Department
should clarify that the merchandise need only be included in inventory,
not physical inventory.
---- page 27351 ----
We have not adopted the suggestion of the first commenter that we
codify the ``indirect export price'' test in the regulations. While we
do not disagree with the commenter's characterization of the test's
pedigree, we have not attempted in these regulations to codify all
aspects of the Department's AD methodology that are well-established.
We generally have refrained from codifying principles that are clearly
set forth in the statute and/or the legislative history. In our view,
the ``indirect export price'' test is one of these principles. As for
the suggestions of the second commenter, these suggestions are moot in
light of our decision to refrain from codifying the ``indirect export
price'' test.
Section 351.402
Section 351.402 deals with the calculation of export price and
constructed export price under section 772 of the Act.
Adjustments to constructed export price: Proposed paragraph (b)
addressed the expenses that the Department will deduct from the
starting price in calculating constructed export price (``CEP'') under
section 772(d) of the Act. In addition to a stylistic change, we have
made one substantive revision to paragraph (b), as discussed below.
In proposed paragraph (b), the Department stated that it would
adjust for ``expenses associated with commercial activities in the
United States, no matter where incurred.'' Noting that this language
only required a deduction for expenses associated with United States
selling activities, several commenters argued that the Department
should adjust for all expenses incurred on CEP sales, including
expenses incurred in the foreign market. These commenters contended
that proposed paragraph (b) was inconsistent with: (1) The plain
language of section 772(d); (2) judicial precedent interpreting the
pre-URAA version of the statute, which contained language identical to
that of section 772(d); and (3) established Department practice.
A second set of commenters argued in response that, in calculating
constructed export price, the Department may deduct from the starting
price only those expenses associated with activities occurring in the
United States. According to these commenters, expenses incurred in the
exporting country that are directly attributable to United States sales
(i.e., that are not indirect expenses) are subject to adjustment under
the circumstances of sale provision of section 773(a)(6)(C)(iii) of the
Act.
In these final regulations, we have clarified that the Secretary
will deduct only expenses associated with a sale to an unaffiliated
customer in the United States. With respect to the suggestion of the
first group of commenters that we deduct all expenses incurred in
connection with the CEP sale, we do not believe such an approach is
consistent with the statute. Although section 772(d)(1) is ambiguous on
this particular point, section 772(f), which deals with the deduction
of profit from CEP, refers to the expenses to be deducted under section
772(d)(1) as ``United States expenses,'' thereby suggesting that the
coverage of section 772(d)(1) is limited to those expenses incurred in
connection with a sale in the United States. In addition, the SAA makes
clear that only those expenses associated with economic activities in
the United States should be deducted from CEP. In discussing section
772(d)(1), the SAA states that the deduction of expenses in calculating
CEP relates to ``expenses (and profit) associated with economic
activities occurring in the United States.'' SAA at 823 (emphasis
added).
In addition to conflicting with the SAA, the suggestion that we
deduct all expenses would disrupt the statutory scheme with respect to
the level-of-trade (``LOT'') adjustment. The statute clearly
anticipates that an adjustment for differences in levels of trade will
not be necessary every time the Department uses CEP. However, under the
proposed interpretation, because the Department always would calculate
CEP exclusive of all expenses and normal value inclusive of such
expenses, CEP and normal value always would be at different levels of
trade. Thus, an adjustment for differences in levels of trade would be
necessary in almost every case. This would frustrate the legislative
intent that the Department make comparisons at the same level of trade
to the extent possible, and that the Department make level of trade
adjustments only when such comparisons are not possible.
Finally, the Department believes that the deduction of all expenses
from CEP would conflict with Article 2.4 of the AD Agreement. Article
2.4, on which section 772(d) is based, requires the deduction of costs
``incurred between importation and resale.'' The suggestion of the
first group of commenters would call for the deduction of expenses that
are incurred before importation and that do not relate to activities
between importation and resale.
With regard to the argument concerning judicial and administrative
precedents under the pre-URAA version of the statute, the Department
notes that the URAA changed the manner in which CEP (formerly
``exporter's sales price'') is calculated. Because of this change, and
in light of the clear intent expressed in the SAA, we do not believe
that these old law precedents govern the interpretation of section
772(d)(1) with respect to this particular point.
Although we have not adopted the suggestion that we deduct all
expenses from CEP, we have revised paragraph (b) to clarify its
meaning. In the first sentence of paragraph (b), we have deleted the
phrase ``no matter where incurred'' and have replaced it with the
phrase ``that relate to the sale to the unaffiliated purchaser, no
matter where or when paid.'' In addition, we have added the following
new sentence: ``The Secretary will not make an adjustment for any
expense that is related solely to the sale to an affiliated importer in
the United States, although the Secretary may make an adjustment to
normal value for such expenses under section 773(a)(6)(C)(iii) of the
Act.''
The purpose of these changes is to distinguish between selling
expenses incurred on the sale to the unaffiliated customer, which may
be deducted under 772(d)(1), and those associated with the sale to the
affiliated customer in the United States, which may not be deducted. In
addition, the phrase ``no matter where or when paid'' is intended to
indicate that if commercial activities occur in the United States and
relate to the sale to an unaffiliated purchaser, expenses associated
with those activities will be deducted from CEP even if, for example,
the foreign parent of the affiliated U.S. importer pays those expenses.
Finally, the reference to adjustments to normal value reflects our
agreement with the comment that the Secretary may adjust for direct
selling expenses (as well as assumed expenses) associated with the sale
to the affiliated importer under the circumstance of sale provision,
discussed below.
One commenter urged the Department to define ``selling expenses''
to exclude ``general and administrative expenses.'' The Department has
not adopted this suggested change. Typically, the primary, if not sole,
function of an affiliated U.S. importer is to sell. Therefore, many or
all general and administrative expenses of such firms are properly
considered as selling expenses and must be deducted under section
772(d)(1)(D).
Another commenter stated that, in the past, the Department would
not deduct selling expenses in calculating CEP (formerly ESP) in AD
proceedings involving nonmarket economies. According to the commenter,
the
---- page 27352 ----
Department's stated reason for not making a deduction was its inability
to make an offsetting circumstance-of-sale adjustment to normal value
(formerly foreign market value). The commenter stated that the
Department has reevaluated this particular practice, and now recognizes
that the statute requires CEP deductions in nonmarket economy cases
irrespective of whether a circumstance-of-sale adjustment is possible.
The commenter suggests that the agency's regulations should reflect
this change in practice, and should make clear that CEP deductions are
required in nonmarket economy cases.
With respect to this suggestion, the commenter is correct
concerning the Department's reevaluation of its practice. In a recent
determination, the Department stated: ``Regarding the necessity of
making CEP deductions, we have reevaluated our practice in this area
and have concluded that CEP deductions are required by the plain
language of the statute, which states in section 772(d)(2)(D) that CEP
`shall be reduced' by the selling expenses associated with economic
activity in the United States. Consequently, we have made deductions to
CEP for all selling expenses associated with economic activities in the
United States in accordance with our practice.'' Bicycles from the
People's Republic of China, 61 FR 19026, 19031 (April 30, 1996).
However, because the statute is clear on this point, we do not believe
that a change to paragraph (b) is necessary.
``Special rule'' for merchandise with value added after
importation: Proposed paragraph (c) addressed the ``special rule'' of
section 772(e) of the Act that is applicable in situations where
imported merchandise is subject to further manufacture or assembly in
the United States before it is sold to an unaffiliated customer. Except
for the modification of the percentage threshold normally used to
determine when the special rule applies (discussed below), we have not
changed paragraph (c).
By way of background, prior to the enactment of the URAA, section
772(e)(3) of the Act required that the Department calculate ESP (now
CEP) by deducting the amount of any increased value resulting from a
process of manufacture or assembly performed on imported merchandise
prior to its sale to an unaffiliated customer. In situations where the
amount of value added in the United States was very large, the process
of calculating this deduction was very difficult and time-consuming for
the Department. In addition, the legislative history of section
772(e)(3) provided that if the final product sold did not contain a
significant amount of the subject merchandise, the Department was to
refrain from assessing antidumping duties, even though the merchandise
may have been dumped.
Congress retained the U.S. value-added adjustment, in modified
form, in section 772(d)(2) of the Act. However, in the URAA, Congress
addressed the problems described in the preceding paragraph by
providing an alternative method for dealing with imported merchandise
for which a large amount of value is added in the United States. Under
section 772(e), the merchandise no longer is excepted from the
assessment of duties. In addition, instead of requiring that the
Department calculate and deduct the precise amount of value added in
the United States from the price of the finished product, section
772(e) permits the Department, in certain circumstances, to determine
the dumping margin for value-added merchandise on some other basis,
such as by relying on the dumping margins calculated on sales to
unaffiliated customers for which no value was added in the United
States. Under section 772(e), the Department may use an alternative
method where the value added to the subject merchandise ``is likely to
exceed substantially'' the value of the subject merchandise as
imported. The SAA at 826 explains that this ``special rule'' does not
require the Department to make a precise calculation of the value
added. Instead, the phrase ``exceed substantially'' means that the
Department estimates that the value added in the United States is
``substantially more than half'' of the price of the merchandise as
sold to the unaffiliated customer. The SAA at 825-826 further explains
that the intent of the new rule is to avoid requiring the Department to
calculate and back out large amounts of value added, while also
avoiding the undesirable result of subject merchandise escaping the
assessment of antidumping duties entirely.
Threshold for applying the ``special rule'' and use of transfer
prices: In proposed paragraph (c)(2), the Department provided that if
the Secretary estimated the value added in the United States to be at
least 60 percent of the price charged to the first unaffiliated
purchaser, the Secretary normally would determine that the value added
in the United States was likely to exceed substantially the value of
the subject merchandise; i.e., that the special rule applied. The
Department reasoned that a 60 percent threshold met the SAA's
requirement of ``substantially more than half.'' See AD Proposed
Regulations at 7331. In addition, in estimating the value added,
proposed paragraph (c)(2) called for the use of transfer prices between
the foreign exporter/producer and the affiliated U.S. importer.
Several commenters argued against the adoption of a bright-line
test for determining whether the estimated value added is
``substantially more than half,'' the finding that triggers the
application of the special rule. These commenters argued that a bright-
line test was inappropriate and inconsistent with the SAA. In addition,
these commenters argued that if the Department insisted upon using a
bright-line test, it should use a threshold higher than 60 percent.
Finally, these commenters argued that the Department should not
estimate the U.S. value added by relying on transfer prices, because of
the risk that exporters might manipulate these prices to their
advantage. Instead, they asserted, the Department should compare the
price charged to unaffiliated customers for the finished goods to the
constructed value (cost) of the imported merchandise.
A different group of commenters supported the use of a bright-line
test and transfer prices. While most of these commenters also supported
a 60 percent value-added standard, one commenter argued that in
proceedings where the absolute volume of merchandise is large, the
standard should be 50 percent value added. This latter commenter argued
that a 50 percent standard is warranted because of (1) the heavy burden
of reporting value added information in these types of cases, and (2)
the alleged distortions in dumping margins caused by the value-added
calculations.
With respect to the comments concerning the use of a bright-line
test, the Department continues to believe that such a test is
appropriate and desirable. Neither the SAA nor the statute indicates
that the Department may not adopt guidelines in this area, and there
are sound policy reasons for having a bright-line test. First, if the
Department did not adopt a standard in these final regulations, the
burden of establishing on a case-by-case basis the amount of value
added that constitutes ``significantly more than half'' would erase the
administrative savings that Congress intended section 772(e) to
generate. Second, a bright-line standard enables the Department to
inform respondents early in an investigation or review as to whether
they will have to provide detailed value-added information.
We must emphasize, however, that the Department does not intend
that its bright-line standard operate as an
---- page 27353 ----
irrebuttable presumption for all cases. The Department may use a
different threshold where it is satisfied, based on the facts, that a
different threshold is more appropriate in a particular case. In
addition, the Department retains the discretion to refrain from
applying the special rule in situations where there are an insufficient
number of sales to unaffiliated customers to use as an alternative
basis for determining the dumping margin on value added sales. Finally,
because the purpose of section 772(e) is to reduce the administrative
burden on the Department, the Department retains the authority to
refrain from applying the special rule in those situations where the
value added, while large, is simple to calculate.
With respect to the issue of transfer prices, paragraph (c)(2)
continues to provide for the use of transfer prices in estimating U.S.
value added. Section 772 and the SAA are silent on the precise manner
by which the Department is to estimate the amount of value added.
However, in discussing the alternate methods that the Department may
use to determine CEP once the Department has determined that the
special rule applies, the SAA at 826 states that the Department may use
transfer prices. This suggests to us that, had the drafters of the
statute and the SAA focussed on the matter, they would have permitted
the use of transfer prices in estimating U.S. value added.
While the Department appreciates the arguments raised concerning
the possible manipulation of transfer prices, in our view, there are
several factors that minimize this danger. First, because a respondent
does not control the selection of the alternative method used in
situations where the special rule applies, a respondent will not know
in advance whether it would be better or worse off through the
application of the special rule. Thus, if a respondent chose to
manipulate transfer prices, it would do so at its peril. Second, while
transfer prices may be suspect, there are some independent constraints
on transfer pricing, such as the transfer pricing rules of the U.S.
Internal Revenue Service and the valuation rules of the Customs
Service. Finally, as discussed below, to guard against the misuse of
transfer prices, the Department has raised the bright-line threshold to
account for the fact that any estimate of U.S. value added might be
inflated due to artificial transfer prices.
We have balanced the dangers of using transfer prices against the
alternatives. In our view, absent reliance on transfer prices, there is
no other reasonable way to measure the amount of value added that
accomplishes the burden-reducing objective of the special rule. The
alternative suggested by the commenters (use of constructed value of
the subject merchandise) would be as complex and burdensome a method as
the method that section 772(e) was intended to replace.
Having explained our retention of a bright-line test based on the
use of transfer prices, this brings us to the issue of the precise test
that the Department should apply. The Department has reviewed proposed
paragraph (c)(2), and agrees with the commenters that by increasing the
threshold, the Department would ensure that the special rule applies
only in appropriate circumstances. While the Department continues to
believe that 60 percent is ``substantially more than half,'' the
Department recognizes that section 772(e) requires an imprecise
``estimate,'' an estimate which, as discussed above, the Department
must base in part on transfer prices. Because of the imprecision
inherent in any estimate, in these final regulations we have adopted a
standard of 65 percent, thereby providing additional assurance that the
actual value added is substantially greater than half.
We have not adopted the suggestion that we use a 50 percent
standard. As discussed above, the SAA states that the Department will
apply the special rule only where the U.S. value added is
``substantially more than half'' of the total value of the finished
product. Therefore, the Department cannot adopt a standard that would
trigger the use of the special rule when the U.S. value added is only
one half on the total value. Moreover, while the commenter making this
suggestion cited the need to reduce the burden on respondents, the SAA
indicates that the focus of section 772(e) was on reducing the burden
on the Department. Finally, we do not agree with the commenter that the
value added calculation is distortive or that the special rule was
motivated by a concern over distorted calculations. While the
legislative history demonstrates a recognition that the value added
calculation is complex and time-consuming, there is no indication that
Congress or the Administration considered the calculation to be
distortive.
One commenter proposed that the regulations contain a presumption
against use of the ``special rule'' when: (a) The final goods are
trademarked; (b) an essential feature or characteristic of the further
manufactured good exists at importation; (c) the transfer price to an
affiliated person is less than the sales price of the imported
component to an unaffiliated person; (d) sales to unaffiliated persons
of identical or similar merchandise are not in significant quantity; or
(e) the Secretary believes that the circumstances preclude use of the
special rule. The Department has not incorporated this suggestion into
the final regulations. However, we believe that under section 772(e)
and paragraph (c), the Department has sufficient flexibility to refrain
from applying the special rule where the circumstances so warrant. As
for the specific circumstances identified by the commenter, whether
these circumstances would justify a departure from the special rule
would depend upon the facts of a particular case.
One commenter proposed that the Department calculate the amount of
value added by comparing the price at which subject merchandise
(without value added) is sold to unaffiliated customers to the price at
which merchandise (with value added) is sold to unaffiliated customers.
Although we believe that this method would be permissible, given our
lack of experience in applying section 772(e), we have not codified
this method in these final regulations.
Application of alternative methods to determine dumping margins:
One commenter argued that under proposed paragraph (c)(3), the
Department might assign dumping margins to special rule entries in
situations where no dumping margins should be found at all. This
commenter suggested that the Department should provide in its final
regulation that its preferred approach in applying the special rule
will be to determine the export price for sales subject to the rule
based on the most similar sales of subject merchandise, and that such
an export price will be used to compare to normal value. This commenter
urged the Department to give careful consideration to all relevant
differences between the ``special rule'' sales and the sales used in
applying the ``special rule.''
We have not adopted this suggestion. In the Department's view, the
methodology set forth in proposed paragraph (c)(3) for determining
dumping margins on merchandise to which the special rule applies is in
accordance with section 772(e). Section 772(e) authorizes the
Department to use an alternative means of calculating the dumping
margin where merchandise has a substantial amount of U.S. value added,
including reliance on the dumping margins calculated on sales for which
there is no U.S. value added. In adopting section 772(e), Congress and
the Administration were aware that the dumping margins determined by
use of these alternative means might not be
---- page 27354 ----
identical to those that would be determined if the Department were to
calculate the precise amount of U.S. value added and deduct that amount
from the price. However, they concluded that the burden on the
Department of performing the value added calculations far outweighed
any marginal increase in accuracy gained by such calculations.
Finally, with respect to the sales from which the Department will
derive dumping margins to apply to special rule sales, we must
emphasize that the Department has little experience with this new
methodology. Therefore, the Department is not in a position at this
time to provide a great deal of guidance beyond what is contained in
section 772(e) and the SAA. However, we do believe that whether
merchandise is identical may be a factor to consider in selecting the
sales to be substituted for the value added sales. We do not believe,
however, that most similar in the United States is a consideration, and
have not, therefore, incorporated this comment in the rule.
Another commenter asked the Department to clarify that in applying
the special rule, it will base surrogate margins on sales to
unaffiliated persons only if those sales have been made in sufficient
quantities. While the Department agrees with the substance of this
comment, we do not believe that a regulation is necessary, because
section 772(e) expressly requires that sales to an unaffiliated person
be in ``a sufficient quantity.''
One commenter suggested that the Department clarify that, when the
special rule applies, the Department will base its alternative methods
for calculating a dumping margin exclusively on a producer's own
information, as opposed to information pertaining to another exporter
or producer. We have not adopted this suggestion. While the Department
agrees that it should rely on a respondent's own data where possible,
section 772(e) does not impose such a limitation. In some cases, it may
be necessary for the Department to rely on another respondent's data,
such as in situations where all of a particular respondent's sales have
U.S. value added and are subject to the special rule.
One commenter proposed that the Department reflect in the final
regulations the statement in the AD Proposed Regulations that the
Department normally will base dumping margins for merchandise to which
the special rule applies on margins calculated on other merchandise.
The final regulation reflects the particular requirements of section
772(e) of the Act. As the Department explained in the AD Proposed
Regulations, in situations in which the special rule applies, the
Department normally will apply the methodology described in paragraph
(c)(3); i.e., assigning a margin equal to the weighted-average margin
calculated based upon the prices of identical or other subject
merchandise sold to unaffiliated parties.
CEP profit deduction: Proposed paragraph (d) dealt with the
deduction of profit from CEP. Although we received several comments
concerning the CEP profit deduction, for the reasons set forth below,
we have left paragraph (d) unchanged.
Several commenters suggested that the Department clarify that the
amount of profit to be deducted in calculating CEP may never be less
than zero. In addition, these commenters contended that in calculating
the total actual profit used to derive the CEP profit deduction, the
Department must ignore all home market sales made at prices below the
cost of production.
The Department has not adopted these suggestions. With respect to
the first suggestion, we believe that section 772(f) and the SAA at 825
clearly provide that the profit deduction never may be less than zero.
Therefore, we do not believe that a regulation is necessary on this
point.
Regarding the suggestion concerning the treatment of below-cost
sales, in order to determine the total actual profit earned by a
respondent on the relevant sales, the Department must take into account
sales made at a profit and sales made at a loss. As we stated in the AD
Proposed Regulations, 61 FR at 7332, ``there is no provision in the
statute for disregarding sales below cost in this context, and doing so
would conflict with the statutory requirement to use `actual profit.'
''
Several commenters urged the Department to retain the flexibility
to calculate the CEP profit deduction on the basis of something less
than all sales of the subject merchandise and the foreign like product
throughout the period of investigation or review (e.g., on the basis of
a specific model or sales channel, or on a time period less than a full
year). We have not adopted this suggestion, because we believe that
paragraph (d)(1) provides the Department with sufficient flexibility to
use such approaches in those instances where the facts so warrant.
However, we believe that such instances should be the exception,
rather than the rule, because the suggested approaches would add yet
another layer of complexity to an already complicated exercise and
would be more susceptible to manipulation, which the Department wishes
to safeguard against, as suggested by the Senate Report.
One commenter suggested that the Department provide further
guidance regarding the calculation of the CEP profit deduction in
situations where there are no useable home market or third country
sales. We have not adopted this suggestion, because, as stated in the
AD Proposed Regulations, 61 FR at 7332, the Department currently does
not have enough experience to provide further guidance on this issue.
Another commenter, alleging that the Department generally
calculates profit by deducting expenses from revenues, argued that to
avoid double-counting, the Department should deduct all expenses,
including imputed expenses, in calculating the CEP profit deduction. We
have not adopted this suggestion, because the Department does not take
imputed expenses into account in calculating cost. Moreover, normal
accounting principles permit the deduction of only actual booked
expenses, not imputed expenses, in calculating profit.
Other commenters proposed that the Department should (1) cap the
CEP profit deduction by the amount of actual profit accruing on CEP
sales, and (2) make a corresponding deduction from normal value. We
have not adopted these suggestions. With respect to the first
suggestion, as the Department stated in the AD Proposed Regulations, 61
FR at 7332, the statute does not authorize a cap on the amount of
profit deducted from CEP. Moreover, the SAA at 825 states that the
transfer price between the producer and the affiliated importer should
not be used to determine the profit. In our view, this indicates that
Congress and the Administration did not intend that there be a cap.
With respect to the deduction of profit from normal value, we discuss
this suggestion below in connection with Sec. 351.410.
Finally, one commenter argued that the Department is required to
calculate the CEP profit deduction on a transaction-specific basis. The
final regulations do not reflect this approach. In our view, section
772(f), through its references to ``total actual profit'' and ``total
expenses,'' clearly does not contemplate the calculation of the CEP
profit deduction on a transaction-specific basis.
Reimbursement of antidumping duties and countervailing duties:
Paragraph (f) deals with the deduction from export price or CEP of the
amount of any reimbursed antidumping duties or countervailing duties.
Although we
---- page 27355 ----
received several comments concerning duty reimbursement, for the
reasons set forth below, we have left paragraph (f) unchanged.
Reimbursement of countervailing duties: In proposed paragraph (f),
the Department expanded the scope of former 19 CFR Sec. 353.26 to
include the reimbursement of countervailing duties in situations where
imported merchandise is subject to both AD and CVD orders. As the
Department explained in the AD Proposed Regulations, 61 FR at 7332, the
reimbursement of countervailing duties effectively is nothing more than
a reduction in the price paid by the importer. Absent the
reimbursement, the effective price paid by the importer would increase
by the amount of any such duties. As such, a deduction for reimbursed
countervailing duties is a necessary price adjustment in AD
calculations.
Several commenters objected to the proposed change, asserting that
the Department lacks statutory authority to deduct reimbursed
countervailing duties. In addition, these commenters argued that such a
deduction would violate Article 19.4 of the SCM Agreement, which
prohibits the levying of countervailing duties in excess of the amount
of subsidization found. They also claimed that the deduction could
violate section 772(c)(1)(C) of the Act by permitting the imposition of
both antidumping and countervailing duties to offset the same situation
of dumping or export subsidization. Other commenters, however,
supported a deduction for reimbursed countervailing duties, asserting
that such a deduction is consistent with the SCM Agreement and the Act.
In these final regulations, we have retained the deduction for
reimbursed countervailing duties. In the Department's view, this
deduction is consistent with the SCM Agreement and the Act. A deduction
for reimbursed countervailing duties neither increases the amount of
countervailing duties assessed nor imposes duties for the same
situation of dumping and export subsidization. The deduction simply
recognizes that the reimbursement of countervailing duties constitutes
a reduction in the price paid by the purchaser. Moreover, any
reimbursement of countervailing duties on specific sales is directly
tied to such sales and is no different in substance from any of the
other types of price adjustments that the Department routinely factors
into its calculations. Because antidumping duties are reduced by the
amount of any countervailing duties attributable to an export subsidy,
no double assessment is involved.
Finally, we do not believe that the absence of a statutory
provision expressly dealing with the reimbursement of countervailing
duties is fatal. The courts have long recognized the Department's
ability to develop methodologies to deal with situations not expressly
addressed by the statute. As the Federal Circuit stated in Melamine
Chemicals, Inc. v. United States, 732 F.2d 924, 930 (1984), ``there is
no stultifying requirement that [the Department] cite a statute
detailing in haec verba the specific action it may take when confronted
with a particular set of circumstances among the myriad that may
occur.''
Reimbursement in general: Referring to situations involving
affiliated importers, several commenters urged the Department to
automatically investigate whether the foreign affiliate reimbursed the
importer for antidumping or countervailing duties. Other commenters
went even further, arguing that in cases involving affiliated
importers, the Department should make an irrebuttable presumption that
reimbursement has occurred, or, at a minimum, a rebuttable presumption.
They alleged that because the Department treats affiliated exporters
and importers as a single entity for virtually all other purposes,
there is no reason to treat them differently for purposes of analyzing
reimbursement.
We have not adopted these suggestions, because we do not believe
that they are necessary or justifiable. As under former 19 CFR
Sec. 353.26, paragraph (f) applies to affiliated importers, and
requires that they certify that they have not been reimbursed by the
exporter. Should an affiliated importer fail to make this
certification, the Department would deduct the appropriate amount of
antidumping duties or countervailing duties to establish the EP or the
CEP, just as it would in the case of an unaffiliated importer.
Moreover, in our view, it is not justifiable to presume that the
existence of an affiliation will result in reimbursement or that an
affiliated U.S. importer, because of its affiliation, is more likely to
file a false certification.
Section 351.403
Section 351.403 deals with sales and offers for sale and the use of
sales to or through an affiliated party. Comments on this section
addressed paragraph (c) and the approach the Department should take in
determining whether sales to an affiliated party are an appropriate
basis for determining normal value (the ``arm's length test'').
Comments also addressed paragraph (d) and the issue of when the
Department should require the reporting of sales made by affiliated
customers (``downstream sales'').
Arm's length test: The Department's current policy is to treat
prices to an affiliated purchaser as ``arm's length'' prices if the
prices to affiliated purchasers are on average at least 99.5 percent of
the prices charged to unaffiliated purchasers. We received several
comments asking that we codify the current 99.5 percent test. We also
received several comments asking that we refrain from codifying the
99.5 percent test, and that we instead develop and codify a new
methodology for testing affiliated prices.
After considering the comments received on this issue, we have
decided not to codify an arm's length test at this time. We believe
that, while the 99.5 percent test has functioned adequately in numerous
cases, there may be other methods available. We will continue to apply
the current 99.5 percent test unless and until we develop a new method.
If we develop a new methodology, the Department will describe that
methodology in a policy bulletin. We will also publicly announce the
issuance of policy bulletins and ensure that they are easily accessible
to the public.
One commenter asked that the Department adopt a separate test for
situations where the vast majority of a firm's sales are to affiliated
parties. We have not adopted this suggestion, because we believe that,
in this context, the appropriate means to make this determination is by
comparison to known arm's length prices. In order to perform such an
arm's length test, the Department first must establish that sales to
unaffiliated purchasers are sufficient in number or quantity sold to
serve as a benchmark for testing affiliated party transactions. If
sales to unaffiliated purchasers are insufficient, we simply will not
use sales to affiliated purchasers to determine normal value.
One commenter argued that in determining whether sales are at arm's
length, the Department should consider normal business practices, such
as volume discounts, preferences for longstanding customers, and
differences due to level of trade. Many other commenters stated that
under the 99.5 percent test, the Department correctly limits its
examination to a comparison of prices.
The Department agrees that a proper comparison focuses on the
comparability of prices charged to affiliated and unaffiliated
purchasers. However, the Department also agrees
---- page 27356 ----
that it should take into account differences in levels of trade,
quantities, and other factors that affect price. For example, in
comparing prices charged to affiliated and unaffiliated purchasers, we
would attempt to make comparisons on the basis of sales made at the
same level of trade.
Several commenters argued that the Department should disregard not
only affiliated party sales that fall below 99.5 percent, but also
sales that fall above 100.5 percent. We have not adopted this
suggestion. The purpose of an arm's length test is to eliminate prices
that are distorted. We test sales between two affiliated parties to
determine if prices may have been manipulated to lower normal value. We
do not consider home market sales to affiliates at prices above the
threshold to have been depressed due to the affiliation. Therefore, the
Department should treat such sales in the same manner as sales to
unaffiliated customers. However, if a party wishes to argue that sales
at high prices to an affiliate are outside the ordinary course of
trade, the Department would consider such arguments on a case-by-case
basis.
Downstream sales: With respect to paragraph (d) and the use of
``downstream sales,'' certain commenters asked that the regulations
provide that the Department normally will require a respondent to
report downstream sales by an affiliated party to the first
unaffiliated customer. Other commenters argued that the Department
should require a respondent to report downstream sales only if the
sales to the affiliated party are not made at arm's length.
The Department does not believe it necessary or appropriate to
require the reporting of downstream sales in all instances. Questions
concerning the reporting of downstream sales are complicated, and the
resolution of such questions depends on a number of considerations,
including the nature of the merchandise sold to and by the affiliate,
the volume of sales to the affiliate, the levels of trade involved, and
whether sales to affiliates were made at arm's length.
However, we have decided to codify the Department's current
practice regarding the reporting of downstream sales when the volume of
sales to affiliates is small. Under our current practice, we normally
do not require the reporting of downstream sales if total sales of the
foreign like product by a firm to all affiliated customers account for
five percent or less of the firm's total sales of the foreign like
product. In such situations, the Department calculates normal value on
the basis of sales to unaffiliated customers and arm's-length sales to
affiliated customers. In addition, in certain cases, the Department may
decide that a percentage higher than five percent is an appropriate
benchmark, and, in such cases, the Department will not require the
reporting of downstream sales. Also, while the Department normally will
calculate this percentage on the basis of total sales value, there may
be cases where it is more appropriate to use total volume or sales
quantity.
If the Department determines that an affiliate made downstream
sales of a foreign like product, the Department usually will not
require the reporting of both the sales to the affiliate and the
downstream sales by the affiliate. We will examine the sales between
the affiliated parties under paragraph (c). If sales to the affiliate
fail the arm's-length test, the Department will require the respondent
to report that affiliate's downstream sales. If sales to the affiliate
pass the arm's-length test, the Department normally will not require
the respondent to report the affiliate's downstream sales and will
calculate normal value based on sales to the affiliate.
The Department will require a respondent to demonstrate in each
segment of an AD proceeding that the reporting of downstream sales is
not necessary. Similarly, the Department will analyze affiliated party
transactions in each segment. In other words, the fact that the
Department may have determined in an investigation or review that
affiliated party transactions are at arm's length does not mean that
the Department automatically will treat such transactions as being at
arm's length in subsequent segments of a proceeding.
One commenter stated that the quantity of sales sold in the foreign
market to an affiliated customer is not necessarily relevant to the
calculation of a dumping margin, because the Department may compare
those sales to a large number of sales in the U.S. market. Other
commenters stated that all home market sales should be reported so that
Department can address each situation on its facts. Another commenter
stated that section 771(16) of the Act requires the reporting of all
downstream sales of the foreign like product.
With respect to these comments, the Department believes that
imposing the burden of reporting small numbers of downstream sales
often is not warranted, and that the accuracy of determinations
generally is not compromised by the absence of such sales. Even if a
respondent demonstrates that its sales to affiliated parties account
for less than five percent of its total sales, the Department still
will require the respondent to report its sales to the affiliated
parties. Where all sales to all affiliates represent less than 5
percent of total sales, and where the only match for a U.S. sale is a
downstream sale, the Department normally will base normal value on
constructed value, as opposed to requiring that a respondent report
downstream sales.
In our view, this methodology does not conflict with section
771(16) of the Act, because section 771(16) deals with the type of
merchandise for which the Department needs to obtain sales information.
Section 771(16) does not require that the Department obtain information
on all possible sales of the foreign like product.
Some commenters argued that where certain types of affiliation are
involved, such as long-term supplier relationships, the Department
should not require the reporting of downstream sales under paragraph
(d), nor should the Department conduct an arm's-length test analysis
under paragraph (c). We have not adopted this suggestion, because the
Department believes that it should apply these provisions whenever
there are transactions between parties that are affiliated within the
meaning of section 771(33) of the Act. Therefore, if two parties are
affiliated, any transactions between those parties are subject to
paragraphs (c) and (d). However, in instances where a respondent does
not report downstream sales, the Department will consider the nature of
the affiliation in deciding how to apply facts available.
Section 351.404
Section 351.404 deals with the selection of the market to be used
in establishing normal value. We have not made any changes from
proposed Sec. 351.404.
Viability, particular market situation, and representative price:
In proposed paragraph (c)(1), the Department provided that decisions
concerning the calculation of a price-based normal value generally will
be governed by the Secretary's determination as to whether the market
in a particular country is ``viable'' (i.e., whether sales in that
country constitute 5 percent or more of a firm's sales to the United
States). In proposed paragraph (c)(2), however, the Department provided
that the Secretary may decline to calculate normal value based on sales
in a particular market if it is established to the satisfaction of the
Secretary that (1) a particular market situation exists that does not
permit a proper comparison, or (2) in the case of a third country, the
price is not
---- page 27357 ----
representative. In addition, in the preamble to the AD Proposed
Regulations, 61 FR at 7334, the Department stated that a party would
have to submit ``convincing evidence'' in order to overcome a
determination, based on an application of the 5 percent standard, that
a particular market is an appropriate basis for calculating normal
value.
Several commenters objected to the Department's proposed approach
to the ``particular market situation'' criterion. According to these
commenters, section 773(a)(1) of the Act identifies the ``particular
market situation'' in the exporting country or in a third country as
one of three coequal factors that the Department must consider in
determining whether it may use sales in that country as the basis for
calculating normal value. Therefore, they argued, it is improper for
the Department to require that parties present ``convincing evidence''
of the extraordinary nature of a particular market situation before the
Department will invoke this statutory provision. Consistent with the
statute and the SAA, the Department's proposed regulations should not
impose a higher evidentiary standard for determinations regarding the
``particular market situation'' than for other determinations that the
Department makes during the course of an AD proceeding.
The Department has not revised paragraph (c) in light of these
comments. There are a variety of analyses called for by section 773
that the Department typically does not engage in unless it receives a
timely and adequately substantiated allegation from a party. For
example, the Department does not engage in a fictitious market analysis
under section 773(a)(2) absent an adequate allegation from a party.
See, e.g., Tubeless Steel Disc Wheels from Brazil, 56 FR 14083 (1991);
and Porcelain-on-Steel Cooking Ware from Mexico, 58 FR 32095 (1993).
Likewise, the Department does not automatically request information
relevant to a multinational corporation analysis under section 773(d)
of the Act in the absence of an adequate allegation. See, e.g., Certain
Small Business Telephone Systems and Subassemblies Thereof from Taiwan,
54 FR 31987 (1989); and Appendix B, Antifriction Bearings from the
Federal Republic of Germany, 54 FR 18993, 19027 (1989). Also, as
discussed above, the Department and the courts have held that the party
claiming that a sale is not in the ``ordinary course of trade'' has the
burden of proof. Significantly, both the ``ordinary course of trade''
and the ``particular market situation'' criteria appear in section
773(a)(1).
In short, the Department's AD methodology contains presumptions
that certain provisions of section 773 do not apply unless adequately
alleged by a party or unless the Department uncovers relevant
information on its own. In our view, this is an eminently reasonable
approach. A common feature of these provisions is that they call for
analyses based on information that is quantitatively and/or
qualitatively different from the information normally gathered by the
Department as part of its standard AD analysis. If the Department were
to routinely seek the information called for by these provisions in
every case, the Department's ability to comply with its statutory
deadlines would be significantly impaired. Moreover, in many instances,
the exercise would prove to be pointless and a waste of resources for
both the Department and the parties involved. For example, absent an
adequate allegation, it would not make much sense to routinely
investigate whether Japan is a nonmarket economy country merely to
ensure that section 773(c) of the Act does not apply.
In the Department's view, the criteria of a ``particular market
situation'' and the ``representativeness'' of prices fall into the
category of issues that the Department need not, and should not,
routinely consider. In this regard, we note that the SAA at 822,
through its repeated use of the words ``may'' and ``might,'' appears to
treat the ``particular market situation'' criterion as a discretionary
criterion that is subordinate to the primary criterion of
``viability.'' In addition, the SAA at 821 recognizes that the
Department must inform exporters at an early stage of a proceeding as
to which sales they must report. This objective would be frustrated if
the Department routinely analyzed the existence of a ``particular
market situation'' or the ``representativeness'' of third country
sales.
Having said this, however, we believe that the language in the
preamble concerning ``convincing evidence'' was not consistent with
proposed paragraph (c)(2) and was unartful, at best. It was not the
Department's intent to establish an entirely new evidentiary standard,
such as the ``clear and convincing evidence'' standard that is
sometimes used in civil matters. Instead, by using the phrase ``if it
is established to the satisfaction of the Secretary'' in paragraph
(c)(2), we merely were attempting to provide that the party alleging
the existence of a ``particular market situation'' or that sales are
not ``representative'' has the burden of demonstrating that there is a
reasonable basis for believing that a ``particular market situation''
exists or that sales are not ``representative.''
One commenter proposed that the Department recognize that
significant sales to affiliated parties constitute a ``particular
market situation'' that may cause a specific market to be
``inappropriate as a basis for determining normal value.'' The
Department has not adopted this recommendation, because under the
statute and these regulations, the Department may use affiliated party
sales if they are made at arm's-length prices. If affiliated party
sales are made at arm's-length prices, there is no basis for concluding
that the mere fact of affiliation precludes a proper comparison. By
definition, such sales are equivalent to sales to unaffiliated parties.
Another commenter suggested that the Department revise Sec. 351.404
to allow the Department to reject a given third-country market if
prices to that country are ``not representative for reasons other than
for supporting dumping.'' In other words, if high prices in a third
country support dumping to the United States, the Department should not
disregard those prices as ``not representative.'' This commenter also
argued that it would be useful for the regulations to contain a
definition of ``representative,'' and that ``representative prices''
are market-set prices, as opposed to fictitious or artificial prices.
The Department has not included a definition of representative
prices in these regulations, because the Department does not yet have
sufficient experience with this new statutory term to provide
meaningful guidance. However, the Department does not agree with the
implication in the comment that ``not representative'' can mean only
that the prices are unrepresentatively low, nor does the Department
agree with the suggestion that it must identify the reasons for a
particular respondent's pricing scheme.
Another commenter, referring to the Department's explanation of
proposed Sec. 351.404, proposed that the final regulation provide that
the Department will interpret the term ``quantity'' in a broad manner.
In addition, this commenter argued, the final rule should clarify that
the Department always will determine quantity on the basis of the
``aggregate'' sales of the foreign like product. This commenter also
urged the Department to define the terms ``representative,''
``particular market situation,'' and ``proper comparison,''
---- page 27358 ----
and to use narrow definitions based on the language in the SAA.
Finally, with regard to selection of a third country market, this
commenter suggested that the Department elaborate on the ``other
relevant factors'' it will consider under Sec. 351.404(e)(3), and that
the final regulation include a statement that all of the criteria do
not have to be present in order to select a market and that no one
criterion is dispositive.
The Department has not adopted these suggestions. First, with
respect to ``quantity,'' because the SAA at 821 is clear that the term
quantity is to be interpreted broadly, there is no need for a
regulation. Second, regarding ``aggregate sales,'' the final regulation
adopts the language of the proposed Sec. 351.404(b)(2), which states
that the Secretary ``normally'' will determine whether sales are in
sufficient quantity based on ``aggregate'' sales of the foreign like
product. We have retained the word ``normally'' in order to provide the
Department with the flexibility to deal with unusual situations. Third,
regarding definitions of terms, as suggested previously, ``particular
market situation'', ``representative'' prices, and ``proper
comparisons'' are new concepts added to the Act by the URAA. The
Department does not have sufficient experience in applying these new
terms to provide any additional guidance at this time. Finally, with
respect to the selection of a third country market, in proposed
Sec. 351.404(e)(3), we left the term ``other relevant factors''
undefined precisely because we cannot foresee all of the possible
factual scenarios that we may encounter in future cases. In addition,
we believe that Sec. 351.404(e) is sufficiently clear that (1) not all
of the three criteria need be present in order to justify the selection
of a particular market, and (2) no single criterion is dispositive.
Time limits: Proposed paragraph (d) cross-referenced proposed
Sec. 351.301(d)(1), in which the Department provided that allegations
regarding viability, including allegations regarding a particular
market situation or the unrepresentativeness of prices, must be
submitted within 40 days after the date on which the initial AD
questionnaire was transmitted. Section 351.301(d)(1) also authorized
the Secretary to alter the 40-day time limit. We have addressed
comments regarding Sec. 351.301(d)(1) below in connection with our
discussion of that section.
One commenter proposed that the regulations explicitly state that
the Department will make its viability determination early in a
proceeding. The Department has not adopted this suggestion. We agree
that the Department should strive to make viability determinations
early in an investigation or review, and, as noted above, we have
drafted Sec. 351.404 with this objective in mind. However, there may be
instances in which the Department must delay or reconsider a decision
on viability.
Section 351.405
Section 351.405 deals with the calculation of normal value based on
constructed value (``CV'').
Appropriate market for determining profit: Subparagraph (A) of
section 773(e)(2) of the Act sets forth the preferred method for
determining the amount of selling, general, and administrative
(``SG&A'') expenses and profit to be included in constructed value.
Subparagraph (B) of that section sets forth three alternative methods.
In proposed Sec. 351.405(b), the Department defined the term ``foreign
country'' differently for purposes of subparagraphs (A) and (B).
With respect to these definitions, one commenter argued that well-
established rules of statutory construction preclude the Department
from defining the term ``foreign country'' differently in different
subparagraphs of the same statutory provision. This commenter observed
that section 773(e)(2) provides that for both the preferred method
under subparagraph (A) and the alternative methods under subparagraph
(B), the Department must determine SG&A expenses and profit on the
basis of sales of the foreign like product ``for consumption in the
foreign country.'' The commenter further noted that the phrase ``for
consumption in the foreign country'' appears in the statute with
respect to each of the four methods for computing SG&A and profit.
Thus, according to the commenter, there is no basis for the Department
to construe the phrase ``foreign country'' to mean either the home
market or a third country for purposes of subparagraph (A), while at
the same time interpreting the identical phrase to mean only the home
market for purposes of subparagraph (B). The commenter believed that
the Department should compute SG&A and profit for CV exclusively by
reference to home market sales.
Another commenter also argued that the Department should not
interpret the term ``foreign country'' differently for purposes of
subparagraphs (A) and (B). However, unlike the prior commenter, this
commenter believed that the correct interpretation allows the
Department to compute SG&A and profit on the basis of either home
market or third country sales, as appropriate, under any of the methods
listed in section 773(e)(2). In this commenter's view, to limit the
alternative SG&A and profit methods to home market experience, as the
Department proposed, would be inconsistent with the intent of the
drafters of the URAA and the AD Agreement. Moreover, this commenter
noted, such an interpretation would be logically inconsistent in
circumstances where, because the Department has found the home market
to be non-viable, the Department uses third country data for normal
value. Accordingly, the commenter suggested, the Department should
revise proposed paragraph (b) in order to retain flexibility to use
third country profit and SG&A experience in computing CV under the
alternative methods of subparagraph (B), as well as under the preferred
method of subparagraph (A).
The Department has not adopted the suggestions of either commenter.
With respect to the three alternative methods, the SAA and the AD
Agreement expressly indicate that profit and SG&A are to be based on
home market sales. Thus, the Department cannot adopt the proposal to
use third country profit and SG&A under the alternative methods. By
contrast, with respect to the preferred method, the SAA and the AD
Agreement are silent as to the market on which SG&A and profit should
be based. The absence of any express intent in the SAA or other
legislative history with respect to the preferred method--in contrast
to the express intent set forth in these same documents regarding the
alternative methods--indicates that, in the case of this particular
issue, the drafters did not intend that the preferred and alternative
methods be identical.
The Department believes that in situations where an exporter's
third country sales form the basis for normal value, but the Department
resorts to CV (because, for example, third country sales are below
cost), third country sales constitute the most reasonable and accurate
basis for calculating profit and SG&A. In such situations, because the
Department already has rejected a respondent's home market sales as a
basis for normal value, the Department also must reject SG&A and profit
based on those sales. Further, where a respondent reports third country
COP data, use of third country sales is the most practical basis for
deriving profit and SG&A for both the Department and the respondent,
because the respondent already will have reported the necessary data.
Determination of product categories for calculation of SG&A and
profit: In the AD Proposed Regulations, 61 FR at 7335, the Department
stated that it would calculate SG&A and profit on the
---- page 27359 ----
basis of aggregate figures for all covered foreign like products. A
number of commenters disagreed with this approach. Although differing
somewhat in their respective statutory interpretations and suggestions,
all of the commenters generally agreed that the Act requires the
Department to compute SG&A and profit on a basis narrower than that
contemplated by the Department. In this regard, some of the commenters
recommended that the regulations provide for the calculation of SG&A
and profit on the basis of different product groupings, and that such
groupings be limited to those models of the foreign like products
capable of comparison to each model of the subject merchandise. Other
commenters suggested an even narrower, model-specific basis for
computing SG&A and profit; i.e., when the Department disregards all
home market sales of a particular model of the foreign like product, it
would select the next most similar model as the basis for computing
SG&A and profit.
The Department recognizes that there are other methods available
for computing SG&A and profit for CV under section 773(e)(2)(A) of the
Act, including those suggested by the commenters. We continue to
believe, however, that an aggregate calculation that encompasses all
foreign like products under consideration for normal value represents a
reasonable interpretation of the statute. This approach is consistent
with the Department's method of computing SG&A and profit under the
pre-URAA version of the statute, and, while the URAA revised certain
aspects of the SG&A and profit calculation, we do not believe that
Congress intended to change this particular aspect of our practice.
Moreover, the Department believes that in applying the preferred
method for computing SG&A and profit under section 773(e)(2)(A), the
use of aggregate data results in a reasonable and practical measure of
profit that the Department can apply consistently in each case. By
contrast, a method based on varied groupings of foreign like products,
each defined by a minimum set of matching criteria shared with a
particular model of the subject merchandise, would add an additional
layer of complexity and uncertainty to AD proceedings without
generating more accurate results.
Inclusion of below-cost sales in the calculation of profit: One
commenter argued that, in calculating CV profit, the Department should
exclude all below-cost sales, whether or not the Department disregarded
such sales as being outside the ordinary course of trade under section
773(b) of the Act. This commenter believed that the SAA at 840 supports
this position in that it provides for the use of profitable sales as
the basis for calculating CV profit in most cases. In the commenter's
view, the Department's regulations should implement the legislative and
administrative intent by providing that the loss resulting from any
below-cost sale will not enter into the profit calculation for CV.
Another commenter disagreed with the proposal that the Department
automatically exclude all below-cost sales from the profit calculation,
arguing that the statutory directive for computing CV profit (as well
as SG&A expenses) requires that the Department use sales ``in the
ordinary course of trade'' in making its profit calculations. This
commenter contended that if, under its below-cost test, the Department
does not disregard below-cost sales of a foreign like product, those
sales are in the ordinary course of trade, notwithstanding that they
are at below-cost prices. Thus, according to the commenter, the
Department should account for such sales in the CV profit calculation.
The commenter further noted that the statute provides no restriction on
using home market sales in the ordinary course of trade in the first
and third alternative profit methods under section 773(e)(2)(B) of the
Act. Accordingly, the commenter maintained, the Department must use all
home market sales to compute profit under these alternative profit
methods.
The Department believes that, in computing profit for CV, the
automatic exclusion of below-cost sales would be contrary to the
statute. In computing profit under the preferred and second alternative
methods, the statute allows for the exclusion of sales outside the
ordinary course of trade. The statutory definition of ordinary course
of trade, in turn, provides that only those below-cost sales that are
``disregarded under section 773(b)(1)'' of the Act are automatically
considered to be outside the ordinary course of trade. In other words,
the fact that sales of the foreign like product are below cost does not
automatically trigger their exclusion. Instead, such sales must have
been disregarded under the cost test before the Department will exclude
from the calculation of CV profit.
In addition, we believe that the SAA at 840 supports this position.
The SAA states that unlike the Department's old law practice (under
which the Department accounted for all sales, including sales
disregarded as being below-cost, in the computation of profit), the new
statute precludes the Department from including in its calculation of
profit any below-cost sales that the Department disregards under
section 773(b)(1) of the Act. Consequently, under the new law and as
described in the SAA, profitable sales would constitute the majority of
the transactions used to compute profit for CV under the preferred and
second alternative methods.
With respect to the other alternative profit methods authorized by
section 773(e)(2)(B), the Department believes that the absence of any
ordinary course of trade restrictions under the first alternative is a
clear indication that the Department normally should calculate profit
under this method on the basis of all home market sales, without regard
to whether such sales were made at below-cost prices. However, the same
cannot be said of the third alternative method, which provides for the
use of ``any other reasonable method'' in determining CV profit. The
SAA at 841 makes it clear that, given the absence of any comparable
standard under the prior statute, it would be inappropriate to
establish methods and benchmarks for applying this alternative. Thus,
depending on the circumstances and the availability of data, there may
be instances in which the Department would consider it necessary to
exclude certain home market sales that are outside the ordinary course
of trade in order to compute a reasonable measure of profit for CV
under the third alternative method.
Abnormally high profits: One commenter recommended that the
regulations state that above-cost sales are not ``in the ordinary
course of trade'' for purposes of determining CV profit when the use of
those sales would lead to irrational or unrepresentative results. This
commenter noted that the SAA at 834 and 840 refers to sales with
``abnormally high profits'' and merchandise sold at ``aberrational
prices'' as examples of transactions that the Department may consider
as being ``outside the ordinary course of trade'' for purposes of
determining CV profit. Based on these examples, the commenter posited
that if the Department excluded the vast majority of a respondent's
sales from the profit calculation because they were below cost, the few
remaining above-cost sales, by definition, would be sold at
aberrational prices. As such, the Department also would have to exclude
those sale from the CV profit calculation.
Another commenter suggested that the regulations stringently define
the phrase ``abnormally high profits.'' This
---- page 27360 ----
commenter argued that the fact that profit margins are relatively high
is an insufficient basis for determining that profits are ``abnormal.''
Instead, the commenter argued, the burden of establishing that a given
profit amount is ``abnormal'' should be very high, and should be based
on express economic assumptions.
The Department agrees that the sales used as the basis for CV
profit should not lead to irrational or unrepresentative results.
However, we have not adopted the first commenter's recommendation,
because there may be instances in which it would be appropriate to base
profit on a small number of above-cost sales. Specifically, where the
Department finds a majority of sales of a foreign like product to be at
below-cost prices (and, thus, excludes those sales from the calculation
of profit), the fact that only a few sales remain at above-cost prices
does not, by itself, render such sales outside the ordinary course of
trade. Rather, it is the below-cost sales that are outside the ordinary
course of trade. Whether the few remaining above-cost sales are also
outside the ordinary course of trade is a separate issue that depends
on the facts and circumstances surrounding these transactions.
In this regard, the Department believes that the burden of showing
that profits earned from above-cost sales are ``abnormal'' (or
otherwise unusable as the basis for CV profit) rests with the party
making the claim. We do not consider it appropriate, however, to
establish a stringent evidentiary burden in the regulations, as
suggested by the second commenter. In most instances, proof that the
profits earned by respondent on specific sales are abnormal will depend
on a number of factors, including the type of merchandise under
investigation or review and the normal business practices of the
respondent and of the industry in which the merchandise is sold. Thus,
the Department believes it appropriate to make such ordinary course of
trade determinations on a case-by-case basis.
Profit ceiling: One commenter proposed that the regulations impose
a ceiling on the amount of profit to be used in those cases where no or
too few foreign market sales are found to be made ``in the ordinary
course of trade.'' For such a ceiling, the commenter suggested that the
Department use the average profit rate for the industry that produces/
sells the subject merchandise.
The Department does not believe that there is a statutory basis for
imposing a profit ceiling. Consistent with our position in the
preceding comment, where there are only a few sales made by a
respondent in the ordinary course of trade, such sales would form the
basis for CV profit, because they would fulfill the requirement for
actual profits under section 773(e)(2)(A) of the Act. It would
contradict the plain language of the statute (which calls for the use
of respondent's actual profits for a foreign like product) were the
Department to impose an industry-wide ceiling on the profit used for
CV.
Moreover, in instances where there are no sales in the ordinary
course of trade from which to compute profit, section 773(e)(2)(B) of
the Act does not provide that a profit ceiling be imposed for each of
the alternative methodologies. Instead, only the third alternative
method (i.e., amounts realized under any other reasonable method)
requires that the Department consider a ``ceiling'' on the amount
calculated for CV profit. Here too, however, the Department believes
that the commenter's recommended industry-wide average profit ceiling
does not conform to the statutory requirement. Section
773(e)(2)(B)(iii) of the Act provides that the so-called ``profit cap''
be determined based on amounts realized by other exporters or producers
in the foreign country in connection with sales of merchandise that is
the same general category as the subject merchandise. This differs from
the commenter's suggestion in two important respects. First, the
statutory profit cap is to be derived from sales in the general
category of products and, thus, encompasses a group of products that is
broader than the subject merchandise. Second, where it relies on the
third alternative method, the Department is required to determine the
profit cap figure based on sales in the foreign country exclusive of
profits realized by the exporter or producer under investigation or
review. By contrast, the proposed average industry-wide profit figure
presumably would include sales by all exporters and producers in all
markets, including sales by the exporter and producer in question and
sales to the United States. In our view, the statute prohibits the use
of such sales for this purpose.
Finally, it is important to note that the SAA at 841 anticipates
situations in which the Department will be unable to determine a profit
cap due to an absence of the appropriate data. In these instances, the
Department may apply the third alternative profit method on the basis
of facts available. However, the Department will not make adverse
inferences in applying facts available, unless the respondent did not
cooperate to the best of its ability during the course of the
investigation or review.
Use of other producer's profit data: One commenter suggested that
the regulations state that, when calculating a respondent's profit for
CV under section 773(e)(2)(B) of the Act, the Department will resort to
the second alternative method (other producers' profits for the foreign
like product) only in exceptional circumstances. The commenter
contended that the adoption of this principle will help to ensure
fairness and predictability in AD proceedings.
In our view, the SAA at 840 makes clear that there is no hierarchy
or preference among the three alternative methods for calculating
profit under section 773(e)(2)(B). Rather, the SAA provides that the
Department's selection of an alternative profit calculation method will
be made on a case-by-case basis, and will depend, to an extent, on the
data available with regard to profits earned in the foreign market. For
this reason, we have not adopted the commenter's recommendation to
limit the use of the second alternative method to exceptional
circumstances, because such an approach would impose a preference in
favor of the first and third alternative methods.
Section 351.406
Section 351.406 deals with the analysis of whether to disregard
certain sales as below the cost of production under section 773(b) of
the Act.
Extended period of time: Several commenters made suggestions
regarding the ``extended period of time'' criterion for below-cost
sales under section 773(b)(1)(A) of the Act. Two of these commenters
disagreed with the statement in the AD Proposed Regulations, 61 FR at
7336, that the Department would exclude below-cost sales made during
only one month of the period of investigation or review. These
commenters maintained that because one-month's worth of sales do not
represent the pricing practices of a company over a full investigation
or review period, the Department should not consider such sales to have
been made within an extended period of time. Similarly, another
commenter recommended that the Department establish criteria for
determining when sales of ``custom'' products (products not
manufactured continuously throughout the period of investigation or
review) have been made ``within an extended period of time in
substantial quantities.''
The Department has not adopted these suggestions, because we
believe that the SAA is clear as to when below-
---- page 27361 ----
cost sales have occurred ``within an extended period of time.'' The
SAA at 831-832 states that ``below-cost sales need occur only within
(rather than over) an extended period of time.'' According to the SAA,
this means that the Department ``no longer must find that below-cost
sales occurred in a minimum number of months before excluding such
sales from its analysis.'' Thus, for example, where a particular model
is sold at prices below the cost of production during one month of the
period of investigation or review (and where such sales are in
substantial quantities and are not at prices that would permit cost
recovery), the Department may disregard these sales in its
determination of normal value.
Another commenter made two recommendations regarding the language
in proposed paragraph (b) that an extended period of time ``normally
will coincide with the period in which the sales under consideration
for the determination of normal value were made.'' First, the commenter
cited the statutory requirement that the substantial quantity of below-
cost sales occur ``within'' the extended period of time, and not
``over'' that period. Based on this requirement, the commenter argued,
paragraph (b) should not state that the period required to satisfy the
``extended period of time'' criterion must be as long as, or
``coincide'' with, the period of investigation or review. Second, this
commenter noted that under proposed paragraph (b), the period in which
``sales under consideration'' are made could vary by model or part
number. For example, according to this commenter, if a model was
discontinued only a few months into the period of review, paragraph
(b), as drafted, would limit the ``extended period of time'' to the
duration of sales of that model. The commenter suggested that if the
Department intends that the entire period of investigation or review
constitute the ``extended period of time,'' it should make this clear
in the final regulations.
It was not the Department's intention (nor do we believe it to be
the case) that the use of the word ``coincide'' in proposed paragraph
(b) changes the clear language of section 773(b)(1)(A) from ``within an
extended period of time'' to ``over'' such a period. Instead, proposed
paragraph (b) merely establishes the duration of that interval which
the Department normally will consider as being ``an extended period of
time'' for purposes of determining whether below-cost sales were made
in substantial quantities under section 773(b)(1) of the Act. Below-
cost sales need only occur within that period in order to be counted
toward the substantial quantities threshold.
The Department does not believe it appropriate to redraft paragraph
(b) to refer to sales within the period of investigation or review. The
commenter making this suggestion presented a scenario in which a firm
sells a particular model of a foreign like product only during the
first few months of a review period. This commenter argued that
paragraph (b) could be construed in such a way as to limit the extended
period of time to the duration of sales of that model. We do not
believe this to be the case, however, because the extended period of
time is based on the period during which all foreign market sales were
made, not merely sales of individual models. In other words, although
it has been the Department's practice to conduct the sales below cost
analysis on a model-specific basis, the extended period of time
interval is generally the same for all models of the foreign like
product that are under consideration for normal value. The fact that a
firm makes sales of a particular model in only a few months does not
alter the defined ``extended period of time.''
This being the case, it is important to note that paragraph (b)
allows the Department to adhere to the statutory requirement that an
extended period of time normally be one year. At the same time,
however, it recognizes that the foreign market sales used as the basis
for determining normal value (and that may become the subject of a
sales below cost analysis) can occur over a period that is longer or
shorter than one year. For example, in an administrative review,
because of our practice of looking to ``contemporaneous'' sales in
months other than the month in which the sale of the subject
merchandise took place, the Department often requests a respondent to
submit data regarding contemporaneous sales of foreign like products
for specific months prior to and after the normal one-year period of
review. In this instance, the extended period of time would be longer
than twelve months. Likewise, the extended period of time could be
shorter than one year if, for example, the subject merchandise
consisted of highly perishable agricultural products with growing and
selling seasons that are shorter than one year.
Section 351.407
Section 351.407 contains rules regarding the allocation of costs,
the application of the major input rule under section 773(f)(3) of the
Act, and the application of the startup adjustment to CV and COP under
section 773(f)(1)(C) of the Act.
Affiliated party transactions/major input rule: In response to a
number of comments, the Department has added a new paragraph (b) to
Sec. 351.407 that clarifies the Department's practice with respect to
the determination of the value of major inputs purchased from
affiliated suppliers in cases involving cost of production and/or CV.
(We have redesignated proposed paragraphs (b) and (c) as paragraphs (c)
and (d), respectively.) The new paragraph provides that, when the
Department applies the major input rule, the Department normally will
use the transfer price paid by the producer for a major input so long
as that price is not below the input's market price or the supplier's
cost of production for the input. In addition, if both the transfer
price and the market price for a major input are less than the
supplier's cost of production for the input, the Department normally
will use production costs as the appropriate value for the major input
under section 773(f)(3) of the Act.
Several commenters made recommendations regarding the Department's
treatment of production inputs purchased from affiliated parties under
section 773(f)(2) and (3) of the Act (affiliated party transactions
disregarded and the major input rule). In general, these commenters
suggested that, in determining the value of production inputs, the
Department should place greater reliance on transfer prices between
producers and their affiliated suppliers, especially where the
reporting burden on respondents outweighs the value of conducting an
arm's length test for every input. More specifically, two commenters
suggested that the regulations establish an arm's-length test for
inputs obtained from affiliated parties. One commenter believed that
only significant differences--for instance, plus or minus 10 percent--
between the average price charged to affiliated parties and the average
price charged to unaffiliated parties should cause the Department to
reject the affiliated party transactions as not being at arm's-length
prices. As an alternative, this commenter suggested that the
regulations provide that affiliated party prices are at arm's length if
they do not deviate from the average non-affiliated party prices by
substantially more than the deviation of non-affiliated party prices
from that average. The other commenter suggested that if record
evidence demonstrates that a producer cannot manipulate the price of
inputs purchased from an affiliated party, the Department should
---- page 27362 ----
conclude that the producer purchased the input at arm's length.
We have not adopted the proposal to include in the regulations an
arm's-length test for inputs sourced from affiliated suppliers.
Although a test along these lines may be appropriate in some instances,
it may not be in others. For instance, where a particular input
represents a significant portion of the cost of the merchandise under
investigation, a 10 percent difference between the price charged to the
affiliated producer and the price charged to unaffiliated producers
could have a significant effect on the results of the Department's AD
analysis. In other instances, where inputs sourced from an affiliated
party represent an immaterial part of the overall manufacturing costs
of the merchandise, the Department may find it appropriate to accept a
producer's transfer prices (or to test those prices on a sample basis)
without conducting a full-blown arm's-length test based on the prices
paid for all such inputs. Thus, instead of implementing a single arm's-
length test applicable to all situations involving affiliated party
inputs, we think it is important that the Department consider the facts
of each case in order to determine the appropriate level of scrutiny it
should give to affiliated party transactions.
With respect to the recommendation that the Department consider the
ability of a producer to manipulate the price of inputs purchased from
an affiliated party, we do not think that the potential price
manipulation standard described by the commenter is appropriate for
purposes of examining the arm's-length nature of input transfer prices.
The indeterminate nature of such a standard would make it
unadministrable and impractical. Instead, the Department believes that
the appropriate standard for determining whether input prices are at
arm's length is its normal practice of comparing actual affiliated
party prices with prices to or from unaffiliated parties. This practice
is the most reasonable and objective basis for testing the arm's length
nature of input sales between affiliated parties, and is consistent
with section 773(f)(2) of the Act.
With respect to the major input rule, two of the commenters
recommended that the regulations establish a threshold for determining
when an input will be considered ``major.'' These commenters suggested
that normally the Department should not consider affiliated party
inputs to be ``major'' if they represent less than 20 percent of the
cost of production. Two commenters added that where a producer cannot
obtain cost data from an affiliated supplier, the Department should
allow the producer to report transfer prices.
Another commenter opposed these suggestions, noting that the only
substantive change made by the URAA with respect to the issue of input
dumping was to clarify that section 773(f) applies to the calculation
of both cost of production and CV. Thus, the commenter argued, the
Department should reject as inappropriate the suggestions of the other
commenters.
The Department has not adopted the suggested definitions of ``major
input.'' We continue to believe that the determination of whether an
affiliated party input constitutes a ``major input'' in a particular
case depends on several factors, including the nature of the input and
the product under investigation. The determination also may depend on
the nature of the transactions and operations between the producer and
its affiliated supplier. For example, a producer could purchase a
number of significant inputs from an affiliated supplier that
individually account for a small percentage of the total cost of
production for the subject merchandise, but, when considered in the
aggregate, comprise a substantial portion of the total cost of
production. In this instance, it may be appropriate for the Department
to consider the inputs to be major inputs for purposes of examining the
affiliated supplier's production costs under section 773(f)(3) of the
Act. Similarly, the Department may find it necessary to analyze, on a
sample basis, the production costs incurred for affiliated party inputs
where a large number of such inputs are purchased from various
affiliated suppliers and the combined value of the inputs purchased
represents a significant portion of the total manufacturing cost of the
subject merchandise.
These examples illustrate the difficulties inherent in relying on a
single, all-encompassing definition of ``major input.'' There also is
an additional problem associated with using a single numerical
standard. In identifying ``major input,'' the Department generally must
rely on the transfer price charged by the affiliated supplier. However,
because the transfer price itself may be below cost, it may not
constitute an appropriate basis on which to measure the significance of
the input. Because of this problem, we do not believe that the
Department would have sufficient flexibility to examine affiliated
party transactions were we to adopt the 20 percent-of-cost definition
or any other specific threshold for major inputs suggested by the
commenters.
Nonrecurring costs: One commenter suggested that the Department add
a new paragraph to its regulations to clarify the treatment of
nonrecurring costs under section 773(f)(1)(B) of the Act. Specifically,
this commenter recommended that the regulations establish a rebuttable
presumption that all nonrecurring costs benefit current and/or future
production, and that the Department either will (1) expense such costs
to current production, or (2) allocate the costs over current and
future production, as appropriate.
As the Department stated in the AD Proposed Regulations, 61 FR at
7342, the allocation of nonrecurring costs, such as research and
development costs, for purposes of computing COP and CV is dependent on
case-specific factors. Section 773(f)(1)(B) recognizes the fact-
specific nature of these allocation issues by providing only that the
Department adjust costs appropriately to take account of any benefit
that may accrue to a respondent's current and/or future production as a
result of incurring such costs. Thus, in these final regulations, we
have not elaborated on the allocation of nonrecurring costs. Instead,
the Department will continue to determine the appropriate allocation of
non-recurring costs on a case-by-case basis.
Reliance on generally accepted accounting principles: With respect
to the allocation of costs, one commenter recommended that the
regulations provide that the Department normally will allocate costs in
accordance with the generally accepted accounting principles (GAAP) of
the country of exportation.
The Department has not adopted this suggestion, because it would
establish a standard for computing COP and CV different from the
standard contemplated by the Act. Section 773(f)(1)(A) provides that
the Department normally will calculate costs ``based on the records of
the exporter or producer of the merchandise, if such records are kept
in accordance with generally accepted accounting principles of the
exporting country (or the producing country, where appropriate) and
reasonably reflect the costs associated with the production and sale of
the merchandise.'' Thus, the statute expresses a preference for
computing costs on the basis of foreign country GAAP only when those
practices measure costs in a reasonable manner. In addition, where a
producer does not keep its normal accounting records in accordance with
foreign country GAAP, the statute does not require that such records be
made to conform with foreign GAAP.
We do not mean to suggest that the Department would not look to the
---- page 27363 ----
GAAP of the foreign country (or to U.S. or international accounting
principles) in establishing whether the normal accounting practices of
the producer reasonably reflect the costs associated with the
production of the merchandise in question. Instead, we mean only that,
for AD purposes, the fact that a producer does not follow its national
accounting principles does not automatically mean that the producer's
accounting practices do not reasonably reflect costs.
Startup adjustment: We received several comments concerning various
aspects of proposed paragraph (c) (now paragraph (d)) and the new
startup adjustment.
Definition of startup: One commenter, stating that the definition
of terms in proposed paragraph (c) seemed to conform to the statute and
the AD Agreement, urged the Department to apply paragraph (c) in a
manner consistent with the SAA and the URAA. Specifically, this
commenter maintained that the Department should allow for a startup
adjustment in those instances where a semiconductor producer can
demonstrate that a substantial investment was required to change a
design, significantly reduce wafer size, or produce other new types of
products that fall within a current chip generation.
Another commenter contended that the definitions of ``new
products'' and ``new production facilities'' in proposed paragraph
(c)(1) were exceedingly narrow. This commenter asked the Department to
confirm that improvements to products or production facilities that
entail substantial costs and that involve significant decreases in
productivity will qualify for the startup adjustment.
Two commenters oppose the suggestions described above. One
commenter argued that the startup adjustment does not apply to the
semiconductor design changes described. In support, this commenter
cited the SAA at 836, which states that ``a 16 megabyte Dynamic Random
Access Memory (DRAM) chip, for example, would be considered a new
product if the latest version of the product had been a 4 megabyte
chip. However, an improved version of a 16 megabyte chip (e.g., a
physically smaller version) would not be considered a new product.''
The other commenter opposing the suggestions argued that the
definition of ``new products'' in proposed paragraph (c)(1)(ii) was too
broad, and suggested that the regulations provide examples that would
limit the circumstances under which the ``complete revamping or
redesign'' of products would be eligible for a startup cost adjustment.
This commenter noted that in many industries, firms continually revamp
or redesign products in order to obtain incremental improvements in
performance or to reduce production costs, or both. In the commenter's
view, however, such process or performance improvements that do not
change the dimensions and construction of an article are not sufficient
to result in a ``new product.'' The commenter recognized that in
proposed paragraph (c)(1)(ii), the Department sought to distinguish
``mere improvements'' to products from the ``complete revamping or
redesign'' of such products. However, the commenter believed that this
paragraph was unduly vague and that the Department should clarify it by
means of specific, narrowly defined examples of ``new products.''
The Department has not incorporated the suggestions made by these
commenters in the regulations. Nor do we consider this explanatory
preamble an appropriate vehicle for making determinations as to whether
situations specific to the semiconductor industry would warrant a
startup adjustment under section 773(f)(1)(C). Instead, paragraph
(d)(1) continues to set forth the definitions contained in the SAA at
836. Given the variety of products and industries with which the
Department deals and the fact that the startup provision is new to the
statute, we believe that these examples are well-suited to the task of
providing guidance to parties without unintentionally expanding or
limiting the availability of a startup adjustment.
Standard for granting a startup adjustment: One commenter noted
that proposed paragraph (c) correctly recognized that the standard for
granting a startup adjustment is no more or less stringent than those
applicable to other types of adjustments under the Act. This commenter
added that because there are numerous situations that may call for some
form of startup adjustment, proposed paragraph (c) properly left the
Department wide latitude in analyzing and granting startup adjustments.
Another commenter, however, argued that the Department should
strengthen paragraph (c) to ensure that respondents are not encouraged
to file meritless claims for startup adjustments. To achieve this, the
commenter recommended that the regulations provide that a respondent
must submit substantial evidence demonstrating that the expenses for
which a startup adjustment is sought can be directly tied to a startup
phase of production.
A third commenter suggested that, because respondents bear the
burden of proof in demonstrating they are entitled to a startup
adjustment, the regulations should clarify the information necessary to
obtain the adjustment. This commenter asked that the Department give
specific examples of the types of documentation that will be sufficient
to meet its requirements.
With respect to these suggestions, the Department notes that the
SAA at 838 provides that the burden of establishing entitlement to a
startup adjustment rests with the party seeking the adjustment. Among
other things, the claimant must demonstrate that the costs for which an
adjustment is claimed are directly associated with the startup phase of
operations. Having said this, however, we have not adopted the
suggestion that we establish a special burden of proof for startup
adjustments, because we believe that the burden of establishing
eligibility for a startup adjustment is the same as that applicable to
any other AD adjustment. However, as in the case of any other
adjustment, the Department intends to seek the case-specific
information and documentation necessary to establish whether a startup
adjustment is appropriate.
We also have chosen not to implement the suggestion that the
Department provide specific examples of the documentation required in
order to qualify for a startup adjustment. The SAA indicates that
startup inquiries will be based on the specific facts of each case. For
example, the SAA at 838 states that ``companies must demonstrate that,
for the period of investigation or review, production levels were
limited by technical factors associated with the initial phase of
commercial production and not by factors unrelated to startup, such as
marketing difficulties or chronic production problems. In addition, to
receive a startup adjustment, companies will be required to explain
their production situation and identify those technical difficulties
associated with startup that resulted in the underutilization of
facilities.'' Here, the SAA clearly contemplates a fact-based inquiry
that includes consideration of a respondent's specific production
situation and the unique technical difficulties that led to decreases
in its normal production output. Moreover, other portions of the SAA
further support the conclusion that the Department must conduct a fact-
based examination of claims for a startup adjustment. Thus, it would be
inappropriate, as well as impractical, for the Department to impose a
mandatory set of information requirements that would apply to all
cases.
---- page 27364 ----
Duration of startup period: One commenter recommended that the
regulations refer expressly to the quality of merchandise produced as a
criterion to be considered in determining the length of the startup
period. The commenter argued that where merchandise, although in
production, is not yet of a quality sufficient for sale, some startup
adjustment would be appropriate. Another commenter, however, opposed
this proposal, arguing that the ``quality of a product'' is an
amorphous concept that respondents could manipulate.
The Department has not adopted the suggestion to make product
quality a criterion in determining the length of the startup period,
because we believe that this suggestion is inconsistent with the
statute and the SAA. Section 773(f)(1)(C)(ii) of the Act provides that
the Department will consider startup as having ended as of the time the
producer achieves a level of commercial production that is
characteristic of the merchandise, producer, or industry concerned. The
SAA at 836 states that in making a determination as to when a producer
reaches commercial production levels, the Department will measure the
producer's actual production levels based on the number of units
processed. The SAA also provides that, to the extent necessary, the
Department will examine other factors (such as historical data
reflecting the same producer's or other producer's experiences in
producing the same or similar products) in determining the end of the
startup period.
We note also that the SAA does not refer to quality of merchandise
as a criterion for measuring the length of the startup period, but
instead relies strictly on the number of units processed as a primary
indicator of the end of the startup period. In fact, the SAA at 836
states that the Department will not extend the startup period in a
manner that would cover product improvements and cost reductions that
may occur over the life cycle of a product. The Department believes
this to be a clear reference to product quality and yield improvements
that may continue to exist long after startup has ended and, if taken
into consideration, could result in extending the startup period beyond
the point at which commercial production is achieved.
Startup costs: One commenter suggested revisions to proposed
paragraph (c)(4) (now paragraph (d)(4)) regarding the types of costs
that are eligible for a startup adjustment under the Act. According to
this commenter, these revisions would help to clarify the legislative
intent that, in making a startup adjustment, the Department may
consider only those costs that are tied directly to manufacturing of
the merchandise.
We have adopted the revisions suggested by the commenter. These
changes provide additional clarification regarding the types of non-
production costs that the Department will consider as ineligible for a
startup adjustment. These costs include general and administrative
(``G&A'') expenses and general research and development costs that the
Department normally considers to be part of G&A.
Amortization of startup costs: One commenter disagreed with the
Department's position that it should amortize over a reasonable period
of time any excess between a respondent's actual costs and the costs
adjusted and calculated for startup costs. In this commenter's view,
there is no basis under the AD Agreement for such an approach. In
addition, the commenter maintained that any adjustments for startup
costs are isolated adjustments that the Department reasonably can take
into account during the period of investigation or review.
Another commenter recommended that the Department provide that
amortized expenses related to prior startup operations be included as
part of respondent's startup costs during the period under
investigation or review. This commenter maintained that its
recommendation was consistent with sound accounting principles and
would preclude a respondent from receiving an unintended and improper
benefit as a result of a startup adjustment.
The Department believes that its position concerning the
amortization of unrecognized startup costs is fully consistent with the
URAA and the AD Agreement. As a result of making a startup adjustment
under section 773(f)(1)(C), the difference between actual production
costs during the startup phase and costs at the end of the startup
phase are not accounted for during the startup phase. Because this
difference represents actual costs incurred by the producer, it is
reasonable to expect that the producer recoup these costs over an
appropriate time period. Failing to consider these costs would mean
ignoring a portion of the actual costs incurred by the producer in
manufacturing subject merchandise.
Moreover, as described in the SAA at 837, the difference between
actual and adjusted startup costs is recouped through amortization over
a reasonable period of time (subsequent to the startup phase) based on
the life of the product or production machinery, as appropriate.
Because the amortization period is based on the estimated life cycle of
a product or machinery, this period may extend beyond the period of
investigation or review. Therefore, it is not possible for the
Department, in all instances, to account for startup costs within the
investigation or review period.
The Department also has not adopted the recommendation that
respondents be required to account for startup operations that may have
taken place prior to the period of investigation. The Department
believes that only where respondents have adjusted for startup costs in
an investigation or review period would they be required to account for
(through amortization in periods subsequent to the startup phase) the
difference between actual costs and costs computed for startup. As
noted above, this practice ensures that respondents account for all
actual costs incurred to produce the merchandise. Where merchandise was
produced, or production facilities have been in place, prior to the
period of investigation, the Department considers it unnecessarily
burdensome to require that respondents account for previously incurred
startup costs in the same manner as for startup operations that
occurred during the investigation or review period. Nor is such a
requirement contemplated under the statute as a condition for granting
a startup adjustment.
Section 351.408
Section 351.408 implements section 773(c) of the Act, which creates
a special methodology for calculating normal value in AD proceedings
involving a nonmarket economy (``NME'') country. We received numerous
comments on this section.
Market-oriented industry test: Section 773(c)(1) of the Act permits
the Department, in certain circumstances, to use the ``market economy''
methodology set forth in section 773(a) to determine normal value in an
NME case. To identify those situations where we would apply the market
economy methodology and calculate normal value based on domestic prices
or costs in the NME, we developed our so-called ``market oriented
industry'' or ``MOI'' test. However, we elected not to codify the MOI
test in the AD Proposed Regulations because of our concern that the
test did not succeed in ``identifying situations where it would be
appropriate to use domestic prices or cost in an NME as the basis for
normal value * * *.'' 61 FR at 7343.
Several comments were filed concerning the MOI test and whether the
Department should codify its
---- page 27365 ----
current test or an amended version of the MOI test. One commenter put
forward numerous arguments against the current MOI test. First, this
commenter argued that the third leg of the MOI test is unrealistic.
(The third leg of the test requires that market-determined prices must
be paid for virtually all inputs before the Department will find a
particular industry to be an MOI.) In this commenter's view, this third
leg extends the Department's inquiry beyond the pricing of the input
itself to factors that only remotely impact the price of the input,
such as land use and energy policies. Because of the breadth of this
inquiry, this commenter believed that the Department effectively
requires an examination of the entire NME economy, an approach that
contravenes the stated purpose of the MOI test; i.e., to determine
whether a particular input or sector in the NME is sufficiently subject
to market forces.
According to this commenter, another indication that the MOI test
is unreasonable is that few, if any, market economy countries have
industries in which every single input is 100 percent subject to market
forces. To make the MOI test more reasonable, this commenter suggested
amending the third leg of the test to require only that a reasonable
portion of inputs be subject to market forces.
This commenter also questioned the Department's all-or-nothing
approach under the third leg of the MOI test. Specifically, this
commenter contended that the Department's requirement that all inputs
sourced in the NME be obtained at market-determined prices overlooks
the fact that certain inputs may be purchased at market prices. Where
certain inputs are purchased at market prices, this commenter argued,
the Department should use those prices. Moreover, in this commenter's
view, doing so would be consistent with the Department's policy of
using the actual input prices paid by an NME producer when the producer
purchases the input from a market economy supplier and pays for the
input in a market economy currency. The all-or-nothing approach also
leads to anomalous results, in this commenter's view. When an NME
industry is unable to meet the burden of showing that virtually all of
its inputs are purchased at market-determined prices, the Department
uses the NME methodology and values the NME producers' inputs in a
surrogate market economy country that, according to this commenter,
would itself fail the MOI test.
This same commenter also questioned the second leg of the MOI test,
particularly as it applies to the People's Republic of China (``PRC'').
(In order to qualify under the second leg of the test, the industry
producing the merchandise should be characterized by private or
collective ownership.) In this commenter's view, government ownership
should not be dispositive of whether an industry is subject to market
forces. The Department investigates many state-owned companies in
market economy countries, and government ownership of those companies
does not lead the Department to apply a different AD methodology.
Moreover, based on its experience in administering the separate rates
test (see Sec. 351.102(b)), the Department has found on numerous
occasions that PRC companies ``owned by the people'' operate
independently of the government. Hence, in this commenter's view,
ownership by the people should not preclude a PRC industry from
achieving MOI status.
On a more general level, this commenter urged the Department to
apply the MOI test on a company-specific basis rather than to all
companies within a given industry. The failure of particular companies
to provide evidence that market forces are at work should not, in this
commenter's view, work unfairly against those companies that are able
to satisfy the test. Similarly, according to this commenter, the
regional nature of certain economic reforms in the PRC argues for a
company-specific approach.
Two commenters raised various policy arguments against the rigidity
of the MOI test. In their view, the MOI test should be applied in such
a way as to encourage market reforms in NMEs. Instead, they claimed
that the current MOI test sends a signal to NMEs that the Department
will not recognize their reforms. Additionally, in the view of one
commenter, NME producers and exporters would be more willing to
cooperate in AD proceedings if the Department changed the MOI test,
because they would have an opportunity to avoid the unfairly high
margins generated by the NME methodology.
Two commenters suggested amendments to the current MOI test to make
it meaningful and fair for ``economies in transition'' to market
economies. Specifically, they urged the Department to adopt a
presumption that when the first two legs of the current MOI test are
met (i.e., there is no government involvement in setting the prices or
production quantities of the product, and the industry is characterized
by private and collective ownership), the Department will perform a
market economy AD analysis. Under their proposal, the presumption could
be rebutted by evidence showing that the central government set the
prices paid for inputs constituting a substantial value of the final
product.
One commenter urged the Department either to (1) retain the current
MOI test (on the grounds that it does succeed in identifying those
situations where it would be appropriate to use prices or costs in the
NME), or (2) abandon the notion of MOIs altogether. In this commenter's
view, it is not possible to reconcile the notion that a country is an
NME with the notion that the prices or costs of some participants in
that economy are immune from that economy's influences.
We have not codified the current MOI test in our final regulations.
Nor have we adopted a modified version of the MOI test. Given the
changing conditions in NMEs, we believe that we should continue to
develop our policy in this area through the resolution of individual
cases, and the comments that were submitted will help us in that
process. This area of the law continues to be extremely important to
the agency and will receive the Department's careful attention.
Surrogate selection: In applying the NME AD methodology, the first
step is to identify the so-called ``surrogate country'' to be used for
valuing the NME producers' factors of production. Under section
773(c)(4) of the Act, the surrogate should be a country (or countries)
at a level of economic development comparable to the NME and a
significant producer of merchandise comparable to the merchandise being
investigated. In proposed paragraph (b), we stated that we would place
primary emphasis on per capita GDP as the measure of economic
comparability. More generally with respect to surrogate selection, we
explained that the relative weights we would place on the two selection
criteria (i.e., economic comparability and significant production of
comparable merchandise) would vary based on the specific facts
presented by individual cases.
We received two comments on the issue of surrogate selection. One
commenter suggested that where other economic indicators (e.g., growth
rates, distribution of labor between the manufacturing, agricultural
and service sectors) reflect disparities in economic comparability, the
Department should take this into account. The second commenter agreed
with the Department's position that surrogate selection should be made
on the basis of the particular circumstances presented by each case.
---- page 27366 ----
Regarding the comment on economic comparability, we believe that
paragraph (b) provides the Department with adequate flexibility to take
into account economic indicators other than per capita GDP. While
similar levels of per capita GDP would always be considered the primary
indicator of comparability, other measures of comparability could
outweigh it where the circumstances so warranted.
Valuation of the factors of production: Once the Department
identifies an appropriate surrogate country, the next step in an AD
proceeding involving an NME is to value the NME producers' factors of
production. Proposed paragraph (c) contained rules for determining
these values. In general, under proposed paragraph (c), we would value
inputs using publicly available information regarding prices in a
single surrogate country. However, we articulated certain exceptions to
this general rule. First, where the NME producer purchases inputs from
a market economy producer and these inputs are paid for in a market
economy currency, we would use the price paid by the NME producer to
value that input. Second, we proposed valuing the NME producer's labor
input by reference to a regression-derived calculation that effectively
includes wage information from a number of countries, rather than a
single country.
We received several comments on the proposed factor valuation
rules. One commenter called for the Department to seek internal
coherence among the factor values by obtaining them from a single
source. In this commenter's view, the goals espoused by the Department
(i.e., to achieve accuracy, fairness and predictability) would be
better served if where there were a tight interrelationship among the
surrogate values. Moreover, because the Department calculates certain
values (such as manufacturing overhead, general expenses, and profit)
relative to labor and material costs, this commenter believed the
Department should derive all of these amounts from the same source.
We have not adopted this suggestion. In order to derive
``internally consistent'' values, as the commenter used the term, it
would be necessary to obtain valuation data from a single producer in
the surrogate country. We have tried this approach in the past and it
has not worked well. Frequently, we have been unable to obtain a
surrogate producer willing to share this type of information with the
Department. Moreover, even when we have been able to obtain data, this
approach is much less transparent than use of publicly available input
values, because while a surrogate producer might share data with the
U.S. government, it would be less likely to make it available to a U.S.
petitioner or an NME producer. Finally, we question the accuracy of
this approach as it applies to individual input prices. When compared
to a publicly available price that reflects numerous transactions
between many buyers and sellers, a single input price reported by a
surrogate producer may be less representative of the cost of that input
in the surrogate country. For these reasons, we have continued the
general schema put forward in the proposed paragraph (c) of relying on
publicly available data (which will not normally be producer-specific)
for material inputs, while relying on producer- or industry-specific
data for manufacturing overhead, general expenses, and profit.
Two commenters discussed the proposal in paragraph (c)(1) regarding
the use of prices paid by NME producers when they import the input from
a market economy and pay for the input in a market economy currency.
One commenter objected to the Department's approach on the grounds that
(1) such prices are not publicly available, and (2) they are not
internally coherent with other values included in the calculation (see
discussion above). In this commenter's view, if the Department does use
the prices paid by NME producers, it should ensure that those prices
are free of any distorting effects attributable to barter transactions
or savings achieved through centralized purchasing. Moreover, this
commenter continued, the Department should not use those input values
except for the specific transactions to which they pertain. Thus, if an
NME producer sourced some of the input from market economy suppliers
and the remainder from domestic sources, then the value for the
domestically-sourced inputs should be based on surrogate values and not
on the price paid by the NME producers to the market economy suppliers.
In support, this commenter stated that: (1) relying solely on the price
paid to the market economy supplier to value the input is inappropriate
because it assumes that the NME producer could purchase all of its
needs at this price, and (2) it ignores the statutory requirement that
the NME producer's factors of production be valued in a surrogate
market economy country to the extent possible. The second commenter
supported the Department's proposal to use the price paid by the NME
producer to a market economy supplier in these situations, because that
price is a more reasonable and accurate indicator of the value of the
input than a surrogate price would be.
We have not adopted the suggestions put forward by the first
commenter. While we acknowledge that prices paid by the NME producer to
a market economy supplier will not be publicly available, we have
weighed this consideration against the increased accuracy achieved by
our proposal. We note that the Federal Circuit has upheld our practice
of using prices paid for inputs imported from market economies instead
of surrogate values. Lasko Metal Products, Inc. v. United States, 43
F.3d. 1442 (1994) (``Lasko''). While we certainly do not view this
decision as permitting us to use distorted (i.e., non-arm's length)
prices, we believe that the Court's emphasis on ``accuracy, fairness
and predictability'' does provide us with the ability to rely on prices
paid by the NME producer to market economy suppliers, in lieu of
surrogate values, for the portion of the input that is sourced
domestically in the NME. Moreover, as noted in the AD Proposed
Regulations, 61 FR at 7345, we would not rely on the price paid by an
NME producer to a market economy supplier if the quantity of the input
purchased was insignificant. Because the amounts purchased from the
market economy supplier must be meaningful, this requirement goes some
way in addressing the commenter's concern that the NME producer may not
be able to fulfill all its needs at that price.
Another commenter suggested that the Department should ``test''
surrogate values for reasonableness. For example, if the Department has
two values for a particular input that are very different, but one is
closer to the price paid by the NME producer in the NME, the Department
should select the price that is closer to the price paid by the NME
producer. More generally, this commenter urged the Department to apply
the law as fairly as possible by closely matching the characteristics
of the input used by the NME producer with the input selected in the
surrogate country for valuation purposes.
We agree that ``aberrational'' surrogate input values should be
disregarded (see, e.g., Certain Cased Pencils from the People's
Republic of China, 59 FR 55625, 55630 (1994)). However, we have not
accepted this commenter's benchmark for determining whether a
particular surrogate value is reasonable. Use of an NME price as a
benchmark is inappropriate because it is the unreliability of NME
prices that drives us to use the special NME methodology in the first
place. The Department does attempt to match the surrogate product
---- page 27367 ----
used for valuation purposes closely with the input used by the NME
producer. This practice is reflected in paragraph (c), wherein the
Department elected to codify a preference for publicly available
information rather than publicly available published information. This
approach allows us to use input-specific data instead of the aggregated
data that frequently appear in published statistics. See AD Proposed
Regulations, 61 FR at 7344.
Finally, we received a comment regarding factor valuation in
general. This commenter urged the Department to add to the regulations
an illustrative list of the factors of production that are included in
calculating the normal value of an import from an NME. The commenter
believed that including such a list will increase the likelihood that
all the appropriate factors of production will be identified. We have
not adopted this proposal, because, in our view, the statute is
sufficiently clear regarding the identify of the factors of production
to be valued. If a party to a particular proceeding believes that
certain factors are not being reported, it should raise its concerns
with the Department in the context of that proceeding.
Valuation of the labor input: Proposed paragraph (c)(3) included a
proposal for valuing the labor input in NME cases. Rather than relying
on the wage rate in the selected surrogate country, under this proposal
the Department would have valued the labor input using a wage rate
developed through a regression analysis of wages and per capita GDP.
After a further review of paragraph (c)(3) and the comments relating
thereto, we have left paragraph (c)(3) unchanged.
Three commenters submitted views on the Department's proposal. One
commenter noted that the proposal did not provide different wage levels
for skilled and unskilled labor. The second commenter urged the
Department to allow itself the flexibility to use other types of wage
data if the record indicated that the other data would be better. Also,
to value NME labor inputs, this commenter urged the Department to
include full labor costs rather than simply wages, and to use industry-
specific data because wages can vary dramatically from industry to
industry within a single surrogate country.
We agree with the first commenter that the regression-based
calculation fails to provide differentiated wage rates for skilled and
unskilled labor. However, this results from limitations on the
available data, not from the proposed approach. Even using a single
country as a surrogate, it has been rare for the Department to find
different wage rates for skilled and unskilled labor. Limitations on
available data also prevent us from considering whether we should be
using full labor costs or industry-specific wages, as suggested by the
second commenter.
The third commenter also urged the Department not to adopt the
regression-based wage rate. First, in this commenter's view, the
proposal ignored the statutory requirement that factors be valued in a
country that is economically comparable to the NME and is a significant
producer of comparable merchandise. More specifically, this commenter
pointed out that because the regression was based on wage rates and per
capita GDP, the Department would have calculated NME wage values
without regard to the significant production criterion. In a related
argument, this commenter stated that the regression-based wage value
was inconsistent with the intent of Congress that the Department select
a surrogate country where input prices allow significant production to
occur. Third, this commenter claimed that the proposal was contrary to
standard and accepted economic theory on the grounds that when a
producer locates in a country, that producer will choose the
appropriate mix of capital and labor based on their relative prices. By
applying a theoretical wage rate, the Department's proposal would have
upset that relative price structure with the result that NME
calculations would be less accurate and less related to real economic
conditions. Finally, this commenter contended that the premise
underlying the Department's proposal was unsound. In this commenter's
view, because many potential factor valuations vary significantly
between and among eligible surrogate countries, there is no reason for
singling out labor as a factor to be valued under a regression approach
while using single values for other inputs.
Addressing these comments in reverse order, we do not share the
commenter's concern that the premise underlying our wage rate proposal
was unsound because values for other factors of production are not
similarly averaged. In general, we believe that more data is better
than less data, and that averaging of multiple data points (or
regression analysis) should lead to more accurate results in valuing
any factor of production. However, it is only for labor that we have a
relatively consistent and complete database covering many countries. To
employ a parallel approach for other factors of production, the
Department would have to develop a comparable database. Even if we were
to limit our search for data to those countries that meet both the
economic comparability criterion and the significant production
criterion, the burden imposed on the Department in compiling such a
database normally would outweigh any gains in accuracy.
Regarding the commenter's point that the proposed approach violates
standard economic theory, we do not dispute that the relative prices of
labor and capital are important and that relatively cheap labor usually
will be substituted for relatively expensive capital. However, in order
to capture the precise tradeoff between labor and capital that this
commenter is seeking, we would have to value all factors using
information from a single surrogate producer. As discussed above, we
have not adopted that general approach to factor valuation.
Finally, regarding the argument that proposed paragraph (c)(3)
ignores the significant manufacturer criterion for surrogate selection,
we believe that the regression-based wage rate significantly enhances
the accuracy, fairness, and predictability of our AD calculations in
NME cases, all of which were attributes highlighted by the Court in
Lasko. As we stated in the AD Proposed Regulations, for some inputs
there is no direct correspondence between significant levels of
production and input price or availability. When looking at a surrogate
country to obtain labor rates, we believe it is appropriate to place
less weight on the significant producer criterion, because economic
comparability is more indicative of appropriate labor rates. As
discussed above in connection with the calculation of average values
for other factors, by combining data from more than one country, the
regression-based approach will yield a more accurate result. It also is
fairer, because the valuation of labor will not vary depending on which
country the Department selects as the economically comparable surrogate
economy. Finally, the results of the regression are available to all
parties, thus making the labor value in all NME cases entirely
predictable. Given these attributes of the regression-based wage rate,
we believe that paragraph (c)(3) is fully consistent with the statute.
Manufacturing overhead, general expenses, and profit: Regarding
these factors of production, proposed paragraph (c)(4) stated that the
Department normally will use information from producers of identical or
comparable merchandise in the surrogate country.
One commenter suggested that the Department should rigorously check
the information it uses to value
---- page 27368 ----
manufacturing overhead, general expense and profit. Specifically, the
Department should make sure the data are reliable and that they do not
double-count items such as electricity and water. In this commenter's
view, the Department could check the reasonableness of these values
against the experience of the NME producers under investigation.
For the reasons explained above, we do not believe it is
appropriate to check surrogate values against the NME respondents'
experience. Regarding the reliability of the surrogate values for
manufacturing overhead, general expenses and profit, we do attempt to
obtain good data and avoid double-counting where possible. Parties to
the proceeding are encouraged to submit data on these factor values and
to identify areas where the data are questionable.
Section 351.409
Section 351.409 sets forth the guidelines for making adjustments to
normal value for differences in quantities. We have made a few
revisions in light of the comments received.
One commenter proposed that the Department liberalize its policy
regarding quantity adjustments, noting that the Department typically
ignores the requirement in former 19 CFR 353.55(a) that the Secretary
normally will use sales of comparable quantities of merchandise.
Because the statute itself does not require that the Department use
sales of comparable quantities, but instead merely authorizes an
adjustment when the Department compares sales in different quantities,
we have decided to delete this requirement from paragraph (a).
In addition, we also have deleted the last sentence of proposed
paragraph (a), which refers to the consideration of industry practice
in determining whether to make a quantity adjustment. Upon further
consideration, the Department believes that the granting of an
adjustment should depend more on the pricing behavior of the individual
firm in question, and not on whether other firms in the industry engage
in similar behavior.
As a matter of calculation mechanics, the Secretary may adjust for
differences in quantities by deducting from all prices used to
calculate normal value quantity discounts even if all sales did not
receive the quantity discount. Paragraph (b) contains standards that
must be satisfied before the Secretary will calculate normal value in
this manner.
One commenter stated that under paragraph (b), the two situations
in which the Department will make a quantity adjustment are so narrow
that it is virtually impossible for a respondent to meet the applicable
standards. The commenter argued that the 20 percent threshold is
excessively high, that it is not required by section 773(a)(6)(C)(i) of
the Act, and that there is no rationale to support it. Moreover,
according to the commenter, the requirement that the discounts be ``of
at least the same magnitude'' violates the statutory directive that the
adjustment be made whether the price difference is ``wholly or partly
due to differences in quantities.'' The commenter suggested that the
Department provide for additional situations where it will make
quantity-based adjustments, such as when the exporter or producer can
correlate quantity levels and prices.
While the Department does not agree with all of the arguments made
by the commenter, we agree that former 19 CFR Sec. 353.55(b), which
formed the basis of paragraph (b), should be modified so as to allow
other methods of establishing entitlement to a quantity adjustment.
Therefore, in proposed paragraph (b), the Department added the word
``normally'' to indicate that the two methods described in paragraph
(b) are not exclusive.
Under proposed paragraph (e), the Department stated that it will
not make both a quantity adjustment and a level of trade adjustment
unless it is established that the difference in quantities has an
effect on price comparability that is separate from the difference in
level of trade. One commenter argued that paragraph (e) was superfluous
in light of Sec. 351.401(b)(2), which contains a general prohibition
against the double-counting of adjustments. In addition, this commenter
contended that the proposed paragraph (e) did not provide any guidance
(beyond what normally would be required for any claimed adjustment) as
to the kind of showing necessary to establish the difference in the
effects of each type of adjustment on price comparability. Third, the
commenter argued that because the Department will identify level of
trade differences by focusing primarily on the selling functions, to
the extent that the quantity sold is one factor in a claimed level of
trade difference, the Department can determine on a case-by-case basis
whether an additional claimed quantity adjustment would be duplicative.
The Department recognizes that the prohibition against double-
counting adjustments in Sec. 351.401(b)(2) applies to situations in
which a party claims a level of trade adjustment and an adjustment for
differences in quantities. However, the Department believes that it is
appropriate to emphasize that, in this specific area, it is
particularly concerned about the possibility of double-counting. Based
on our experience, firms tend to sell in different quantities to
different levels of trade, thereby increasing the possibility of
double-counting where both adjustments are claimed. This concern is
expressed in the SAA at 830, where, in discussing the effect on price
comparability necessary for a level of trade adjustment, the
Administration stated: ``Commerce will ensure that a percentage
difference in price is not more appropriately attributable to
differences in the quantities purchased in individual sales.''
With respect to the commenter's suggestion that the Department
provide additional guidance as to the showing necessary to establish
the individual effect of each adjustment, the Department does not have
enough experience to provide additional guidance at this time.
Essentially, we agree with the commenter that the Department, at least
initially, will have to resolve these issues on a case-by-case basis.
Section 351.410
Section 351.410 clarifies aspects of the Department's practice
concerning adjustments to normal value for differences in the
circumstances of sale (``COS'').
One commenter, noting that proposed Sec. 351.410 did not indicate
the types of expenses eligible for a COS adjustment, suggested that the
final regulation clarify, in accordance with the SAA, that the
Department will make a COS adjustment only for direct selling expenses
and assumed expenses, as opposed to indirect selling expenses.
We agree with the commenter that in proposed Sec. 351.410, we
failed to connect the definitions of ``direct selling expenses'' and
``assumed expenses'' in paragraphs (b) and (c) to the COS adjustment
itself. Therefore, we have revised this section by (1) redesignating
proposed paragraphs (b) and (c) as paragraphs (c) and (d),
respectively; (2) redesignating proposed paragraph (d) as paragraph
(f); and (3) adding a new paragraph (b) that indicates the expenses
eligible for a COS adjustment. In this regard, however, in paragraph
(e) we have maintained the special ``commission offset'' rule,
previously codified in 19 CFR Sec. 353.56(b)(1).
Another commenter suggested that the Department clarify that it may
treat allocated expenses as direct selling
---- page 27369 ----
expenses eligible for a COS adjustment. We have not revised
Sec. 351.410 in light of this comment. However, as stated above in
connection with Sec. 351.401(g), the Department will accept the
allocation of direct selling expenses, subject to certain conditions.
One commenter noted that under proposed Sec. 351.412, the
Department would establish the level of trade for CEP sales only after
having made the adjustments required under 772(d) of the Act; i.e.,
after having converted the CEP sale to the equivalent of an export
price sale. However, this commenter argued, because U.S. resale prices
are the starting point for calculating CEP, and because such prices may
differ substantially from one distribution channel to another, some
sales cannot be compared logically to home market sales at the relevant
level of trade, absent some appropriate adjustment. Accordingly, this
commenter maintained, if the Department retains proposed Sec. 351.412,
the Department should clarify in Sec. 351.410 that it normally will
compare sales made in the same distribution channels. In this regard,
the commenter asserted that the new law ``requires Commerce to make
fair comparisons of price, 19 U.S.C. 1677b(a), and Commerce has
traditionally used COS to achieve this all-important objective.''
The Department has not adopted this suggestion. First, as discussed
below, section 773(a) of the Act specifies the adjustments that are
required in order to achieve a ``fair comparison.'' Moreover, under the
statute, the COS adjustment is not a vehicle for identifying sales
matches. Instead, the Department makes a COS adjustment only after it
first has identified appropriate sales matches. Finally, the
commenter's proposal would require the Department to match sales on the
basis of a level of trade other than the level of trade of the CEP.
However, section 773(a)(1)(B)(i) of the Act requires the Department to
identify the level of trade of the CEP (which the SAA at 829 defines as
a starting price to which the Department has made adjustments), and to
determine normal value at the same level as the CEP, if possible. If
the Department must rely on sales in the foreign market that are at a
level of trade different from the level of trade of the CEP sale, and
if the level of trade difference is reflected in different selling
functions and a pattern of consistent price differences, then the
Department must make an adjustment for the different levels of trade.
Nevertheless, as discussed in connection with Sec. 351.412, the
Department has modified the methodology it will use to identify
different levels of trade. Under Sec. 351.412, as revised, the
Department will not rely solely on selling activities to identify
levels of trade, but instead will evaluate differences in selling
activities in the context of a seller's whole scheme of marketing. This
new methodology will deal with the problem identified by the commenter.
One commenter argued that the Department should provide for a COS
adjustment to normal value for resale profit in situations where the
Department makes a profit deduction to CEP. The commenter stated that
``[t]he Department rightly notes in its explanations that the statute
does not `provide for an adjustment to normal value' '' for resale
profit. However, the commenter argued that this is a ``grossly
inadequate rationale'' for refusing to make such an adjustment, because
neither the statute nor the SAA prohibits such an adjustment, and
because such an adjustment is necessary ``for proceedings to be fair.''
The commenter contended that because the CEP profit deduction will be
based on profit earned in both the United States and the home market,
the deduction amounts to double-counting. According to the commenter,
this is unfair, and it will have the perverse effect of discouraging
foreign investment in the United States and adding value to imported
products in the United States.
Another commenter argued that any time a home market producer sells
the foreign like product through an affiliated reseller, either in the
home market or in the third country, a reseller profit will exist.
However, under the proposed regulations, the Department will deduct
profit only from CEP sales, and not from sales used to calculate normal
value. To achieve a fair comparison, the Department should add a new
provision to Sec. 351.402(d) (special rule for determining profit) and
deduct this affiliated reseller profit from normal value whenever it
compares normal value to CEP.
The Department has not adopted these suggestions. First, with
respect to the argument concerning a double-deduction of profit, we
disagree. Under section 772(f), the Department does not deduct the CEP
profit earned in both the United States and the home market from the
price in the United States. Instead, because transfer prices cannot be
relied upon for this purpose, section 772(f) provides for the
allocation of total profit in the United States and the home market to
CEP sales based upon the proportion of expenses incurred in the U.S.
market vis-a-vis total expenses.
In addition, the statute specifies the adjustments that the
Department may make to normal value in order to achieve a fair
comparison between normal value and export price or CEP. Therefore,
adjustments beyond those called for by the statute (such as an
adjustment for resale profit) are not appropriate. Finally, the courts
have made it clear that where, as here, Congress has provided for an
adjustment to sales made in one market, but not for an adjustment to
sales made in the other, the Department must comply with the scheme
established by Congress. Ad Hoc Committee of AZ-NM-TX-FL Producers of
Gray Portland Cement v. United States, 13 F.3d 398, 401-02 (Fed. Cir.
1994).
One commenter stated that the Department should clarify that if
prices are reported net of any rebated or uncollected taxes, no
adjustment to normal value under this provision is required. We have
not adopted this suggestion, because the Department believes that
section 773(a)(6)(B)(iii) of the Act clearly provides that the
Department need adjust for taxes only where such taxes are included in
the price of the foreign like product that is reported to the
Department. While the topic of taxes has been fertile ground for
misinterpretation and litigation, Congress has now established
conclusively that dumping comparisons are to be tax-neutral in all
cases. SAA at 827.
Regarding the definition of direct selling expense contained in
proposed paragraph (b), one commenter suggested that the Department
specifically state that the allocation of expenses, even over non-scope
merchandise, does not automatically relieve that expense of its direct
nature. Again, the Department has addressed this and similar comments
above in connection with Sec. 351.401(g).
Section 351.411
Section 351.411 deals with adjustments for differences in physical
characteristics (also known as ``differences in merchandise'' or
``DIFMER'' adjustments).
One commenter suggested that the Department amend Sec. 351.411 to
provide that the Department will not make DIFMER adjustments when it
compares merchandise with identical control numbers, or (in the case of
comparisons involving ``identical'' or ``similar'' merchandise) for
characteristics that the Department did not select as product-matching
criteria. In addition, this commenter suggested that the regulations
state that, in reviews, the Department will use the same product
matching criteria as it used in the initial investigation, unless
revised by the Department. Another commenter agreed
---- page 27370 ----
with this commenter, and added that the Department never should base
DIFMER adjustments upon differences in the ``market value'' of
products, but instead should base such adjustments only upon
differences in variable costs. This commenter cited the SAA at 828,
which states that ``Commerce will continue its current practice of
limiting this adjustment to differences in variable costs associated
with physical differences.''
The Department has not modified Sec. 351.411 in light of these
suggestions. The final regulation follows the proposed regulation and
prior regulations in providing that ``the Secretary will not consider
differences in cost of production when compared merchandise has
identical physical characteristics.'' By comparing merchandise
considered identical, the Department can avoid the need to make DIFMER
adjustments entirely.
Regarding the proposal that the Department not alter its matching
criteria after the initial investigation, the Department agrees that
continuity and consistency from one segment of a proceeding to another
is desirable. However, the Department must have the flexibility to
revise these criteria where the facts so warrant.
Finally, the Department has retained the language concerning the
use of effect on market value in measuring the amount of a DIFMER
adjustment. This provision has been in the Department's prior
regulations, although the Department rarely has quantified a DIFMER
adjustment on the basis of value. Moreover, the Federal Circuit has
held that while the Department may maintain a methodological preference
for cost over value in making adjustments, the Department may not rely
on cost to the exclusion of value. Smith-Corona Group v. United States,
713 F.2d 1568, 1577 (1983). In addition, although the SAA discusses the
Department's practice of making DIFMER adjustments based on variable
costs, which is the usual basis for such adjustments, it is silent on
the issue of market value. Therefore, the Department believes it is
necessary to retain the discretion to use market value in appropriate
circumstances.
Another commenter noted that under proposed Sec. 351.411, the
Department would disregard fixed costs, SG&A, and profit that are
allocable to the physical differences. This commenter argued that this
approach is illogical, because the purpose of the DIFMER adjustment is
to put the price of the similar home market merchandise on the same
basis as the price of the comparison U.S. merchandise. The commenter
noted that, in the context of constructed value, the Department
includes all fixed and variable costs attributable to production of the
merchandise, plus amounts for general expenses and profit. We have not
adopted this suggestion, because the SAA at 828 is clear that when the
Department uses cost to measure the amount of a DIFMER adjustment, it
is to consider only differences in variable costs associated with
physical differences in the merchandise.
Section 351.412
Section 351.412 addresses the Department's methodology for
identifying differences in LOT and adjusting for such differences,
where appropriate. It also addresses how and when the Department will
apply the CEP offset. There have been several changes from the proposed
regulation.
First, a number of commenters suggested that the Department abandon
its efforts to regulate in this area because of the Department's lack
of experience in making LOT adjustments under new statute. They
proposed instead that Sec. 351.412 merely track section 773(a)(7)(A) of
the Act, and provide that an LOT adjustment is allowed only when the
claimant demonstrates entitlement ``to the satisfaction of Commerce.''
The Department believes that it is necessary to provide as much
guidance in this area as it can at this time. The LOT adjustment is one
of the most significant issues under the new statute and is an area in
which parties are in need of guidance. It is also an area in which
there has been considerable debate concerning the requirements of the
statute and the SAA. Therefore, while we have avoided regulating some
areas in which the Department needs more experience, such as the
definition of a ``pattern of consistent price differences,'' discussed
below, we have clarified our interpretations of the legal requirements,
and have given as much indication as possible as to how we intend to
identify, and adjust for, differences in levels of trade.
One commenter proposed that the regulations make clear that the
burden of proof is on the respondent to prove entitlement to an LOT
adjustment to its advantage, just as the burden is on a respondent to
prove any other adjustment in its favor. The commenter also suggested
that the regulations make clear that neither adjustments for LOT
differences nor the CEP offset are automatic, but may be made only
where the statutory requirements are satisfied.
While the Department generally agrees with these concepts, we do
not believe that it is necessary to incorporate them in the
regulations. The statute provides clear guidelines regarding the
conditions that must be satisfied before the Department may grant an
LOT adjustment. In addition, Sec. 351.401(b) makes clear that all
adjustments, including LOT adjustments, must be demonstrated to the
satisfaction of the Secretary. New Sec. 351.412(f) also clarifies that
the Department will grant a CEP offset only where a respondent has
succeeded in establishing that there is a difference in the levels of
trade, but, although the respondent has cooperated to the best of its
ability, the available data do not permit the Department to determine
whether that difference affects price comparability.
Section 351.412(b) generally tracks the statute in explaining the
general conditions precedent to making an LOT adjustment. Although, for
organizational clarity, we have transposed paragraphs (b) and (c), we
do not intend this modification to have any substantive impact.
Section 351.412(c) explains the basis on which the Department will
determine whether there are differences in the levels of trade of the
EP or CEP and normal value. Paragraph (c) is substantively the same as
the proposed regulation. Paragraph (c)(1) explains the basis on which
the Department will determine the LOT of sales and CV. Paragraph
(c)(1)(i) provides that the Department will determine the LOT of EP
sales on the basis of the starting prices of sales to the United
States, before any adjustments under section 772(c) of the Act.
Paragraph (c)(1)(ii) provides that the Department will base the LOT of
CEP on the U.S. affiliate's starting price in the United States, after
the CEP deductions under section 772(d) of the Act, but before the
deductions under section 772(c). Paragraph (c)(1)(iii) provides that
the Department will base the LOT of a price-based normal value on the
starting prices in the market in which normal value is determined,
before any deductions under section 773(a)(6) of the Act. The
Department will base the LOT of CV on the LOT of the sales from which
the Department derives SG&A and profit under section 773(e) of the Act.
Section 773(a)(1)(B) of the Act requires that, to the extent
practicable, the Department base normal value on sales at the same LOT
as EP or CEP. Sections 772(a) and (b) define EP and CEP, respectively,
as the starting price in the United States as adjusted under sections
772(c) and (d). The adjustments under subsection (d) normally change
the LOT, so that the Department must
---- page 27371 ----
determine the LOT of CEP sales after any deductions under subsection
(d). The adjustments under subsection (c), however, are made to both EP
and CEP. Therefore, determining the LOT on the basis of EP or CEP
before any deductions under subsection (c) yields the LOT of the EP or
CEP. Similarly, we will not make the adjustments under section
773(a)(6) before determining the LOT of normal value.
Several commenters contended that the Department's proposed
regulation, which identified the LOT of CEP sales based on the price
after adjustments under section 772(d), was contrary to the statute and
ignored commercial reality. According to these commenters, the
Department's proposed analysis would make CEP offsets virtually
automatic, contrary to the intent of Congress. These commenters
suggested that the Department revise its proposed regulation to state
that, in all situations, it will identify LOT on the basis of the
starting price.
Other commenters contended that there is no basis for identifying
the LOT of CEP any differently than the LOT of EP and normal value.
They argued that such an approach would result in comparing a CEP that,
in reality, had been reduced to a ``factory door'' price with a normal
value at a more advanced stage of distribution, thereby necessitating
an LOT adjustment in virtually every instance. However, other
commenters argued that the Department's identification of the LOT of
CEP after adjustments was in accordance with the statute and SAA.
As discussed above, we have maintained the methodology of the
proposed regulation. The statute directs the Department to determine
normal value at the LOT of the CEP, which includes any CEP deductions
under section 772(d). We note that many of the commenters opposed to
the use of adjusted CEP appear to believe that the deductions under
section 772(d) involve all direct and indirect expenses. However, as
discussed above in connection with Sec. 351.402, the deduction under
section 772(d) removes only expenses associated with economic
activities in the United States. Thus, CEP is not a price exclusive of
all selling expenses, because it contains the same type of selling
expenses as a directly observed export price.
Paragraph (c)(2) describes how the Department will determine
whether two sales were made at different levels of trade. We have
modified the proposed regulation to provide that the Department will
not identify levels of trade based solely on selling activities. We
have made this change in order to avoid any implication that every
substantial difference in selling functions or activities constitutes a
difference in the levels of trade.
Numerous commenters stated that the proposed regulation appeared to
be inconsistent with the statute because it based the identification of
levels of trade on the identification of different selling activities.
These commenters argued that the statute requires that the Department
identify levels of trade first, and that it consider selling activities
only to determine whether an LOT adjustment is authorized.
Other commenters asserted that the proposed regulation
appropriately made differences in selling activities the test for
identifying levels of trade. These commenters argued, however, that the
Department should not merely count the number of different selling
activities, but instead should take a qualitative approach, weighing
the extent and importance of each selling activity.
In the Department's view, while neither the statute nor SAA defines
level of trade, section 773(a)(7)(A)(i) of the Act provides for LOT
adjustments where there is a difference in levels of trade and the
difference ``involves'' the performance of different selling
activities. Thus, the statute uses the term ``level of trade'' as a
concept distinct from selling activities. The SAA at 829 reinforces
this point by explaining that the Department must analyze the functions
performed by the sellers, but need not find that two levels involve no
common selling activities before finding two levels of trade. In other
words, the statute indicates that two sales with substantial
differences in selling activities nevertheless may be at the same level
of trade, and the SAA adds that two sales with some common selling
activities nevertheless may be at different levels of trade. Taken
together, the two points establish that an analysis of selling
activities alone is insufficient to establish the LOT. Rather, the
Department must analyze selling functions to determine if levels of
trade identified by a party are meaningful. In situations where some
differences in selling activities are associated with different sales,
whether that difference amounts to a difference in the levels of trade
will have to be evaluated in the context of the seller's whole scheme
of marketing.
If the Department treated every substantial difference in selling
activities as a separate LOT, the Department potentially would be
required to address dozens of levels of trade--many of which would be
artificial creations. In addition to being extremely burdensome, this
would make the Department less likely to find ``patterns of consistent
price differences'' between the apparently different levels of trade.
This would result either in denial of LOT adjustments altogether or
routine use of the CEP offset. Neither of these results was intended by
the URAA.
Section 351.412(c)(2) states that an LOT is a marketing stage ``or
the equivalent'' (which means that the merchandise does not necessarily
have to change hands twice in order to reach the more remote LOT). It
is sufficient that, at the more remote level, the seller takes on a
role comparable to that of a reseller if the merchandise had changed
hands twice. For example, a producer that normally sells to
distributors (that, in turn, resell to industrial consumers) could make
some sales directly, taking over the functions normally performed by
the distributors. Such sales would be at the same LOT as the sales
through the distributors. Each more remote level must be characterized
by an additional layer of selling activities, amounting in the
aggregate to a substantially different selling function. Substantial
differences in the amount of selling expenses associated with two
groups of sales also may indicate that the two groups are at different
levels of trade.
Although the type of customer will be an important indicator in
identifying differences in levels of trade, the existence of different
classes of customers is not sufficient to establish a difference in the
levels of trade. Similarly, while titles, such as ``original equipment
manufacturer,'' ``distributor,'' ``wholesaler,'' and ``retailer'' may
actually describe levels of trade, the fact that two sales were made by
entities with titles indicating different stages of the marketing
process is not sufficient to establish that the two sales were made at
different levels of trade.
Section 351.412(d) provides that the Department will grant an LOT
adjustment only if it is demonstrated to the satisfaction of the
Secretary that the difference between the LOT of the sales in the
United States and normal value affects price comparability, based on a
pattern of consistent price differences between sales at those two
levels of trade in the market in which normal value is determined. The
Department will develop its practice in this area in the course of
administrative proceedings, and intends to issue a policy bulletin once
its methodology is more fully developed.
Section 351.412(e) provides that the Department will calculate LOT
adjustments by determining the weighted average of the adjusted prices
---- page 27372 ----
at the two relevant levels of trade in the market in which normal value
is determined. These two levels are the level corresponding to EP or
CEP and the level at which normal value is determined. The Department
will apply the average percentage difference between these weighted
averages to normal value, as otherwise adjusted.
Several commenters contended that the Department should base the
amount of any adjustment on the pattern of consistent price
differences, rather than on a weighted average. The Department has not
adopted this proposal. The SAA at 830 clearly states that ``any
adjustment * * * will be calculated as the percentage by which the
weighted-average prices at each of the two levels of trade differ in
the market used to establish normal value.''
Several commenters proposed that the Department make clear that LOT
adjustments, or the CEP offset, can be applied when normal value is
based on CV, as well as when normal value is based on prices. The
Department agrees, and has revised the proposed regulation to remove
any suggestion that LOT adjustments will be made only to prices.
Section 773(a)(8) of the Act provides that the Department may adjust
CV, as appropriate, under subsection 773(a). Section 773(a)(7)(B)
provides that the CEP offset is made to ``normal value.'' There is no
limitation confining the adjustment to home market prices, or
precluding its application to CV. Therefore, it is clear that LOT
adjustments are appropriate regardless of the basis on which normal
value is determined.
Where there are sales of the foreign like product at the LOT in the
home market corresponding to the LOT of the EP or CEP, the Department
will determine normal value on the basis of those sales, and the
Department will not make an LOT adjustment. In situations where the
Department seeks to make an LOT adjustment, there may be no usable
sales of the foreign like product in the market in which normal value
is determined at the LOT of the EP or CEP. In order to calculate LOT
adjustments in such situations, the Department will examine price
differences in the home market either for sales of broader or different
product lines or for sales made by other companies.
The regulation also makes clear that the Department will make the
LOT adjustment on the basis of adjusted prices. Although neither the
statute nor the SAA stipulates whether the average prices compared to
determine the amount of the LOT adjustment should be adjusted prices,
the adjustment can accomplish its purpose only if calculated on the
basis of adjusted prices. This is because the adjustment is intended to
eliminate only differences that are: (1) attributable to a difference
in levels of trade; and (2) not otherwise adjusted for. In order to
avoid having the LOT adjustment duplicate other adjustments, the LOT
adjustment must be calculated on the basis of prices to which those
adjustments have already been made. To achieve this, the Department
will adjust prices at each level of trade in the foreign market as
appropriate under section 773(a)(6) before it determines the amount of
the LOT adjustment.
One commenter asked the Department to specify that an LOT
adjustment can have any value, positive, negative, or zero. We have not
adopted this proposal because the statute and SAA make clear that LOT
adjustments can be upwards or downwards. SAA at 830.
Section 351.412(f) describes the situations in which the Department
will grant a CEP offset. Some commenters suggested that the CEP offset
is ``automatic.'' This is not the case. The Department will calculate
CEP by deducting only selling expenses and profit associated with
selling activities in the United States. Thus, the resulting CEP will
retain an element of selling expenses and an element of profit, as do
directly observed export prices. We do not agree that there never will
be comparable sales in the foreign market.
The Department will not make a CEP offset where the sales to the
United States are EP sales or where the Department bases normal value
on home market sales at the same LOT as the CEP. The Department will
grant a CEP offset only where: (1) normal value is determined at a more
remote level of trade than CEP sales; and (2) despite the fact that a
respondent cooperated to the best of its ability, the data available do
not provide an appropriate basis to determine whether the difference in
levels of trade affects price comparability.
One commenter contended that the Department should make the CEP
offset in addition to any adjustment for differences in levels of
trade. The Department has not adopted this proposal. Section
773(a)(7)(B) of the Act authorizes the Department to make the CEP
offset only where the data available do not provide an appropriate
basis to determine an LOT adjustment. Therefore, whenever an LOT
adjustment can be calculated, the Department cannot also make the CEP
offset.
Section 351.413
Section 351.413 deals with the Department's authority to disregard
insignificant adjustments under section 777A(a)(2) of the Act. More
specifically, Sec. 351.413 defines the term ``insignificant'' with
respect to an individual adjustment and a group of adjustments.
Two commenters observed that proposed Sec. 351.413 provided that
the Department may ignore any ``group of adjustments'' with an ad
valorem effect of less than one percent. Because the proposed
regulations identify three separate ``groups of adjustments,'' it is
possible that the Department could ignore three separate groups of
``insignificant'' adjustments for which the combined ad valorem effect
could be nearly three percent. To prevent this, one commenter suggested
that the Department delete the final sentence of proposed Sec. 351.413
dealing with groups of adjustments. The other commenter suggested that
the Department make clear that the total ad valorem effect of all
disregarded adjustments can be no more than one percent.
The Department has not adopted these suggestions. In Sec. 351.413,
the percentages used and the definition of groups of adjustments
reflects the legislative history of section 777A(a)(2) of the Act, the
statutory provision on which the regulation is based. See, e.g., S. Rep
No. 249, 96th Cong., 2d Sess. 96 (1979). Moreover, with the exception
of changes in terminology (e.g., from ``foreign market value'' to
``normal value'') a revision to render this provision applicable to the
calculation of export price and constructed export price, Sec. 351.413
is unchanged from former 19 CFR Sec. 353.59(a).
We believe that part of the commenters' concerns may arise from a
misperception that the references to ``an ad valorem effect'' in
Sec. 351.413 relate to the ad valorem dumping margin, so that if the
Department ignored groups of adjustments with a total ad valorem effect
of three percent, the Department, for example, might transform a
dumping margin of 4 percent ad valorem to 1 percent ad valorem.
However, this is not what is contemplated by Sec. 351.413, because that
section clearly states that the ad valorem effect in question is the
percentage change to ``export price, constructed export price, or
normal value, as the case may be,'' and not the percentage change in
the dumping margin.
Finally, we should note that both section 777A(a)(2) and
Sec. 351.413 give the Department the flexibility to determine, on a
case-by-case basis, whether it should disregard a particular
insignificant adjustment. Given this flexibility, and given that
Sec. 351.413 is taken almost verbatim from the
---- page 27373 ----
legislative history, we do not believe there is a reason to eliminate
the guidance provided by the last sentence defining ``groups of
adjustments.''
Section 351.414
Section 351.414 implements section 777A(d) of the Act and sets
forth the three statutory methods for establishing and measuring
dumping margins. Section 351.414(c) sets forth the preference for
comparisons of average U.S. prices to average comparison market prices
in investigations, and for comparison of transaction-specific U.S.
prices to average comparison market prices in administrative reviews.
Averaging groups: In establishing the particular averaging groups
to be used for price comparisons, Sec. 351.414(d)(2) of the proposed
rule stated that an averaging group will consist of subject merchandise
that is identical or virtually identical in all physical
characteristics and that is sold to the United States at the same level
of trade. The Secretary also will take into account, where appropriate,
the region of the United States in which the merchandise is sold and
such other factors as are considered relevant.
One commenter objected to the Department's interpretation of the
statutory provision, and suggested that the true purpose of averaging
groups, as reflected in the SAA, is to identify potential targeted
dumping to certain U.S. customers or certain U.S. regions, not to
invite a similar division of the home market into such groups as a
means of thwarting the AD law. The commenter concluded that the
regulations should make clear that price averaging pertains solely to
U.S. sales and that no product averaging groups will be undertaken with
respect to normal value sales.
We disagree with the comment. The SAA provides that in an
investigation Commerce will normally establish and measure dumping
margins on the basis of a comparison of weighted-average normal values
and weighted-average export or constructed export prices. The SAA
specifically states:
To ensure that these averages are meaningful, Commerce will
calculate averages for comparable sales of subject merchandise to
the U.S. and sales of foreign like products. In determining the
comparability of sales for purposes of inclusion in a particular
average, Commerce will consider factors it deems appropriate, such
as the physical characteristics of the merchandise, the region of
the country in which the merchandise is sold, the time period, and
the class of customer involved. (Emphasis added.)
SAA at 842.
In the Department's view, the language of the SAA makes clear that
Congress and the Administration contemplated the use of averaging
groups for both U.S. and normal value sales. Nothing in the statute or
SAA supports the view that normal value sales should not be averaged,
or that normal value sales should not be averaged on the same basis as
U.S. sales. Moreover, the purpose of establishing particular price
averaging groups is to make accurate and meaningful price comparisons,
not to identify (and address) potential targeted dumping.
Time period over which weighted-average is calculated: Under
Sec. 351.414(d)(3) of the proposed rule, the Department normally will
calculate averages for the entire period of investigation or review
when the average-to-average method is applied. However, the Secretary
may calculate weighted-averages for shorter periods when normal values,
export prices, or constructed export prices differ significantly over
the course of the period of investigation or review.
One commenter pointed out that there is no reason to default to the
entire period given the complete reporting requirements of the law and
the capability for analysis of prices through computer support. For
perishable products, the commenter noted that the Department should
average prices over the shortest period necessary to take account of
the perishable nature of the products, but should not average prices
over a period that would mask price trends unrelated to the perishable
nature of the product.
For products such as manufactured goods, the commenter contended
that the Department should adopt a one-month average as the standard
time period over which prices would be averaged when the Department
employs the average-to-average method. According to the commenter, use
of a one-month average time period results in a more precise comparison
of normal values and export/constructed export prices than would a
single period-wide average comparison. With a one-month standard, the
Department may allow averaging over longer periods only where it is
shown that a longer period does not distort the price-to-price
comparison.
Another commenter supported the Department's proposed rule that the
Department will rely on shorter periods in appropriate circumstances
and urges the Department to give full consideration to all relevant
circumstances in applying the rule.
In the Department's view, price averaging means establishing an
average price for all comparable sales. In general, we believe it is
appropriate to average prices across the period of investigation,
though we recognize that there are circumstances in which other
averaging periods are more appropriate. Accordingly, the proposed rule
is designed to ensure that the time periods over which price averages
and comparisons are made comports with the circumstances of the case,
while maintaining a preference for period-wide averaging. Where
perishable products are concerned, the Department has not fashioned a
rule with respect to a particular type of product because such an
approach may limit the agency's ability to address, for example, price
trends unrelated to the perishable nature of the product.
Use of the average-to-average method in administrative reviews:
Section 351.414(c)(2) of the proposed regulations states that in a
review the Secretary normally will use the transaction-to-average
method. One commenter urged the Department to expand the application of
the average-to-average price comparison method to administrative
reviews. In contrast, another commenter contended that such an
expansion is clearly impermissible. Citing the SAA, the opposing
commenter argued that both Congress and the Administration recognized
that the transaction-to-average method would continue to be used in
administrative reviews. Another commenter agreed and advocated adoption
of a final rule that would preclude application of the average-to-
average methodology in reviews, other than in exceptional
circumstances.
The Department specifically addressed these divergent positions in
the preamble to the proposed regulation. The final rule reflects the
SAA, which expressly states that the transaction-to-average method is
the preferred approach for administrative reviews. SAA at 843. However,
these regulations do not preclude the use of average-to-average price
comparisons in every review. Circumstances may exist that warrant
application of the average-to-average method and the final rule
reflects the Department's authority to apply this method where
necessary.
On the subject of the transaction-to-transaction method of price
comparisons, one commenter suggested that the final rule state that
this method be applied ``in appropriate situations,'' rather than
``only in unusual situations'' as contemplated in the proposed
regulation, Sec. 351.414(c)(1). In the commenter's view, the language
of the proposed rule establishes a strong presumption that the
transaction-to-
---- page 27374 ----
transaction method should not be used. The commenter believed that
anyone who advocates use of this alternative method should bear the
burden of providing good reason for its application, but that the final
rule should not discourage this option.
In the Department's view, the SAA makes clear that Congress did not
contemplate broad application of the transaction-to-transaction method.
SAA at 842. Specifically, the SAA recognizes the difficulties the
agency has encountered in the past with respect to this methodology and
suggests that even in situations where there are very few sales, the
merchandise in both markets should also be identical or very similar
before the agency would make transaction-to-transaction comparisons.
Accordingly, we continue to maintain that the transaction-to-
transaction methodology should only be applied in unusual situations.
Targeted dumping: Paragraph (f) of Sec. 351.414 of the proposed
regulation implemented the ``targeted dumping'' provision of section
777A(d)(1)(B) of the Act. Several parties commented that the final rule
should provide more specific guidelines as to what constitutes targeted
dumping. One commenter suggested the Department provide guidance by
establishing more specific criteria for making targeted dumping
determinations. Another commenter suggested that the Department needs
to gain more experience in order to develop the proper standard for
making such determinations, and should establish guidelines through
policy bulletins as it develops its practice in this area.
More specifically, several commenters suggested that the Department
recognize in its final rule that certain ``common commercial patterns
of pricing'' do not constitute targeted dumping, such as (1) different
pricing for larger or smaller orders, (2) seasonal pricing, and (3)
price changes associated with industry practices, such as downward
price changes pursuant to lower costs as are typical for
semiconductors, personal computers, and other technical products. In
contrast, other commenters contended that common commercial practices
in an industry can constitute targeted dumping and that such behavior
should not be excused or ignored simply because it is considered to be
a common commercial practice.
Other commenters proposed additional substantive guidance. For
example, one party suggested that targeted dumping should not be found
to exist where the pattern of prices exists in both the U.S. and the
comparison market. Another commenter suggested that the Department not
obligate itself to use ``standard statistical techniques'' in all of
its determinations. Several commenters suggested that the Department
define in the final regulations the evidentiary threshold for
initiating a targeted dumping inquiry. One commenter, in particular,
contended that the final rule establish a low threshold for an
allegation to be accepted, similar to allegations of sales below cost.
Another commenter expressed concern that the Department's brief
practice in this area already has established an arbitrarily high
initiation standard.
In the preamble to the proposed regulations, the Department
specifically avoided the adoption of any per se rules on targeted
dumping due to the Department's limited experience administering this
provision of the Act. However, the Department recognizes the need to
establish guidance in this area and thus will issue policy bulletins
setting forth more specific criteria as the Department develops its
practice in this area. Moreover, the Department plans to employ common
statistical methods in its targeted dumping determinations in order to
ensure that the test is applied on a consistent basis and in a manner
that ensures transparency and predictability to all parties concerned.
In addition, the Department will ensure that parties have an
opportunity to explain whether a particular pattern of export prices or
constructed export prices constitutes targeted dumping. A policy
bulletin setting forth some basic guidelines for applying statistical
techniques to targeted dumping questions will be issued in the near
future. As we gain more experience in this area, the bulletins will be
supplemented or replaced.
Allegation requirement: In proposed Sec. 351.414(f)(3), the
Department stated that ``the Secretary will not consider targeted
dumping absent an allegation.'' Many commenters opposed the allegation
requirement on several grounds. First, they claimed that the burden
imposed on interested domestic parties is substantial in that these
parties would have to examine multiple respondents, and then reexamine
revised responses, sometimes submitted subsequent to verification.
Second, the commenters added that the Department's proposed rule
effectively precluded self-initiation of a targeted dumping examination
by the Department. One commenter contended that the Department should
place the burden of proof on respondents to demonstrate that they did
not engage in targeted dumping, thereby removing the improper burden
placed on domestic interested parties. The commenter went on to state
that, contrary to the Department's reasoning in the preamble to the AD
Proposed Regulations, it is the Department, and not domestic interested
parties, that is in the best position to find targeted dumping.
According to the commenter, a domestic interested party's knowledge of
the market in question offers no special insight into whether a foreign
company has engaged in targeted dumping. While a domestic company may
recognize that it is losing sales to foreign competitors, it surely can
have no way of knowing the reasons behind, or pattern emanating from,
such dumping. According to the commenter, the Department, through its
power to assess margins based on facts available, is in the best
position to obtain the information necessary to make a targeted dumping
determination.
It is the Department's view that normally any targeted dumping
examination should begin with domestic interested parties. It is the
domestic industry that possesses intimate knowledge of regional
markets, types of customers, and the effect of specific time periods on
pricing in the U.S. market in general. Without the assistance of the
domestic industry, the Department would be unable to focus
appropriately any analysis of targeted dumping. For example, the
Department would not know what regions may be targeted for a particular
product, or what time periods are most significant and can impact
prices in the U.S. market. Ultimately, the domestic industry possesses
the expertise and knowledge of the product and the U.S. market.
Information on these factors are significant for both the burden aspect
and the determination itself. If the Department were required to
explore the contours of the U.S. market for every product subject to an
investigation, absent the knowledge as to how the market functions, the
Department would be compelled to conduct countless comparisons of
prices between customers, possible regions, and possibly significant
time periods in every case. Absent any guiding insight as to how the
market truly functions, such a requirement would be an enormous
undertaking. Fundamentally, the Department needs the assistance of the
domestic industry to focus the inquiry and to properly investigate the
possibility of targeted dumping.
Nevertheless, there may be instances in which the Department
recognizes targeted dumping on its own, without an allegation from
domestic interested parties. In such cases, the Department must be able
to address the targeted
---- page 27375 ----
dumping behavior regardless of whether any domestic interested party
filed a timely and sufficient allegation. Accordingly, the Department
has modified the proposed rule in order to ensure that the regulation
properly reflects the Department's authority to address instances of
targeted dumping absent an allegation. However, the final rule
anticipates that targeted dumping examinations normally will flow from
allegations of targeted dumping.
With respect to the availability of information, the Department
recognizes that parties' access to relevant information on the record
is crucial for making targeted dumping allegations of merit and will
continue to take steps to ensure that public summaries provide the
parties with adequate information. For example, the authority to
determine margins based on facts available should continue to enable
the Department to obtain the information necessary for domestic
interested parties to make targeted dumping allegations. For example,
the Department intends to calculate dumping margins using the
transaction-to-average method as facts available for any respondent who
refuses to supply the necessary data for a targeted dumping
determination.
Time in which to file targeted dumping allegations: Section
351.301(d)(4) sets forth the time in which targeted dumping allegations
must be filed. Although we received comments on the proposed regulatory
deadline for filing targeted dumping allegations, for the final rule we
have adopted the time requirement set forth in the proposed rule for
the reasons discussed below.
Under proposed Sec. 351.301(d)(4), the Department stated that an
allegation of targeted dumping must be filed ``no later than 30 days
before the scheduled date of the preliminary determination.''
Commenters pointed out that there is no reason to impose such a
deadline for submitting an allegation given that the Department will
receive the necessary information on targeted dumping in the normal
course of every investigation. Thus, unlike cost investigations, the
Department need not request additional information to conduct its
examination. Accordingly, commenters contended, the Department need not
require the stringent deadlines set forth in the proposed rule.
Commenters also contended that the proposed deadline imposed a
substantial burden in that for many cases the Department has limited,
unusable information on the record 30 days prior to the preliminary
determination. Commenters also noted that the proposed early and
inflexible time limit would impose the added burden on petitioners at a
time when the domestic industry must examine questionnaire responses
for identification of deficiencies and for potential below-cost
allegations. These commenters proposed that the final rule permit
domestic interested parties to file allegations at any time until the
deadline for the case briefs, which would allow allegations to include
information uncovered at verification.
The Department has adopted the proposed regulation relating to the
time in which to file targeted dumping allegations. To extend the
deadline would make it impossible for the Department to consider the
allegation for the preliminary determination. Furthermore, it would
make any verification of issues relative to the allegation extremly
difficult. 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. For example,
if the timing of the responses does not permit adequate time for
analysis, the Department may consider that to be ``good cause'' and
extend the deadline under section 351.302.
Limited application of average-to-transaction method: Under
proposed paragraph (f)(2), the Secretary will normally limit the
application of average-to-transaction comparisons exclusively to those
sales in which the criteria for determining targeted dumping are
satisfied. The preamble to the proposed regulations states that it
would be ``unreasonable and unduly punitive'' to apply the transaction-
to-average approach to all sales where, for example, targeted dumping
accounted for only one percent of a firm's total sales. The preamble
also states that the approach would not always be limited in
application ``because there may be situations in which targeted dumping
by a firm is so pervasive that the average-to-transaction method
becomes the benchmark for gauging the fairness of that firm's pricing
practices.''
Several commenters argued that neither the AD Agreement, statute,
nor the SAA supports limited application, and advocated broad
application of the transaction-to-average approach to all of a firm's
sales once targeted dumping is found. In general, these commenters also
were concerned that limiting the application exclusively to those sales
in which the targeting criteria are met would have significant
implications for submitting allegations. One commenter, in particular,
noted that the ``hybrid approach'' proposed by the Department would
require an exhaustive recitation, rather than a representative
allegation, if all instances of targeted dumping are to be addressed.
The commenter also rejected the view that broad application would be
``punitive'' and claimed that the average-to-average method was
designed to simplify the dumping calculations, not to provide more
accurate means of calculating dumping margins. In the commenter's view,
the transaction-to-average method should be viewed as a more accurate,
not more punitive, measure of dumping. Another commenter suggested that
the targeted dumping provision is intended to prevent foreign producers
from unduly and inappropriately benefitting from an averaging of U.S.
sales. The commenter reasoned that once a party engages in targeted
dumping, it has violated the spirit of the average-to-average method
and forfeits entirely the privilege of receiving an average-to-average
calculation. In the alternative, one commenter suggested that the
Department consider application of the transaction-to-average method
for all of a firm's sales where it is established that targeted dumping
exists for 10 percent or more of that firm's sales.
The Department has considered the scope of application of the
average-to-transaction methodology raised in the comments on this
issue. Based upon our examination, the Department is adopting the
proposed regulation without modification. In the Department's view,
section 777A(d)(1) of the Act establishes a preference for average-to-
average price comparisons in investigations. The statute contemplates a
divergence from the normal average-to-average (or transaction-to-
transaction) price comparison out of concern that such a methodology
could conceal ``targeted dumping.'' SAA at 842. Accordingly, the
Department will apply the average-to-transaction approach solely to
address the practice of targeted dumping. Nevertheless, the Department
contemplates that in some instances it may be necessary to apply the
average-to-transaction method to all sales to the targeted area, such
as a region or a customer, or even all sales of a particular
respondent. For example, where the targeted dumping practice is so
widespread it may be administratively impractical to segregate targeted
dumping pricing from the normal pricing behavior of a company.
Moreover, the Department recognizes that where a firm engages
extensively in the practice of targeted dumping, the only adequate
yardstick available to measure such pricing behavior may be the
average-to-transaction methodology.
With respect to the contention that limiting the application of the
transaction-to-average method solely to
---- page 27376 ----
targeted sales would require an extensive allegation, as opposed to a
representative one, we disagree. The proposed regulation speaks to
limited application of the transaction-to-average method once targeted
dumping is found to exist. It does not address the scope of the
targeted dumping examination itself. Interested parties may make
representative targeted dumping allegations based upon prices to
purchasers, regions, or periods of time, provided they explain how the
evidence examined in the allegations is relevant to prices of other
products or models, or other companies.
Section 351.415
Section 351.415 implements section 773A of the Act, which deals
with the selection of the exchange rate used to convert foreign
currencies to U.S. dollars. For the reasons set forth below, we have
not revised Sec. 351.415.
Forward sales of currency: Section 351.415(b) creates an exception
to the general rule that the Department will use the actual exchange
rate on the date of sale to convert foreign currencies to U.S. dollars.
Under paragraph (b), if a currency transaction on forward markets is
directly linked to an export sale under consideration, the Department
will use the exchange rate specified in the forward sales agreement
instead of the actual exchange rate on the date of sale.
Two commenters made suggestions regarding the application of the
``directly linked'' standard. One commenter suggested that if an
exporter actually applies forward exchange rates to its export sales,
then the Department should use those forward exchange rates (whether
they be daily, quarterly, or quarterly averages). The second commenter
proposed that in order for the Department to use a forward exchange
rate, the forward sale of currency must relate specifically to the
export sale, i.e., the forward rate should not be allocated. According
to the second commenter, this would prevent an exporter from claiming
that its general hedging operations are directly linked to particular
export sales. This same commenter also argued that where the forward
sale agreement spans a period of time, the Department should use the
exchange rate specified in the agreement only if the date of sale of
the export transaction falls within that period.
With respect to these suggestions, while the Department believes
that it might be desirable to have more detailed rules concerning the
``directly linked'' standard, we do not have enough experience with
this standard to provide such rules at this time. Therefore, we intend
to develop our practice in the context of future investigations and
reviews.
Another commenter, noting that forward currency transactions
usually involve a fee, suggested that the Department either should
include this fee as part of the forward exchange rate or should make a
COS adjustment under Sec. 351.410 to account for the fee. We agree that
the Department should account for these types of fees, but we do not
believe that an additional regulation is necessary. In the case of
Sec. 351.410, for example, we believe that the provision is
sufficiently flexible to encompass a COS adjustment for forward
exchange rate fees.
Model for identifying and addressing fluctuations and sustained
movements in exchange rates: Several commenters made suggestions to
amend the model proposed by the Department for identifying and
addressing fluctuations and sustained movements in exchange rates. (We
described this model briefly in the AD Proposed Regulations, 61 FR at
7351, and then published a more detailed description in Policy Bulletin
(96-1): Currency Conversions, 61 FR 9434 (March 8, 1996) (``Policy
Bulletin 96-1'')). Regarding fluctuations in exchange rates, two
commenters suggested that the Department replace the 8-week rolling
average benchmark for determining fluctuations with a 17-week (120-day)
rolling average. They also suggested that the benchmark should not
include exchange rates that the Department has determined to be
fluctuations, because section 773A of the Act requires the Department
to ignore fluctuations.
Regarding sustained movements in an exchange rate, certain
commenters claimed that the Department's model is overly rigid in
identifying such movements, as evidenced by the fact that the model
only identifies one sustained movement for one currency in the period
since 1992. These commenters suggested several amendments to the model
to ensure that it would serve the purpose of protecting exporters when
the value of their currency changes faster than they can raise prices.
These suggestions included: changing the so-called ``recognition
period'' for sustained movements from 8 weeks to 13 weeks (90 days);
requiring fewer than 8 consecutive weeks of changes before recognizing
a sustained movement, or using monthly rather than weekly averages to
determine whether a sustained movement has occurred; applying an
historic rate (such as the rate from the quarter preceding the
recognition period) during the recognition period; and, using the
official exchange rate from the first day of the recognition period
during the 60-day adjustment period.
One commenter argued against the latter two suggestions on the
grounds that the purpose of section 773A(b) is to allow exporters an
adjustment period after a sustained movement in exchange rates has
occurred. Therefore, in this commenter's view, it makes no sense to use
an exchange rate that predates the sustained movement, nor would
section 773A(b) permit the use of an historic rate occurring during the
recognition period. Finally, one commenter requested that the
Department provide additional guidance on the exchange rate that it
intends to apply when a foreign currency is depreciating, as opposed to
appreciating, against the U.S. dollar.
The Department welcomes the numerous comments submitted on the
model for identifying and addressing fluctuations and sustained
movements in exchange rates. As we stated in the AD Proposed
Regulations, we intend to use the model for one year and then evaluate
its performance based on public comment. As part of that evaluation, we
will consider the comments we have received in connection with the
instant rulemaking. Moreover, as indicated in Policy Bulletin 96-1, we
will consider comments we received on the model through December 31,
1996.
At this time, however, we would like to make two points. First,
based on a preliminary review of the comments, we do not believe that
using a benchmark rate that includes past fluctuations contravenes
section 773A(a). The fluctuations identified under the model are
fluctuations that are relative to a particular number calculated at a
particular point in time; i.e., the average of the actual exchange
rates on each of the prior 40 days. The fact that a particular daily
rate fluctuates vis-a-vis that number is sufficient to disqualify that
daily rate for purposes of conversion on that date. However, the
designation of a particular daily rate as a fluctuation does not render
that rate unusable for all purposes. In particular, we believe that
actual exchange rates provide the best gauge of whether a particular
daily rate should be viewed as a fluctuation. Therefore, we consider it
appropriate to include past fluctuations in the rolling average
benchmark.
Moreover, when the Department deems a particular daily rate to be a
fluctuation, we believe we should use the benchmark (which includes
past fluctuations) in lieu of the daily rate. For
---- page 27377 ----
example, the fact that a daily rate three weeks ago is considered to be
a fluctuation means only that the daily rate varied from the historic
average as of that time. It does not mean that one should continue to
view that daily rate as a fluctuation three weeks later. Because the
designation of fluctuations is time-sensitive in this sense, the
commenters appear to be reading too much into the statutory prohibition
against the use of fluctuating exchange rates.
Second, regarding the comment on our treatment of depreciating
currencies, we note that the Department addressed this issue in Certain
Pasta from Turkey, 61 FR 30309, 30325 (June 14, 1996). In that case,
which involved a situation where the foreign currency was depreciating
against the U.S. dollar, we used actual daily exchange rates rather
than the benchmark rates generated by the model. We agree with the
commenter that we should address depreciating currencies more fully in
a final model, and we welcome further suggestions on this point.
Sustained movements: While the model discussed above identifies and
addresses sustained movements in exchange rates, paragraph (d) sets
forth a general rule that where there is a sustained movement
``increasing the value of the foreign currency relative to the U.S.
dollar,'' exporters will be given 60 days in which to adjust their
prices. Two commenters claimed that paragraph (d) is ``one-sided.''
Specifically, one commenter objected to the fact that paragraph (d)
only addresses sustained appreciations in a foreign currency relative
to the U.S. dollar. In this commenter's view, section 773A(b) does not
specify whether the sustained movement must be upward or downward. The
second commenter (presumably referring to the fact that paragraph (d)
does not address sustained depreciations in a foreign currency) pointed
out that under paragraph (d), respondents can take advantage of
favorable exchange rates when a foreign currency appreciates, but
domestic industries do not receive a comparable benefit when the
currency depreciates. The commenter suggested that the Department
should address this by establishing a special rule for situations where
exporters should be raising their U.S. prices in response to exchange
rate changes, but, instead, are lowering them.
We are not adopting the proposals put forward by these commenters.
The language contained in paragraph (d) regarding upward sustained
movements reflects the legislative intent expressed in the SAA, which
specifically discusses the granting of an adjustment period following
``a sustained increase in the value of a foreign currency relative to
the U.S. dollar.'' SAA at 842. Moreover, we do not believe that the
statute provides any authority for the Department to deny an adjustment
period when a sustained increase in the value of a foreign currency
relative to the U.S. dollar has occurred, even in the event that an
exporter is lowering U.S. prices.
Another commenter pointed out that paragraph (d) would provide an
adjustment period for sustained movements in exchange rates only in
investigations, and not in reviews. This commenter questioned whether
such a limitation was consistent with the AD Agreement. In the
Department's view, paragraph (d) is consistent with the AD Agreement,
because Article 2.4.1 specifies that the 60-day period for adjusting
prices applies ``in an investigation.''
Finally, one commenter urged the Department to use the exchange
rate in effect on the date that the price and quantity terms of a sale
are first established, rather than under the methodology used to
identify the date of sale for other purposes. We have not adopted this
suggestion because section 773A(a) of the Act directs the Department to
use the exchange rate in effect on the ``date of sale of the subject
merchandise.'' We have clarified how we will identify the date of sale
in section 351.401(i) of these regulations. The Department cannot
establish a different date of sale for currency conversion purposes
from that which is used for all other purposes. This issue is discussed
further with respect to that provision, above.
Other Comments
In addition to the comments discussed above, the Department also
received several comments that did not relate to a particular provision
in the AD Proposed Regulations. A common theme of these comments,
however, was the extent to which the Department should rely on data as
recorded in a firm's books and records.
One commenter criticized the Department's practice of requiring
that respondents submit data in the specific format established by the
Department. According to the commenter, this requirement was
unnecessary, it rendered the cost of complying with Department
information requests excessively high, and, when combined with the
Department's tight deadlines, it made the entire process extremely
onerous for a firm attempting to comply with a request for data.
Another commenter, citing the increasing convergence of accounting
standards as companies compete with one another for capital on an
international level, proposed that the Department accept data responses
in a format that conforms to the generally accepted accounting
principles of the company's home country. Another commenter supported
these proposals.
With respect to these comments, we first must note that in
enforcing the AD law, the Department must balance two different
objectives. On the one hand, the Department has a responsibility to
identify and measure dumping accurately and in accordance with the
standards set forth in the AD law. In some instances, this may mean
that the Department must seek information of a type that is not readily
retrievable from a company's accounting or financial records or that is
in a format different from the format in which a company maintains its
records. On the other hand, the Department is cognizant of the need to
avoid imposing, in the words of section 782(c) of the Act, ``an
unreasonable burden'' on respondents.
In implementing the URAA, we have reviewed our practices and
regulations in light of the two objectives described above. As a
result, we have taken several steps that we believe will make the AD
process less onerous for parties, but that, at the same time, preserve
the Department's ability to apply the standards of the AD law. For
example, the Department has revised its standard AD questionnaire to
clarify that the Department will be flexible in accepting responses
that reflect different accounting standards and systems. In addition,
as discussed above, in the final regulations relating to allocations,
date of sale, and CEP profit, we also have taken steps to accommodate
different accounting standards and systems. In our view, in addition to
making the AD process less onerous for parties, these changes will make
the Department's verifications more efficient and effective, thereby
enhancing the Department's ability to enforce the AD law.
On a somewhat related topic, one commenter stated that the
regulations should address the matter of ``model-matching''
methodology.{3} According to
---- page 27378 ----
the commenter, the Department currently instructs respondents as to the
relative importance of physical characteristics of the subject
merchandise and the foreign like product, rather than permitting
respondents to make that determination, as under traditional practice.
The commenter also alleged that there were two principal problems with
the Department's current approach: (1) the Department's manner of
identifying product characteristics, and the relative importance
assigned to those characteristics, bears no necessary relation to the
product coding system used by a respondent for commercial purposes; and
(2) the use of the product coding system formulated by the Department
in individual cases often results in inappropriate comparisons.
Therefore, the commenter argued, the Department should make clear in
the preamble to its regulations that the Department generally will use
a respondent's existing product coding system as the starting point for
identifying identical and similar merchandise. The Department then can
make modifications and additions to those codes to the extent necessary
to reflect desired model-match criteria.
---------------------------------------------------------------------------
{3} ``Model-matching'' is a shorthand expression for the process
the Department uses to identify identical or similar home market or
third-country merchandise. In order to identify and measure dumping,
the Department must compare a U.S. sale of a particular type or
model of merchandise to a home market or third-country sale of
identical or similar merchandise. Typically, in an AD proceeding,
the Department will develop ``model-matching'' criteria for
identifying identical or similar merchandise in that particular
case.
---------------------------------------------------------------------------
We have not adopted the suggestion. Under section 771(16) of the
Act, the starting point for model-matching is always the physical
characteristics of the product. Based on our experience, a company's
internal product coding system often does not provide sufficient
information to allow the Department to match products in accordance
with their physical characteristics. Therefore, we do not believe that
it would be appropriate to establish what, in effect, would be a
rebuttable presumption that a company's internal product coding system
should be used for purposes of model-matching.
On the other hand, however, we do not intend to suggest that a
company's product coding system is irrelevant to the model-matching
exercise. We agree that the model-matching methodology used by the
Department in a particular case should reflect the most significant
physical characteristics of a product. We also agree that it often is
the case that a company's product coding system is informative, if not
dispositive, as to what those characteristics are. For example, the
fact that the product coding systems of every respondent involved in an
AD proceeding capture a particular physical characteristic usually is a
good indication that the characteristic is significant. Therefore, the
Department will continue to consider producer coding systems in
developing model-match methodologies in particular cases, and will use
these codes where such use is consistent with the standards set forth
in section 771(16).
Subpart G--Effective Dates
Subpart G consists of a single Sec. 351.701 which (1) establishes
the dates on which the new regulations contained in Part 351 will
become effective, and (2) explains the extent to which the Department's
prior regulations will govern segments of proceedings to which the new
regulations do not apply. Section 351.701 also explains the limited
role of these new regulations in proceedings to which they do not
apply.
The new regulations will apply to all investigations and other
segments of proceedings (such as scope requests), other than
administrative reviews, initiated on the basis of petitions filed or
requests made more than thirty days after the date on which the new
regulations are published. The new regulations also will apply to all
investigations or other segments of proceedings that the Department
self-initiates more than thirty days after the date on which the new
regulations are published. In addition, the new regulations will apply
to all administrative reviews initiated on the basis of requests filed
in the month following the month in which the date 30 days after
publication of this notice falls. The slight difference in effective
date for administrative reviews is to avoid confusion over whether the
new regulations apply to administrative reviews requested by different
parties on different days during the month in which the new regulations
become effective for investigations and other segments of proceedings
(in other words, during the month that includes the day thirty days
after the date on which these regulations are published).
Investigations, reviews, and other segments of proceedings to which
these regulations do not apply will continue to be governed by the old
regulations, except to the extent that those regulations were
invalidated by the URAA or were replaced by the interim final
regulations published on May 11, 1995 (60 FR 25130 (1995)).
For segments of proceedings to which these regulations do not
apply, but which are subject to the Act as amended by the URAA because
they were initiated on the basis of petitions filed or requests made
after January 1, 1995 (the effective date of the URAA), the new
regulations will serve as a restatement of the Department's
interpretation of the amended Act. In other words, the new regulations
describe the administrative practice that the Department will follow,
unless there is a reason consistent with the amended Act to depart from
that practice. The AD Proposed Regulations no longer will serve that
purpose.
Annexes to Part 351
We have revised Annexes I through V to reflect changes made in
these final regulations, as well as to correct typographical errors
identified in the annexes attached to the AD Proposed Regulations. In
addition, we have revised the charts to include certain deadlines that
were not included in the AD Proposed Regulations.
One commenter suggested that the Department should refrain from
adopting the ``inflexible deadlines'' outlined in the annexes, and
instead should adapt the timetable to the complexity of each
investigation or review. With respect to this suggestion, we must
emphasize that the tables and charts contained in Annexes I through VII
are intended to serve only as a guide to potential petitioners and
respondents, as well as other persons potentially interested or
involved in an AD/CVD proceeding. The tables themselves are not
``rules,'' and they do not represent the timetables that the Department
will follow in all proceedings. In fact, they may not represent the
timetables that the Department will follow in a majority of
proceedings. The tables and charts simply cross-reference relevant
provisions of the regulations so that parties and other persons will be
aware of when such things as extensions or postponements might occur.
As stated previously, under Sec. 351.302(b), the Secretary may, for
good cause, extend any time limit established by Part 351 unless such
an extension is expressly precluded by statute.
Classification
E.O. 12866
This final rule has been determined to be significant under E.O.
12866.
Regulatory Flexibility Act
The Assistant General Counsel for Legislation and Regulation of the
Department of Commerce certified to the Chief Counsel for Advocacy of
the Small Business Administration that this final rule will not have a
significant economic impact on a substantial number of small entities.
The Department does not believe that there will be any substantive
effect on the outcome of AD and CVD proceedings as a result of the
streamlining and
---- page 27379 ----
simplification of their administration. With respect to the substantive
amendments implementing the Uruguay Round Agreements Act, the
Department believes that these regulations benefit both petitioners and
respondents without favoring either, and, therefore, would not have a
significant economic effects. As such, a regulatory flexibility
analysis was not prepared.
Paperwork Reduction Act
Notwithstanding any other provision of law, no person is required
to respond to nor shall a person be subject to a penalty for failure to
comply with a collection of information subject to the requirements of
the Paperwork Reduction Act unless that collection of information
displays a currently valid OMB Control Number. This final rule does not
contain any new reporting or recording requirements subject to the
Paperwork Reduction Act. The collections of information contained in
this rule are currently approved by the Office of Management and Budget
under OMB Control Numbers 0625-0105, 0625-0148, and 0625-0200. The
public reporting burdens for these collections of information are
estimated to average 40 hours for the AD and CVD petition requirements,
and 15 hours for the initiation of downstream product monitoring. These
estimates include the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collections of information. Send comments
regarding these burden estimates or any other aspect of these
collections of information, including suggestions for reducing the
burden, to OMB Desk Officer, New Executive Office Building, Washington,
D.C. 20503.
E.O. 12612
This final rule does not contain federalism implications warranting
the preparation of a Federalism Assessment.
List of Subjects
19 CFR Part 351
Administrative practice and procedure, Antidumping, Business and
industry, Cheese, Confidential business information, Countervailing
duties, Investigations, Reporting and recordkeeping requirements.
19 CFR Part 353
Administrative practice and procedure, Antidumping, Business and
industry, Confidential business information, Investigations, Reporting
and recordkeeping requirements.
19 CFR Part 355
Administrative practice and procedure, Business and industry,
Cheese, Confidential business information, Countervailing duties,
Freedom of Information, Investigations, Reporting and recordkeeping
requirements.
Dated: May 2, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
For the reasons stated, 19 CFR chapter III is amended as follows:
Parts 353 and 355 [Removed]
1. Parts 353 and 355 are removed.
2. A new Part 351 is added to read as follows:
PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES
Subpart A--Scope and Definitions
Sec.
351.101 Scope.
351.102 Definitions.
351.103 Central Records Unit.
351.104 Record of proceedings.
351.105 Public, business proprietary, privileged, and classified
information.
351.106 De minimis net countervailable subsidies and weighted-
average dumping margins disregarded.
351.107 Deposit rates for nonproducing exporters; rates in
antidumping proceedings involving a nonmarket economy country.
Subpart B--Antidumping and Countervailing Duty Procedures 351.201 Self-
initiation.
351.202 Petition requirements.
351.203 Determination of sufficiency of petition.
351.204 Transactions and persons examined; voluntary respondents;
exclusions.
351.205 Preliminary determination.
351.206 Critical circumstances.
351.207 Termination of investigation.
351.208 Suspension of investigation.
351.209 Violation of suspension agreement.
351.210 Final determination.
351.211 Antidumping order and countervailing duty order.
351.212 Assessment of antidumping and countervailing duties;
provisional measures deposit cap; interest on certain overpayments
and underpayments
351.213 Administrative review of orders and suspension agreements
under section 751(a)(1) of the Act.
351.214 New shipper reviews under section 751(a)(2)(B) of the Act.
351.215 Expedited antidumping review and security in lieu of
estimated duty under section 736(c) of the Act.
351.216 Changed circumstances review under section 751(b) of the
Act.
351.217 Reviews to implement results of subsidies enforcement
proceeding under section 751(g) of the Act.
351.218 Sunset reviews under section 751(c) of the Act.
351.219 Reviews of countervailing duty orders in connection with an
investigation under section 753 of the Act.
351.220 Countervailing duty review at the direction of the
President under section 762 of the Act.
351.221 Review procedures.
351.222 Revocation of orders; termination of suspended
investigations.
351.223 Procedures for initiation of downstream product monitoring.
351.224 Disclosure of calculations and procedures for the
correction of ministerial errors.
351.225 Scope rulings.
Subpart C--Information and Argument
351.301 Time limits for submission of factual information.
351.302 Extension of time limits; return of untimely filed or
unsolicited material.
351.303 Filing, format, translation, service, and certification of
documents.
351.304 Establishing business proprietary treatment of information
[Reserved].
351.305 Access to business proprietary information [Reserved].
351.306 Use of business proprietary information [Reserved].
351.307 Verification of information.
351.308 Determinations on the basis of the facts available.
351.309 Written argument.
351.310 Hearings.
351.311 Countervailable subsidy practice discovered during
investigation or review.
351.312 Industrial users and consumer organizations.
Subpart D--Calculation of Export Price, Constructed Export Price, Fair
Value, and Normal Value
351.401 In general.
351.402 Calculation of export price and constructed export price;
reimbursement of antidumping and countervailing duties.
351.403 Sales used in calculating normal value; transactions
between affiliated parties.
351.404 Selection of the market to be used as the basis for normal
value.
351.405 Calculation of normal value based on constructed value.
351.406 Calculation of normal value if sales are made at less than
the cost of production.
351.407 Calculation of constructed value and cost of production.
351.408 Calculation of normal value of merchandise from nonmarket
economy countries.
351.409 Differences in quantities.
351.410 Differences in circumstances of sale.
351.411 Differences in physical characteristics.
351.412 Levels of trade; adjustment for difference in level of
trade; constructed export price offset.
351.413 Disregarding insignificant adjustments.
---- page 27380 ----
351.414 Comparison of normal value with export price (constructed
export price).
351.415 Conversion of currency.
Subpart E--[Reserved]
Subpart F--Subsidy Determinations Regarding Cheese Subject to an In-
Quota Rate of Duty
351.601 Annual list and quarterly update of subsidies.
351.602 Determination upon request.
351.603 Complaint of price-undercutting by subsidized imports.
351.604 Access to information.
Subpart G--Applicability Dates
351.701 Applicability dates.
Annex I--Deadlines for Parties in Countervailing Investigations
Annex II--Deadlines for Parties in Countervailing Administrative
Reviews
Annex III--Deadlines for Parties in Antidumping Investigations
Annex IV--Deadlines for Parties in Antidumping Administrative
Reviews
Annex V--Comparison of Prior and New Regulations
Annex VI--Countervailing Investigations Timeline
Annex VII--Antidumping Investigations Timeline
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.
PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES
Subpart A--Scope and Definitions
Sec. 351.101 Scope.
(a) In general. This part contains procedures and rules applicable
to antidumping and countervailing duty proceedings under title VII of
the Act (19 U.S.C. 1671 et seq.), and also determinations regarding
cheese subject to an in-quota rate of duty under section 702 of the
Trade Agreements Act of 1979 (19 U.S.C. 1202 note). This part reflects
statutory amendments made by titles I, II, and IV of the Uruguay Round
Agreements Act, Pub. L. 103-465, which, in turn, implement into United
States law the provisions of the following agreements annexed to the
Agreement Establishing the World Trade Organization: Agreement on
Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994; Agreement on Subsidies and Countervailing Measures; and
Agreement on Agriculture.
(b) Countervailing duty investigations involving imports not
entitled to a material injury determination. Under section 701(c) of
the Act, certain provisions of the Act do not apply to countervailing
duty proceedings involving imports from a country that is not a
Subsidies Agreement country and is not entitled to a material injury
determination by the Commission. Accordingly, certain provisions of
this part referring to the Commission may not apply to such
proceedings.
(c) Application to governmental importations. To the extent
authorized by section 771(20) of the Act, merchandise imported by, or
for the use of, a department or agency of the United States Government
is subject to the imposition of countervailing duties or antidumping
duties under this part.
Sec. 351.102 Definitions.
(a) Introduction. The Act contains many technical terms applicable
to antidumping and countervailing duty proceedings. In the case of
terms that are not defined in this section or other sections of this
part, readers should refer to the relevant provisions of the Act. This
section:
(1) Defines terms that appear in the Act but are not defined in the
Act;
(2) Defines terms that appear in this Part but do not appear in the
Act; and
(3) Elaborates on the meaning of certain terms that are defined in
the Act.
(b) Definitions.
Act. ``Act'' means the Tariff Act of 1930, as amended.
Administrative review. ``Administrative review'' means a review
under section 751(a)(1) of the Act.
Affiliated persons; affiliated parties. ``Affiliated persons'' and
``affiliated parties'' have the same meaning as in section 771(33) of
the Act. In determining whether control over another person exists,
within the meaning of section 771(33) of the Act, the Secretary will
consider the following factors, among others: corporate or family
groupings; franchise or joint venture agreements; debt financing; and
close supplier relationships. The Secretary will not find that control
exists on the basis of these factors unless the relationship has the
potential to impact decisions concerning the production, pricing, or
cost of the subject merchandise or foreign like product. The Secretary
will consider the temporal aspect of a relationship in determining
whether control exists; normally, temporary circumstances will not
suffice as evidence of control.
Aggregate basis. ``Aggregate basis'' means the calculation of a
country-wide subsidy rate based principally on information provided by
the foreign government.
Anniversary month. ``Anniversary month'' means the calendar month
in which the anniversary of the date of publication of an order or
suspension of investigation occurs.
APO. ``APO'' means an administrative protective order described in
section 777(c)(1) of the Act.
Applicant. ``Applicant'' means a representative of an interested
party that has applied for access to business proprietary information
under an administrative protective order.
Article 4/Article 7 Review. ``Article 4/Article 7 review'' means a
review under section 751(g)(2) of the Act.
Article 8 violation review. ``Article 8 violation review'' means a
review under section 751(g)(1) of the Act.
Authorized applicant. ``Authorized applicant'' means an applicant
that the Secretary has authorized to receive business proprietary
information under an APO under section 777(c)(1) of the Act.
Changed circumstances review. ``Changed circumstances review''
means a review under section 751(b) of the Act.
Customs Service. ``Customs Service'' means the United States
Customs Service of the United States Department of the Treasury.
Department. ``Department'' means the United States Department of
Commerce.
Domestic interested party. ``Domestic interested party'' means an
interested party described in subparagraph (C), (D), (E), (F), or (G)
of section 771(9) of the Act.
Expedited antidumping review. ``Expedited antidumping review''
means a review under section 736(c) of the Act.
Factual information. ``Factual information'' means:
(1) Initial and supplemental questionnaire responses;
(2) Data or statements of fact in support of allegations;
(3) Other data or statements of facts; and
(4) Documentary evidence.
Fair value. ``Fair value'' is a term used during an antidumping
investigation, and is an estimate of normal value.
Importer. ``Importer'' means the person by whom, or for whose
account, subject merchandise is imported.
Investigation. Under the Act and this Part, there is a distinction
between an antidumping or countervailing duty investigation and a
proceeding. An ``investigation'' is that segment of a proceeding that
begins on the date of publication of notice of initiation of
investigation and ends on the date of publication of the earliest of:
(1) Notice of termination of investigation,
(2) Notice of rescission of investigation,
(3) Notice of a negative determination that has the effect of
terminating the proceeding, or
(4) An order.
---- page 27381 ----
New shipper review. ``New shipper review'' means a review under
section 751(a)(2) of the Act.
Order. An ``order'' is an order issued by the Secretary under
section 303, section 706, or section 736 of the Act or a finding under
the Antidumping Act, 1921.
Ordinary course of trade. ``Ordinary course of trade'' has the same
meaning as in section 771(15) of the Act. The Secretary may consider
sales or transactions to be outside the ordinary course of trade if the
Secretary determines, based on an evaluation of all of the
circumstances particular to the sales in question, that such sales or
transactions have characteristics that are extraordinary for the market
in question. Examples of sales that the Secretary might consider as
being outside the ordinary course of trade are sales or transactions
involving off-quality merchandise or merchandise produced according to
unusual product specifications, merchandise sold at aberrational prices
or with abnormally high profits, merchandise sold pursuant to unusual
terms of sale, or merchandise sold to an affiliated party at a non-
arm's length price.
Party to the proceeding. ``Party to the proceeding'' means any
interested party that actively participates, through written
submissions of factual information or written argument, in a segment of
a proceeding. Participation in a prior segment of a proceeding will not
confer on any interested party ``party to the proceeding'' status in a
subsequent segment.
Person. ``Person'' includes any interested party as well as any
other individual, enterprise, or entity, as appropriate.
Price adjustment. ``Price adjustment'' means any change in the
price charged for subject merchandise or the foreign like product, such
as discounts, rebates and post-sale price adjustments, that are
reflected in the purchaser's net outlay.
Proceeding. A ``proceeding'' begins on the date of the filing of a
petition under section 702(b) or section 732(b) of the Act or the
publication of a notice of initiation in a self-initiated investigation
under section 702(a) or section 732(a) of the Act, and ends on the date
of publication of the earliest notice of:
(1) Dismissal of petition,
(2) Rescission of initiation,
(3) Termination of investigation,
(4) A negative determination that has the effect of terminating the
proceeding,
(5) Revocation of an order, or
(6) Termination of a suspended investigation.
Rates. ``Rates'' means the individual weighted-average dumping
margins, the individual countervailable subsidy rates, the country-wide
subsidy rate, or the all-others rate, as applicable.
Respondent interested party. ``Respondent interested party'' means
an interested party described in subparagraph (A) or (B) of section
771(9) of the Act.
Sale. A ``sale'' includes a contract to sell and a lease that is
equivalent to a sale.
Secretary. ``Secretary'' means the Secretary of Commerce or a
designee. The Secretary has delegated to the Assistant Secretary for
Import Administration the authority to make determinations under title
VII of the Act and this Part.
Section 753 review. ``Section 753 review'' means a review under
section 753 of the Act.
Section 762 review. ``Section 762 review'' means a review under
section 762 of the Act.
Segment of proceeding.
(1) In general. An antidumping or countervailing duty proceeding
consists of one or more segments. ``Segment of a proceeding'' or
``segment of the proceeding'' refers to a portion of the proceeding
that is reviewable under section 516A of the Act.
(2) Examples. An antidumping or countervailing duty investigation
or a review of an order or suspended investigation, or a scope inquiry
under Sec. 351.225, each would constitute a segment of a proceeding.
Sunset review. ``Sunset review'' means a review under section
751(c) of the Act.
Suspension of liquidation. ``Suspension of liquidation'' refers to
a suspension of liquidation ordered by the Secretary under the
authority of title VII of the Act, the provisions of this Part, or
section 516a(g)(5)(C) of the Act, or by a court of the United States in
a lawsuit involving action taken, or not taken, by the Secretary under
title VII of the Act or the provisions of this Part.
Third country. For purposes of subpart D, ``third country'' means a
country other than the exporting country and the United States. Under
section 773(a) of the Act and subpart D, in certain circumstances the
Secretary may determine normal value on the basis of sales to a third
country.
URAA. ``URAA'' means the Uruguay Round Agreements Act.
Sec. 351.103 Central Records Unit.
(a) In general. Import Administration's Central Records Unit is
located at Room B-099, U.S. Department of Commerce, Pennsylvania Avenue
and 14th Street, NW., Washington, D.C. 20230. The office hours of the
Central Records Unit are between 8:30 A.M. and 5:00 P.M. on business
days. Among other things, the Central Records Unit is responsible for
maintaining an official and public record for each antidumping and
countervailing duty proceeding (see Sec. 351.104), the Subsidies
Library (see section 775(2) and section 777(a)(1) of the Act), and the
service list for each proceeding (see paragraph (c) of this section).
(b) Filing of documents with the Department. While persons are free
to provide Department officials with courtesy copies of documents, no
document will be considered as having been received by the Secretary
unless it is submitted to the Central Records Unit and is stamped by
the Central Records Unit with the date and time of receipt.
(c) Service list. The Central Records Unit will maintain and make
available a service list for each segment of a proceeding. Each
interested party that asks to be included on the service list for a
segment of a proceeding must designate a person to receive service of
documents filed in that segment. The service list for an application
for a scope ruling is described in Sec. 351.225(n).
Sec. 351.104 Record of proceedings.
(a) Official record. (1) In general. The Secretary will maintain in
the Central Records Unit an official record of each antidumping and
countervailing duty proceeding. The Secretary will include in the
official record all factual information, written argument, or other
material developed by, presented to, or obtained by the Secretary
during the course of a proceeding that pertains to the proceeding. The
official record will include government memoranda pertaining to the
proceeding, memoranda of ex parte meetings, determinations, notices
published in the Federal Register, and transcripts of hearings. The
official record will contain material that is public, business
proprietary, privileged, and classified. For purposes of section
516A(b)(2) of the Act, the record is the official record of each
segment of the proceeding.
(2) Material returned. (i) The Secretary, in making any
determination under this part, will not use factual information,
written argument, or other material that the Secretary returns to the
submitter.
(ii) The official record will include a copy of a returned
document, solely for purposes of establishing and documenting the basis
for returning the document to the submitter, if the document was
returned because:
(A) The document, although otherwise timely, contains untimely
---- page 27382 ----
filed new factual information (see Sec. 351.301(b));
(B) The submitter made a nonconforming request for business
proprietary treatment of factual information (see Sec. 351.304);
(C) The Secretary denied a request for business proprietary
treatment of factual information (see Sec. 351.304);
(D) The submitter is unwilling to permit the disclosure of business
proprietary information under APO (see Sec. 351.304).
(iii) In no case will the official record include any document that
the Secretary returns to the submitter as untimely filed, or any
unsolicited questionnaire response unless the response is a voluntary
response accepted under Sec. 351.204(d) (see Sec. 351.302(d)).
(b) Public record. The Secretary will maintain in the Central
Records Unit a public record of each proceeding. The record will
consist of all material contained in the official record (see paragraph
(a) of this section) that the Secretary decides is public information
under Sec. 351.105(b), government memoranda or portions of memoranda
that the Secretary decides may be disclosed to the general public, and
public versions of all determinations, notices, and transcripts. The
public record will be available to the public for inspection and
copying in the Central Records Unit (see Sec. 351.103). The Secretary
will charge an appropriate fee for providing copies of documents.
(c) Protection of records. Unless ordered by the Secretary or
required by law, no record or portion of a record will be removed from
the Department.
Sec. 351.105 Public, business proprietary, privileged, and classified
information.
(a) Introduction. There are four categories of information in an
antidumping or countervailing duty proceeding: public, business
proprietary, privileged, and classified. In general, public information
is information that may be made available to the public, whereas
business proprietary information may be disclosed (if at all) only to
authorized applicants under an APO. Privileged and classified
information may not be disclosed at all, even under an APO. This
section describes the four categories of information.
(b) Public information. The Secretary normally will consider the
following to be public information:
(1) Factual information of a type that has been published or
otherwise made available to the public by the person submitting it;
(2) Factual information that is not designated as business
proprietary by the person submitting it;
(3) Factual information that, although designated as business
proprietary by the person submitting it, is in a form that cannot be
associated with or otherwise used to identify activities of a
particular person or that the Secretary determines is not properly
designated as business proprietary;
(4) Publicly available laws, regulations, decrees, orders, and
other official documents of a country, including English translations;
and
(5) Written argument relating to the proceeding that is not
designated as business proprietary.
(c) Business proprietary information. The Secretary normally will
consider the following factual information to be business proprietary
information, if so designated by the submitter:
(1) Business or trade secrets concerning the nature of a product or
production process;
(2) Production costs (but not the identity of the production
components unless a particular component is a trade secret);
(3) Distribution costs (but not channels of distribution);
(4) Terms of sale (but not terms of sale offered to the public);
(5) Prices of individual sales, likely sales, or other offers (but
not components of prices, such as transportation, if based on published
schedules, dates of sale, product descriptions (other than business or
trade secrets described in paragraph (c)(1) of this section), or order
numbers);
(6) Names of particular customers, distributors, or suppliers (but
not destination of sale or designation of type of customer,
distributor, or supplier, unless the destination or designation would
reveal the name);
(7) In an antidumping proceeding, the exact amount of the dumping
margin on individual sales;
(8) In a countervailing duty proceeding, the exact amount of the
benefit applied for or received by a person from each of the programs
under investigation or review (but not descriptions of the operations
of the programs, or the amount if included in official public
statements or documents or publications, or the ad valorem
countervailable subsidy rate calculated for each person under a
program);
(9) The names of particular persons from whom business proprietary
information was obtained;
(10) The position of a domestic producer or workers regarding a
petition; and
(11) Any other specific business information the release of which
to the public would cause substantial harm to the competitive position
of the submitter.
(d) Privileged information. The Secretary will consider information
privileged if, based on principles of law concerning privileged
information, the Secretary decides that the information should not be
released to the public or to parties to the proceeding. Privileged
information is exempt from disclosure to the public or to
representatives of interested parties.
(e) Classified information. Classified information is information
that is classified under Executive Order No. 12356 of April 2, 1982 (47
FR 14874 and 15557, 3 CFR 1982 Comp. p. 166) or successor executive
order, if applicable. Classified information is exempt from disclosure
to the public or to representatives of interested parties.
Sec. 351.106 De minimis net countervailable subsidies and weighted-
average dumping margins disregarded.
(a) Introduction. Prior to the enactment of the URAA, the
Department had a well-established and judicially sanctioned practice of
disregarding net countervailable subsidies or weighted-average dumping
margins that were de minimis. The URAA codified in the Act the
particular de minimis standards to be used in antidumping and
countervailing duty investigations. This section discussed the
application of the de minimis standards in antidumping or
countervailing duty proceedings.
(b) Investigations. (1) In general. In making a preliminary or
final antidumping or countervailing duty determination in an
investigation (see sections 703(b), 733(b), 705(a), and 735(a) of the
Act), the Secretary will apply the de minimis standard set forth in
section 703(b)(4) or section 733(b)(3) of the Act (whichever is
applicable).
(2) Transition rule. (i) If:
(A) the Secretary resumes an investigation that has been suspended
(see section 704(i)(1)(B) or section 734(i)(1)(B) of the Act); and
(B) the investigation was initiated before January 1, 1995, then
(ii) The Secretary will apply the de minimis standard in effect at
the time that the investigation was initiated.
(c) Reviews and other determinations. (1) In general. In making any
determination other than a preliminary or final antidumping or
countervailing duty determination in an investigation (see paragraph
(b) of this section), the Secretary will treat as de minimis any
weighted-average dumping margin or countervailable subsidy rate that is
less
---- page 27383 ----
than 0.5 percent ad valorem, or the equivalent specific rate.
(2) Assessment of antidumping duties. The Secretary will instruct
the Customs Service to liquidate without regard to antidumping duties
all entries of subject merchandise during the relevant period of review
made by any person for which the Secretary calculates an assessment
rate under Sec. 351.212(b)(1) that is less than 0.5 percent ad valorem,
or the equivalent specific rate.
Sec. 351.107 Cash deposit rates for nonproducing exporters; rates in
antidumping proceedings involving a nonmarket economy country.
(a) Introduction. This section deals with the establishment of cash
deposit rates in situations where the exporter is not the producer of
subject merchandise, the selection of the appropriate cash deposit rate
in situations where entry documents do not indicate the producer of
subject merchandise, and the calculation of dumping margins in
antidumping proceedings involving imports from a nonmarket economy
country.
(b) Cash deposit rates for nonproducing exporters. (1) Use of
combination rates. (i) In general. In the case of subject merchandise
that is exported to the United States by a company that is not the
producer of the merchandise, the Secretary may establish a
``combination'' cash deposit rate for each combination of the exporter
and its supplying producer(s).
(ii) Example. A nonproducing exporter (Exporter A) exports to the
United States subject merchandise produced by Producers X, Y, and Z. In
such a situation, the Secretary may establish cash deposit rates for
Exporter A/Producer X, Exporter A/Producer Y, and Exporter A/Producer
Z.
(2) New supplier. In the case of subject merchandise that is
exported to the United States by a company that is not the producer of
the merchandise, if the Secretary has not established previously a
combination cash deposit rate under paragraph (b)(1)(i) of this section
for the exporter and producer in question or a noncombination rate for
the exporter in question, the Secretary will apply the cash deposit
rate established for the producer. If the Secretary has not previously
established a cash deposit rate for the producer, the Secretary will
apply the ``all-others rate'' described in section 705(c)(5) or section
735(c)(5) of the Act, as the case may be.
(c) Producer not identified. (1) In general. In situations where
entry documents do not identify the producer of subject merchandise, if
the Secretary has not established previously a noncombination rate for
the exporter, the Secretary may instruct the Customs Service to apply
as the cash deposit rate the higher of:
(i) the highest of any combination cash deposit rate established
for the exporter under paragraph (b)(1)(i) of this section;
(ii) the highest cash deposit rate established for any producer
other than a producer for which the Secretary established a combination
rate involving the exporter in question under paragraph (b)(1)(i) of
this section; or
(iii) the ``all-others rate'' described in section 705(c)(5) or
section 735(c)(5) of the Act, as the case may be.
(d) Rates in antidumping proceedings involving nonmarket economy
countries. In an antidumping proceeding involving imports from a
nonmarket economy country, ``rates'' may consist of a single dumping
margin applicable to all exporters and producers.
Subpart B--Antidumping and Countervailing Duty Procedures
Sec. 351.201 Self-initiation.
(a) Introduction. Antidumping and countervailing duty
investigations may be initiated as the result of a petition filed by a
domestic interested party or at the Secretary's own initiative. This
section contains rules regarding the actions the Secretary will take
when the Secretary self-initiates an investigation.
(b) In general. When the Secretary self-initiates an investigation
under section 702(a) or section 732(a) of the Act, the Secretary will
publish in the Federal Register notice of ``Initiation of Antidumping
(Countervailing Duty) Investigation.'' In addition, the Secretary will
notify the Commission at the time of initiation of the investigation,
and will make available to employees of the Commission directly
involved in the proceeding the information upon which the Secretary
based the initiation and which the Commission may consider relevant to
its injury determination.
(c) Persistent dumping monitoring. To the extent practicable, the
Secretary will expedite any antidumping investigation initiated as the
result of a monitoring program established under section 732(a)(2) of
the Act.
Sec. 351.202 Petition requirements.
(a) Introduction. The Secretary normally initiates antidumping and
countervailing duty investigations based on petitions filed by a
domestic interested party. This section contains rules concerning the
contents of a petition, filing requirements, notification of foreign
governments, pre-initiation communications with the Secretary, and
assistance to small businesses in preparing petitions. Petitioners are
also advised to refer to the Commission's regulations concerning the
contents of petitions, currently 19 CFR 207.11.
(b) Contents of petition. A petition requesting the imposition of
antidumping or countervailing duties must contain the following, to the
extent reasonably available to the petitioner:
(1) The name, address, and telephone number of the petitioner and
any person the petitioner represents;
(2) The identity of the industry on behalf of which the petitioner
is filing, including the names, addresses, and telephone numbers of all
other known persons in the industry;
(3) Information relating to the degree of industry support for the
petition, including:
(i) The total volume and value of U.S. production of the domestic
like product; and
(ii) The volume and value of the domestic like product produced by
the petitioner and each domestic producer identified;
(4) A statement indicating whether the petitioner has filed for
relief from imports of the subject merchandise under section 337 of the
Act (19 U.S.C. 1337, 1671a), sections 201 or 301 of the Trade Act of
1974 (19 U.S.C. 2251 or 2411), or section 232 of the Trade Expansion
Act of 1962 (19 U.S.C. 1862);
(5) A detailed description of the subject merchandise that defines
the requested scope of the investigation, including the technical
characteristics and uses of the merchandise and its current U.S. tariff
classification number;
(6) The name of the country in which the subject merchandise is
manufactured or produced and, if the merchandise is imported from a
country other than the country of manufacture or production, the name
of any intermediate country from which the merchandise is imported;
(7) (i) In the case of an antidumping proceeding:
(A) The names and addresses of each person the petitioner believes
sells the subject merchandise at less than fair value and the
proportion of total exports to the United States that each person
accounted for during the most recent 12-month period (if numerous,
provide information at least for persons that, based on publicly
available information, individually accounted for two percent or more
of the exports);
(B) All factual information (particularly documentary evidence)
---- page 27384 ----
relevant to the calculation of the export price and the constructed
export price of the subject merchandise and the normal value of the
foreign like product (if unable to furnish information on foreign sales
or costs, provide information on production costs in the United States,
adjusted to reflect production costs in the country of production of
the subject merchandise);
(C) If the merchandise is from a country that the Secretary has
found to be a nonmarket economy country, factual information relevant
to the calculation of normal value, using a method described in
Sec. 351.408; or
(ii) In the case of a countervailing duty proceeding:
(A) The names and addresses of each person the petitioner believes
benefits from a countervailable subsidy and exports the subject
merchandise to the United States and the proportion of total exports to
the United States that each person accounted for during the most recent
12-month period (if numerous, provide information at least for persons
that, based on publicly available information, individually accounted
for two percent or more of the exports);
(B) The alleged countervailable subsidy and factual information
(particularly documentary evidence) relevant to the alleged
countervailable subsidy, including any law, regulation, or decree under
which it is provided, the manner in which it is paid, and the value of
the subsidy to exporters or producers of the subject merchandise;
(C) If the petitioner alleges an upstream subsidy under section
771A of the Act, factual information regarding:
(1) Countervailable subsidies, other than an export subsidy, that
an authority of the affected country provides to the upstream supplier;
(2) The competitive benefit the countervailable subsidies bestow on
the subject merchandise; and
(3) The significant effect the countervailable subsidies have on
the cost of producing the subject merchandise;
(8) The volume and value of the subject merchandise imported during
the most recent two-year period and any other recent period that the
petitioner believes to be more representative or, if the subject
merchandise was not imported during the two-year period, information as
to the likelihood of its sale for importation;
(9) The name, address, and telephone number of each person the
petitioner believes imports or, if there were no importations, is
likely to import the subject merchandise;
(10) Factual information regarding material injury, threat of
material injury, or material retardation, and causation;
(11) If the petitioner alleges ``critical circumstances'' under
section 703(e)(1) or section 733(e)(1) of the Act and Sec. 351.206,
factual information regarding:
(i) Whether imports of the subject merchandise are likely to
undermine seriously the remedial effect of any order issued under
section 706(a) or section 736(a) of the Act;
(ii) Massive imports of the subject merchandise in a relatively
short period; and
(iii) (A) In an antidumping proceeding, either:
(1) A history of dumping; or
(2) The importer's knowledge that the exporter was selling the
subject merchandise at less than its fair value, and that there would
be material injury by reason of such sales; or
(B) In a countervailing duty proceeding, whether the
countervailable subsidy is inconsistent with the Subsidies Agreement;
and
(12) Any other factual information on which the petitioner relies.
(c) Simultaneous filing and certification. The petitioner must file
a copy of the petition with the Commission and the Secretary on the
same day and so certify in submitting the petition to the Secretary.
Factual information in the petition must be certified, as provided in
Sec. 351.303(g). Other filing requirements are set forth in
Sec. 351.303.
(d) Business proprietary status of information. The Secretary will
treat as business proprietary any factual information for which the
petitioner requests business proprietary treatment and which meets the
requirements of Sec. 351.304.
(e) Amendment of petition. The Secretary may allow timely amendment
of the petition. The petitioner must file an amendment with the
Commission and the Secretary on the same day and so certify in
submitting the amendment to the Secretary. If the amendment consists of
new allegations, the timeliness of the new allegations will be governed
by Sec. 351.301.
(f) Notification of representative of the exporting country. Upon
receipt of a petition, the Secretary will deliver a public version of
the petition (see Sec. 351.304(c)) to a representative in Washington,
DC, of the government of any exporting country named in the petition.
(g) Petition based upon derogation of an international undertaking
on official export credits. In the case of a petition described in
section 702(b)(3) of the Act, the petitioner must file a copy of the
petition with the Secretary of the Treasury, as well as with the
Secretary and the Commission, and must so certify in submitting the
petition to the Secretary.
(h) Assistance to small businesses; additional information. (1) The
Secretary will provide technical assistance to eligible small
businesses, as defined in section 339 of the Act, to enable them to
prepare and file petitions. The Secretary may deny assistance if the
Secretary concludes that the petition, if filed, could not satisfy the
requirements of section 702(c)(1)(A) or section 732(c)(1)(A) of the Act
(whichever is applicable) (see Sec. 351.203).
(2) For additional information concerning petitions, contact the
Director for Policy and Analysis, Import Administration, International
Trade Administration, Room 3093, U.S. Department of Commerce,
Pennsylvania Avenue and 14th Street, NW, Washington, DC 20230; (202)
482-1768.
(i) Pre-initiation communications. (1) In general. During the
period before the Secretary's decision whether to initiate an
investigation, the Secretary will not consider the filing of a notice
of appearance to constitute a communication for purposes of section
702(b)(4)(B) or section 732(b)(3)(B) of the Act.
(2) Consultations with foreign governments in countervailing duty
proceedings. In a countervailing duty proceeding, the Secretary will
invite the government of any exporting country named in the petition
for consultations with respect to the petition. (The information
collection requirements in paragraph (a) of this section have been
approved by the Office of Management and Budget under control number
0625-0105.)
Sec. 351.203 Determination of sufficiency of petition.
(a) Introduction. When a petition is filed under Sec. 351.202, the
Secretary must determine that the petition satisfies the relevant
statutory requirements before initiating an antidumping or
countervailing duty investigation. This section sets forth rules
regarding a determination as to the sufficiency of a petition
(including the determination that a petition is supported by the
domestic industry), the deadline for making the determination, and the
actions to be taken once the Secretary has made the determination.
(b) Determination of sufficiency. (1) In general. Normally, not
later than 20 days after a petition is filed, the Secretary, on the
basis of sources readily
---- page 27385 ----
available to the Secretary, will examine the accuracy and adequacy of
the evidence provided in the petition and determine whether to initiate
an investigation under section 702(c)(1)(A) or section 732(c)(1)(A) of
the Act (whichever is applicable).
(2) Extension where polling required. If the Secretary is required
to poll or otherwise determine support for the petition under section
702(c)(4)(D) or section 732(c)(4)(D) of the Act, the Secretary may, in
exceptional circumstances, extend the 20-day period by the amount of
time necessary to collect and analyze the required information. In no
case will the period between the filing of a petition and the
determination whether to initiate an investigation exceed 40 days.
(c) Notice of initiation and distribution of petition. (1) Notice
of initiation. If the initiation determination of the Secretary under
section 702(c)(1)(A) or section 732(c)(1)(A) of the Act is affirmative,
the Secretary will initiate an investigation and publish in the Federal
Register notice of ``Initiation of Antidumping (Countervailing Duty)
Investigation.'' The Secretary will notify the Commission at the time
of initiation of the investigation and will make available to employees
of the Commission directly involved in the proceeding the information
upon which the Secretary based the initiation and which the Commission
may consider relevant to its injury determinations.
(2) Distribution of petition. As soon as practicable after
initiation of an investigation, the Secretary will provide a public
version of the petition to all known exporters (including producers who
sell for export to the United States) of the subject merchandise. If
the Secretary determines that there is a particularly large number of
exporters involved, instead of providing the public version to all
known exporters, the Secretary may provide the public version to a
trade association of the exporters or, alternatively, may consider the
requirement of the preceding sentence to have been satisfied by the
delivery of a public version of the petition to the government of the
exporting country under Sec. 351.202(f).
(d) Insufficiency of petition. If an initiation determination of
the Secretary under section 702(c)(1)(A) or section 732(c)(1)(A) of the
Act is negative, the Secretary will dismiss the petition, terminate the
proceeding, notify the petitioner in writing of the reasons for the
determination, and publish in the Federal Register notice of
``Dismissal of Antidumping (Countervailing Duty) Petition.''
(e) Determination of industry support. In determining industry
support for a petition under section 702(c)(4) or section 732(c)(4) of
the Act, the following rules will apply:
(1) Measuring production. The Secretary normally will measure
production over a twelve-month period specified by the Secretary, and
may measure production based on either value or volume. Where a party
to the proceeding establishes that production data for the relevant
period, as specified by the Secretary, is unavailable, production
levels may be established by reference to alternative data that the
Secretary determines to be indicative of production levels.
(2) Positions treated as business proprietary information. Upon
request, the Secretary may treat the position of a domestic producer or
workers regarding the petition and any production information supplied
by the producer or workers as business proprietary information under
Sec. 351.105(c)(10).
(3) Positions expressed by workers. The Secretary will consider the
positions of workers and management regarding the petition to be of
equal weight. The Secretary will assign a single weight to the
positions of both workers and management according to the production of
the domestic like product of the firm in which the workers and
management are employed. If the management of a firm expresses a
position in direct opposition to the position of the workers in that
firm, the Secretary will treat the production of that firm as
representing neither support for, nor opposition to, the petition.
(4) Certain positions disregarded. (i) The Secretary will disregard
the position of a domestic producer that opposes the petition if such
producer is related to a foreign producer or to a foreign exporter
under section 771(4)(B)(ii) of the Act, unless such domestic producer
demonstrates to the Secretary's satisfaction that its interests as a
domestic producer would be adversely affected by the imposition of an
antidumping order or a countervailing duty order, as the case may be;
and
(ii) The Secretary may disregard the position of a domestic
producer that is an importer of the subject merchandise, or that is
related to such an importer, under section 771(4)(B)(ii) of the Act.
(5) Polling the industry. In conducting a poll of the industry
under section 702(c)(4)(D)(i) or section 732(c)(4)(D)(i) of the Act,
the Secretary will include unions, groups of workers, and trade or
business associations described in paragraphs (9)(D) and (9)(E) of
section 771 of the Act.
(f) Time limits where petition involves same merchandise as that
covered by an order that has been revoked. Under section 702(c)(1)(C)
or section 732(c)(1)(C) of the Act, and in expediting an investigation
involving subject merchandise for which a prior order was revoked or a
suspended investigation was terminated, the Secretary will consider
``section 751(d)'' as including a predecessor provision.
Sec. 351.204 Time periods and persons examined; voluntary respondents;
exclusions.
(a) Introduction. Because the Act does not specify the precise
period of time that the Secretary should examine in an antidumping or
countervailing duty investigation, this section sets forth rules
regarding the period of investigation (``POI''). In addition, this
section includes rules regarding the selection of persons to be
examined, the treatment of voluntary respondents that are not selected
for individual examination, and the exclusion of persons that the
Secretary ultimately finds are not dumping or are not receiving
countervailable subsidies.
(b) Period of investigation. (1) Antidumping investigation. In an
antidumping investigation, the Secretary normally will examine
merchandise sold during the four most recently completed fiscal
quarters (or, in an investigation involving merchandise imported from a
nonmarket economy country, the two most recently completed fiscal
quarters) as of the month preceding the month in which the petition was
filed or in which the Secretary self-initiated an investigation.
However, the Secretary may examine merchandise sold during any
additional or alternate period that the Secretary concludes is
appropriate.
(2) Countervailing duty investigation. In a countervailing duty
investigation, the Secretary normally will rely on information
pertaining to the most recently completed fiscal year for the
government and exporters or producers in question. If the exporters or
producers have different fiscal years, the Secretary normally will rely
on information pertaining to the most recently completed calendar year.
If the investigation is conducted on an aggregate basis under section
777A(e)(2)(B) of the Act, the Secretary normally will rely on
information pertaining to the most recently completed fiscal year for
the government in question. However, the Secretary may rely on
information for
---- page 27386 ----
any additional or alternate period that the Secretary concludes is
appropriate.
(c) Exporters and producers examined. (1) In general. In an
investigation, the Secretary will attempt to determine an individual
weighted-average dumping margin or individual countervailable subsidy
rate for each known exporter or producer of the subject merchandise.
However, the Secretary may decline to examine a particular exporter or
producer if that exporter or producer and the petitioner agree.
(2) Limited investigation. Notwithstanding paragraph (c)(1) of this
section, the Secretary may limit the investigation by using a method
described in subsection (a), (c), or (e) of section 777A of the Act.
(d) Voluntary respondents. (1) In general. If the Secretary limits
the number of exporters or producers to be individually examined under
section 777A(c)(2) or section 777A(e)(2)(A) of the Act, the Secretary
will examine voluntary respondents (exporters or producers, other than
those initially selected for individual examination) in accordance with
section 782(a) of the Act.
(2) Acceptance of voluntary respondents. The Secretary will
determine, as soon as practicable, whether to examine a voluntary
respondent individually. A voluntary respondent accepted for individual
examination under subparagraph (d)(1) of this section will be subject
to the same requirements as an exporter or producer initially selected
by the Secretary for individual examination under section 777A(c)(2) or
section 777A(e)(2)(A) of the Act, including the requirements of section
782(a) of the Act and, where applicable, the use of the facts available
under section 776 of the Act and Sec. 351.308.
(3) Exclusion of voluntary respondents' rates from all-others rate.
In calculating an all-others rate under section 705(c)(5) or section
735(c)(5) of the Act, the Secretary will exclude weighted-average
dumping margins or countervailable subsidy rates calculated for
voluntary respondents.
(e) Exclusions. (1) In general. The Secretary will exclude from an
affirmative final determination under section 705(a) or section 735(a)
of the Act or an order under section 706(a) or section 736(a) of the
Act, any exporter or producer for which the Secretary determines an
individual weighted-average dumping margin or individual net
countervailable subsidy rate of zero or de minimis.
(2) Preliminary determinations. In an affirmative preliminary
determination under section 703(b) or section 733(b) of the Act, an
exporter or producer for which the Secretary preliminarily determines
an individual weighted-average dumping margin or individual net
countervailable subsidy of zero or de minimis will not be excluded from
the preliminary determination or the investigation. However, the
exporter or producer will not be subject to provisional measures under
section 703(d) or section 733(d) of the Act.
(3) Exclusion of nonproducing exporter. (i) In general. In the case
of an exporter that is not the producer of subject merchandise, the
Secretary normally will limit an exclusion of the exporter to subject
merchandise of those producers that supplied the exporter during the
period of investigation.
(ii) Example. During the period of investigation, Exporter A
exports to the United States subject merchandise produced by Producer
X. Based on an examination of Exporter A, the Secretary determines that
the dumping margins with respect to these exports are de minimis, and
the Secretary excludes Exporter A. Normally, the exclusion of Exporter
A would be limited to subject merchandise produced by Producer X. If
Exporter A began to export subject merchandise produced by Producer Y,
this merchandise would be subject to the antidumping duty order, if
any.
(4) Countervailing duty investigations conducted on an aggregate
basis and requests for exclusion from countervailing duty order. Where
the Secretary conducts a countervailing duty investigation on an
aggregate basis under section 777A(e)(2)(B) of the Act, the Secretary
will consider and investigate requests for exclusion to the extent
practicable. An exporter or producer that desires exclusion from an
order must submit:
(i) A certification by the exporter or producer that it received
zero or de minimis net countervailable subsidies during the period of
investigation;
(ii) If the exporter or producer received a countervailable
subsidy, calculations demonstrating that the amount of net
countervailable subsidies received was de minimis during the period of
investigation;
(iii) If the exporter is not the producer of the subject
merchandise, certifications from the suppliers and producers of the
subject merchandise that those persons received zero or de minimis net
countervailable subsidies during the period of the investigation; and
(iv) A certification from the government of the affected country
that the government did not provide the exporter (or the exporter's
supplier) or producer with more than de minimis net countervailable
subsidies during the period of investigation.
Sec. 351.205 Preliminary determination.
(a) Introduction. A preliminary determination in an antidumping or
countervailing duty investigation constitutes the first point at which
the Secretary may provide a remedy if the Secretary preliminarily finds
that dumping or countervailable subsidization has occurred. The remedy
(sometimes referred to as ``provisional measures'') usually takes the
form of a bonding requirement to ensure payment if antidumping or
countervailing duties ultimately are imposed. Whether the Secretary's
preliminary determination is affirmative or negative, the investigation
continues. This section contains rules regarding deadlines for
preliminary determinations, postponement of preliminary determinations,
notices of preliminary determinations, and the effects of affirmative
preliminary determinations.
(b) Deadline for preliminary determination. The deadline for a
preliminary determination under section 703(b) or section 733(b) of the
Act will be:
(1) Normally not later than 140 days in an antidumping
investigation (65 days in a countervailing duty investigation) after
the date on which the Secretary initiated the investigation (see
section 703(b)(1) or section 733(b)(1)(A) of the Act);
(2) Not later than 190 days in an antidumping investigation (130
days in a countervailing duty investigation) after the date on which
the Secretary initiated the investigation if the Secretary postpones
the preliminary determination at petitioner's request or because the
Secretary determines that the investigation is extraordinarily
complicated (see section 703(c)(1) or section 733(c)(1) of the Act);
(3) In a countervailing duty investigation, not later than 250 days
after the date on which the proceeding began if the Secretary postpones
the preliminary determination due to an upstream subsidy allegation (up
to 310 days if the Secretary also postponed the preliminary
determination at the request of the petitioner or because the Secretary
determined that the investigation is extraordinarily complicated) (see
section 703(c)(1) and section 703(g)(1) of the Act);
(4) Within 90 days after initiation in an antidumping
investigation, and on an expedited basis in a countervailing duty
investigation, where verification has
---- page 27387 ----
been waived (see section 703(b)(3) or section 733(b)(2) of the Act);
(5) In a countervailing duty investigation, on an expedited basis
and within 65 days after the date on which the Secretary initiated the
investigation if the sole subsidy alleged in the petition was the
derogation of an international undertaking on official export credits
(see section 702(b)(3) and section 703(b)(2) of the Act);
(6) In a countervailing duty investigation, not later than 60 days
after the date on which the Secretary initiated the investigation if
the only subsidy under investigation is a subsidy with respect to which
the Secretary received notice from the United States Trade
Representative of a violation of Article 8 of the Subsidies Agreement
(see section 703(b)(5) of the Act); and
(7) In an antidumping investigation, within the deadlines set forth
in section 733(b)(1)(B) of the Act if the investigation involves short
life cycle merchandise (see section 733(b)(1)(B) and section 739 of the
Act).
(c) Contents of preliminary determination and publication of
notice. A preliminary determination will include a preliminary finding
on critical circumstances, if appropriate, under section 703(e)(1) or
section 733(e)(1) of the Act (whichever is applicable). The Secretary
will publish in the Federal Register notice of ``Affirmative (Negative)
Preliminary Antidumping (Countervailing Duty) Determination,''
including the rates, if any, and an invitation for argument consistent
with Sec. 351.309.
(d) Effect of affirmative preliminary determination. If the
preliminary determination is affirmative, the Secretary will take the
actions described in section 703(d) or section 733(d) of the Act
(whichever is applicable). In making information available to the
Commission under section 703(d)(3) or section 733(d)(3) of the Act, the
Secretary will make available to the Commission and to employees of the
Commission directly involved in the proceeding the information upon
which the Secretary based the preliminary determination and which the
Commission may consider relevant to its injury determination.
(e) Postponement at the request of the petitioner. A petitioner
must submit a request for postponement of the preliminary determination
(see section 703(c)(1)(A) or section 733(c)(1)(A) of the Act) 25 days
or more before the scheduled date of the preliminary determination, and
must state the reasons for the request. The Secretary will grant the
request, unless the Secretary finds compelling reasons to deny the
request.
(f) Notice of postponement. (1) If the Secretary decides to
postpone the preliminary determination at the request of the petitioner
or because the investigation is extraordinarily complicated, the
Secretary will notify all parties to the proceeding not later than 20
days before the scheduled date of the preliminary determination, and
will publish in the Federal Register notice of ``Postponement of
Preliminary Antidumping (Countervailing Duty) Determination,'' stating
the reasons for the postponement (see section 703(c)(2) or section
733(c)(2) of the Act).
(2) If the Secretary decides to postpone the preliminary
determination due to an allegation of upstream subsidies, the Secretary
will notify all parties to the proceeding not later than the scheduled
date of the preliminary determination and will publish in the Federal
Register notice of ``Postponement of Preliminary Countervailing Duty
Determination,'' stating the reasons for the postponement.
Sec. 351.206 Critical circumstances.
(a) Introduction. Generally, antidumping or countervailing duties
are imposed on entries of merchandise made on or after the date on
which the Secretary first imposes provisional measures (most often the
date on which notice of an affirmative preliminary determination is
published in the Federal Register). However, if the Secretary finds
that ``critical circumstances'' exist, duties may be imposed
retroactively on merchandise entered up to 90 days before the
imposition of provisional measures. This section contains procedural
and substantive rules regarding allegations and findings of critical
circumstances.
(b) In general. If a petitioner submits to the Secretary a written
allegation of critical circumstances, with reasonably available factual
information supporting the allegation, 21 days or more before the
scheduled date of the Secretary's final determination, or on the
Secretary's own initiative in a self-initiated investigation, the
Secretary will make a finding whether critical circumstances exist, as
defined in section 705(a)(2) or section 735(a)(3) of the Act (whichever
is applicable).
(c) Preliminary finding. (1) If the petitioner submits an
allegation of critical circumstances 30 days or more before the
scheduled date of the Secretary's final determination, the Secretary,
based on the available information, will make a preliminary finding
whether there is a reasonable basis to believe or suspect that critical
circumstances exist, as defined in section 703(e)(1) or section
733(e)(1) of the Act (whichever is applicable).
(2) The Secretary will issue the preliminary finding:
(i) Not later than the preliminary determination, if the allegation
is submitted 20 days or more before the scheduled date of the
preliminary determination; or
(ii) Within 30 days after the petitioner submits the allegation, if
the allegation is submitted later than 20 days before the scheduled
date of the preliminary determination. The Secretary will notify the
Commission and publish in the Federal Register notice of the
preliminary finding.
(d) Suspension of liquidation. If the Secretary makes an
affirmative preliminary finding of critical circumstances, the
provisions of section 703(e)(2) or section 733(e)(2) of the Act
(whichever is applicable) regarding the retroactive suspension of
liquidation will apply.
(e) Final finding. For any allegation of critical circumstances
submitted 21 days or more before the scheduled date of the Secretary's
final determination, the Secretary will make a final finding on
critical circumstances, and will take appropriate action under section
705(c)(4) or section 735(c)(4) of the Act (whichever is applicable).
(f) Findings in self-initiated investigations. In a self-initiated
investigation, the Secretary will make preliminary and final findings
on critical circumstances without regard to the time limits in
paragraphs (c) and (e) of this section.
(g) Information regarding critical circumstances. The Secretary may
request the Commissioner of Customs to compile information on an
expedited basis regarding entries of the subject merchandise if, at any
time after the initiation of an investigation, the Secretary makes the
findings described in section 702(e) or section 732(e) of the Act
(whichever is applicable) regarding the possible existence of critical
circumstances.
(h) Massive imports. (1) In determining whether imports of the
subject merchandise have been massive under section 705(a)(2)(B) or
section 735(a)(3)(B) of the Act, the Secretary normally will examine:
(i) The volume and value of the imports;
(ii) Seasonal trends; and
(iii) The share of domestic consumption accounted for by the
imports.
(2) In general, unless the imports during the ``relatively short
period'' (see
---- page 27388 ----
paragraph (i) of this section) have increased by at least 15 percent
over the imports during an immediately preceding period of comparable
duration, the Secretary will not consider the imports massive.
(i) Relatively short period. Under section 705(a)(2)(B) or section
735(a)(3)(B) of the Act, the Secretary normally will consider a
``relatively short period'' as the period beginning on the date the
proceeding begins and ending at least three months later. However, if
the Secretary finds that importers, or exporters or producers, had
reason to believe, at some time prior to the beginning of the
proceeding, that a proceeding was likely, then the Secretary may
consider a period of not less than three months from that earlier time.
Sec. 351.207 Termination of investigation.
(a) Introduction. ``Termination'' is a term of art that refers to
the end of an antidumping or countervailing duty proceeding in which an
order has not yet been issued. The Act establishes a variety of
mechanisms by which an investigation may be terminated, most of which
are dealt with in this section. For rules regarding the termination of
a suspended investigation following a review under section 751 of the
Act, see Sec. 351.222.
(b) Withdrawal of petition; self-initiated investigations. (1) In
general. The Secretary may terminate an investigation under section
704(a)(1)(A) or section 734(a)(1)(A) (withdrawal of petition) or under
section 704(k) or section 734(k) (self-initiated investigation) of the
Act, provided that the Secretary concludes that termination is in the
public interest. If the Secretary terminates an investigation, the
Secretary will publish in the Federal Register notice of ``Termination
of Antidumping (Countervailing Duty) Investigation,'' together with,
when appropriate, a copy of any correspondence with the petitioner
forming the basis of the withdrawal and the termination. (For the
treatment in a subsequent investigation of records compiled in an
investigation in which the petition was withdrawn, see section
704(a)(1)(B) or section 734(a)(1)(B) of the Act.)
(2) Withdrawal of petition based on acceptance of quantitative
restriction agreements. In addition to the requirements of paragraph
(b)(1) of this section, if a termination is based on the acceptance of
an understanding or other kind of agreement to limit the volume of
imports into the United States of the subject merchandise, the
Secretary will apply the provisions of section 704(a)(2) or section
734(a)(2) of the Act (whichever is applicable) regarding public
interest and consultations with consuming industries and producers and
workers.
(c) Lack of interest. The Secretary may terminate an investigation
based upon lack of interest (see section 782(h)(1) of the Act). Where
the Secretary terminates an investigation under this paragraph, the
Secretary will publish the notice described in paragraph (b)(1) of this
section.
(d) Negative determination. An investigation terminates
automatically upon publication in the Federal Register of the
Secretary's negative final determination or the Commission's negative
preliminary or final determination.
(e) End of suspension of liquidation. When an investigation
terminates, if the Secretary previously ordered suspension of
liquidation, the Secretary will order the suspension ended on the date
of publication of the notice of termination referred to in paragraph
(b) of this section or on the date of publication of a negative
determination referred to in paragraph (d) of this section, and will
instruct the Customs Service to release any cash deposit or bond.
Sec. 351.208 Suspension of investigation.
(a) Introduction. In addition to the imposition of duties, the Act
also permits the Secretary to suspend an antidumping or countervailing
duty investigation by accepting a suspension agreement (referred to in
the WTO Agreements as an ``undertaking''). Briefly, in a suspension
agreement, the exporters and producers or the foreign government agree
to modify their behavior so as to eliminate dumping or subsidization or
the injury caused thereby. If the Secretary accepts a suspension
agreement, the Secretary will ``suspend'' the investigation and
thereafter will monitor compliance with the agreement. This section
contains rules for entering into suspension agreements and procedures
for suspending an investigation.
(b) In general. The Secretary may suspend an investigation under
section 704 or section 734 of the Act and this section.
(c) Definition of ``substantially all.'' Under section 704 and
section 734 of the Act, exporters that account for ``substantially
all'' of the merchandise means exporters and producers that have
accounted for not less than 85 percent by value or volume of the
subject merchandise during the period for which the Secretary is
measuring dumping or countervailable subsidization in the investigation
or such other period that the Secretary considers representative.
(d) Monitoring. In monitoring a suspension agreement under section
704(c), section 734(c), or section 734(l) of the Act (agreements to
eliminate injurious effects or to restrict the volume of imports), the
Secretary will not be obliged to ascertain on a continuing basis the
prices in the United States of the subject merchandise or of domestic
like products.
(e) Exports not to increase during interim period. The Secretary
will not accept a suspension agreement under section 704(b)(2) or
section 734(b)(1) of the Act (the cessation of exports) unless the
agreement ensures that the quantity of the subject merchandise exported
during the interim period set forth in the agreement does not exceed
the quantity of the merchandise exported during a period of comparable
duration that the Secretary considers representative.
(f) Procedure for suspension of investigation. (1) Submission of
proposed suspension agreement. (i) In general. As appropriate, the
exporters and producers or, in an antidumping investigation involving a
nonmarket economy country or a countervailing duty investigation, the
government, must submit to the Secretary a proposed suspension
agreement within:
(A) In an antidumping investigation, 15 days after the date of
issuance of the preliminary determination, or
(B) In a countervailing duty investigation, 7 days after the date
of issuance of the preliminary determination.
(ii) Postponement of final determination. Where a proposed
suspension agreement is submitted in an antidumping investigation, an
exporter or producer or, in an investigation involving a nonmarket
economy country, the government, may request postponement of the final
determination under section 735(a)(2) of the Act (see Sec. 351.210(e)).
Where the final determination in a countervailing duty investigation is
postponed under section 703(g)(2) or section 705(a)(1) of the Act (see
Sec. 351.210(b)(3) and Sec. 351.210(i)), the time limits in paragraphs
(f)(1)(i), (f)(2)(i), (f)(3), and (g)(1) of this section applicable to
countervailing duty investigations will be extended to coincide with
the time limits in such paragraphs applicable to antidumping
investigations.
(iii) Special rule for regional industry determination. If the
Commission makes a regional industry determination in its final
affirmative determination under
---- page 27389 ----
section 705(b) or section 735(b) of the Act but not in its preliminary
affirmative determination under section 703(a) or section 733(a) of the
Act, the exporters and producers or, in an antidumping investigation
involving a nonmarket economy country or a countervailing duty
investigation, the government, must submit to the Secretary any
proposed suspension agreement within 15 days of the publication in the
Federal Register of the antidumping or countervailing duty order.
(2) Notification and consultation. In fulfilling the requirements
of section 704 or section 734 of the Act (whichever is applicable), the
Secretary will take the following actions:
(i) In general. The Secretary will notify all parties to the
proceeding of the proposed suspension of an investigation and provide
to the petitioner a copy of the suspension agreement preliminarily
accepted by the Secretary (the agreement must contain the procedures
for monitoring compliance and a statement of the compatibility of the
agreement with the requirements of section 704 or section 734 of the
Act) within:
(A) In an antidumping investigation, 30 days after the date of
issuance of the preliminary determination, or
(B) In a countervailing duty investigation, 15 days after the date
of issuance of the preliminary determination; or
(ii) Special rule for regional industry determination. If the
Commission makes a regional industry determination in its final
affirmative determination under section 705(b) or section 735(b) of the
Act but not in its preliminary affirmative determination under section
703(a) or section 733(a) of the Act, the Secretary, within 15 days of
the submission of a proposed suspension agreement under paragraph
(f)(1)(iii) of this section, will notify all parties to the proceeding
of the proposed suspension agreement and provide to the petitioner a
copy of the agreement preliminarily accepted by the Secretary (such
agreement must contain the procedures for monitoring compliance and a
statement of the compatibility of the agreement with the requirements
of section 704 or section 734 of the Act); and
(iii) Consultation. The Secretary will consult with the petitioner
concerning the proposed suspension of the investigation.
(3) Opportunity for comment. The Secretary will provide all
interested parties, an industrial user of the subject merchandise or a
representative consumer organization, as described in section 777(h) of
the Act, and United States government agencies an opportunity to submit
written argument and factual information concerning the proposed
suspension of the investigation within:
(i) In an antidumping investigation, 50 days after the date of
issuance of the preliminary determination,
(ii) In a countervailing duty investigation, 35 days after the date
of issuance of the preliminary determination, or
(iii) In a regional industry case described in paragraph
(f)(1)(iii) of this section, 35 days after the date of issuance of an
order.
(g) Acceptance of suspension agreement. (1) The Secretary may
accept an agreement to suspend an investigation within:
(i) In an antidumping investigation, 60 days after the date of
issuance of the preliminary determination,
(ii) In a countervailing duty investigation, 45 days after the date
of issuance of the preliminary determination, or
(iii) In a regional industry case described in paragraph
(f)(1)(iii) of this section, 45 days after the date of issuance of an
order.
(2) If the Secretary accepts an agreement to suspend an
investigation, the Secretary will take the actions described in section
704(f), section 704(m)(3), section 734(f), or section 734(l)(3) of the
Act (whichever is applicable), and will publish in the Federal Register
notice of ``Suspension of Antidumping (Countervailing Duty)
Investigation,'' including the text of the agreement. If the Secretary
has not already published notice of an affirmative preliminary
determination, the Secretary will include that notice. In accepting an
agreement, the Secretary may rely on factual or legal conclusions the
Secretary reached in or after the affirmative preliminary
determination.
(h) Continuation of investigation. (1) A request to the Secretary
under section 704(g) or section 734(g) of the Act for the continuation
of the investigation must be made in writing. In addition, the request
must be simultaneously filed with the Commission, and the requester
must so certify in submitting the request to the Secretary.
(2) If the Secretary and the Commission make affirmative final
determinations in an investigation that has been continued, the
suspension agreement will remain in effect in accordance with the
factual and legal conclusions in the Secretary's final determination.
If either the Secretary or the Commission makes a negative final
determination, the agreement will have no force or effect.
(i) Merchandise imported in excess of allowed quantity. (1) The
Secretary may instruct the Customs Service not to accept entries, or
withdrawals from warehouse, for consumption of subject merchandise in
excess of any quantity allowed by a suspension agreement under section
704 or section 734 of the Act, including any quantity allowed during
the interim period (see paragraph (e) of this section).
(2) Imports in excess of the quantity allowed by a suspension
agreement, including any quantity allowed during the interim period
(see paragraph (e) of this section), may be exported or destroyed under
Customs Service supervision, except that if the agreement is under
section 704(c)(3) or section 734(l) of the Act (restrictions on the
volume of imports), the excess merchandise, with the approval of the
Secretary, may be held for future opening under the agreement by
placing it in a foreign trade zone or by entering it for warehouse.
Sec. 351.209 Violation of suspension agreement.
(a) Introduction. A suspension agreement remains in effect until
the underlying investigation is terminated (see Secs. 351.207 and
351.222). However, if the Secretary finds that a suspension agreement
has been violated or no longer meets the requirements of the Act, the
Secretary may either cancel or revise the agreement. This section
contains rules regarding cancellation and revision of suspension
agreements.
(b) Immediate determination. If the Secretary determines that a
signatory has violated a suspension agreement, the Secretary, without
providing interested parties an opportunity to comment, will:
(1) Order the suspension of liquidation in accordance with section
704(i)(1)(A) or section 734(i)(1)(A) of the Act (whichever is
applicable) of all entries of the subject merchandise entered, or
withdrawn from warehouse, for consumption on or after the later of:
(i) 90 days before the date of publication of the notice of
cancellation of the agreement; or
(ii) The date of first entry, or withdrawal from warehouse, for
consumption of the merchandise the sale or export of which was in
violation of the agreement;
(2) If the investigation was not completed under section 704(g) or
section 734(g) of the Act, resume the investigation as if the Secretary
had made an affirmative preliminary determination on the date of
publication
---- page 27390 ----
of the notice of cancellation and impose provisional measures by
instructing the Customs Service to require for each entry of the
subject merchandise suspended under paragraph (b)(1) of this section a
cash deposit or bond at the rates determined in the affirmative
preliminary determination;
(3) If the investigation was completed under section 704(g) or
section 734(g) of the Act, issue an antidumping order or countervailing
duty order (whichever is applicable) and, for all entries subject to
suspension of liquidation under paragraph (b)(1) of this section,
instruct the Customs Service to require for each entry of the
merchandise suspended under this paragraph a cash deposit at the rates
determined in the affirmative final determination;
(4) Notify all persons who are or were parties to the proceeding,
the Commission, and, if the Secretary determines that the violation was
intentional, the Commissioner of Customs; and
(5) Publish in the Federal Register notice of ``Antidumping
(Countervailing Duty) Order (Resumption of Antidumping (Countervailing
Duty) Investigation); Cancellation of Suspension Agreement.''
(c) Determination after notice and comment. (1) If the Secretary
has reason to believe that a signatory has violated a suspension
agreement, or that an agreement no longer meets the requirements of
section 704(d)(1) or section 734(d) of the Act, but the Secretary does
not have sufficient information to determine that a signatory has
violated the agreement (see paragraph (b) of this section), the
Secretary will publish in the Federal Register notice of ``Invitation
for Comment on Antidumping (Countervailing Duty) Suspension
Agreement.''
(2) After publication of the notice inviting comment and after
consideration of comments received the Secretary will:
(i) Determine whether any signatory has violated the suspension
agreement; or
(ii) Determine whether the suspension agreement no longer meets the
requirements of section 704(d)(1) or section 734(d) of the Act.
(3) If the Secretary determines that a signatory has violated the
suspension agreement, the Secretary will take appropriate action as
described in paragraphs (b)(1) through (b)(5) of this section.
(4) If the Secretary determines that a suspension agreement no
longer meets the requirements of section 704(d)(1) or section 734(d) of
the Act, the Secretary will:
(i) Take appropriate action as described in paragraphs (b)(1)
through (b)(5) of this section; except that, under paragraph (b)(1)(ii)
of this section, the Secretary will order the suspension of liquidation
of all entries of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the later of:
(A) 90 days before the date of publication of the notice of
suspension of liquidation; or
(B) The date of first entry, or withdrawal from warehouse, for
consumption of the merchandise the sale or export of which does not
meet the requirements of section 704(d)(1) of the Act;
(ii) Continue the suspension of investigation by accepting a
revised suspension agreement under section 704(b) or section 734(b) of
the Act (whether or not the Secretary accepted the original agreement
under such section) that, at the time the Secretary accepts the revised
agreement, meets the applicable requirements of section 704(d)(1) or
section 734(d) of the Act, and publish in the Federal Register notice
of ``Revision of Agreement Suspending Antidumping (Countervailing Duty)
Investigation''; or
(iii) Continue the suspension of investigation by accepting a
revised suspension agreement under section 704(c), section 734(c), or
section 734(l) of the Act (whether or not the Secretary accepted the
original agreement under such section) that, at the time the Secretary
accepts the revised agreement, meets the applicable requirements of
section 704(d)(1) or section 734(d) of the Act, and publish in the
Federal Register notice of ``Revision of Agreement Suspending
Antidumping (Countervailing Duty) Investigation.'' If the Secretary
continues to suspend an investigation based on a revised agreement
accepted under section 704(c), section 734(c), or section 734(l) of the
Act, the Secretary will order suspension of liquidation to begin. The
suspension will not end until the Commission completes any requested
review of the revised agreement under section 704(h) or section 734(h)
of the Act. If the Commission receives no request for review within 20
days after the date of publication of the notice of the revision, the
Secretary will order the suspension of liquidation ended on the 21st
day after the date of publication, and will instruct the Customs
Service to release any cash deposit or bond. If the Commission
undertakes a review under section 704(h) or section 734(h) of the Act,
the provisions of sections 704(h)(2) and (3) and sections 734(h)(2) and
(3) of the Act will apply.
(5) If the Secretary decides neither to consider the suspension
agreement violated nor to revise the agreement, the Secretary will
publish in the Federal Register notice of the Secretary's decision
under paragraph (c)(2) of this section, including a statement of the
factual and legal conclusions on which the decision is based.
(d) Additional signatories. If the Secretary decides that a
suspension agreement no longer will completely eliminate the injurious
effect of exports to the United States of subject merchandise under
section 704(c)(1) or section 734(c)(1) of the Act, or that the
signatory exporters no longer account for substantially all of the
subject merchandise, the Secretary may revise the agreement to include
additional signatory exporters.
(e) Definition of ``violation.'' Under this section, ``violation''
means noncompliance with the terms of a suspension agreement caused by
an act or omission of a signatory, except, at the discretion of the
Secretary, an act or omission which is inadvertent or inconsequential.
Sec. 351.210 Final determination.
(a) Introduction. A ``final determination'' in an antidumping or
countervailing duty investigation constitutes a final decision by the
Secretary as to whether dumping or countervailable subsidization is
occurring. If the Secretary's final determination is affirmative, in
most instances the Commission will issue a final injury determination
(except in certain countervailing duty investigations). Also, if the
Secretary's preliminary determination was negative but the final
determination is affirmative, the Secretary will impose provisional
measures. If the Secretary's final determination is negative, the
proceeding, including the injury investigation conducted by the
Commission, terminates. This section contains rules regarding deadlines
for, and postponement of, final determinations, contents of final
determinations, and the effects of final determinations.
(b) Deadline for final determination. The deadline for a final
determination under section 705(a)(1) or section 735(a)(1) of the Act
will be:
(1) Normally, not later than 75 days after the date of the
Secretary's preliminary determination (see section 705(a)(1) or section
735(a)(1) of the Act);
(2) In an antidumping investigation, not later than 135 days after
the date of publication of the preliminary
---- page 27391 ----
determination if the Secretary postpones the final determination at the
request of:
(i) The petitioner, if the preliminary determination was negative
(see section 735(a)(2)(B) of the Act); or
(ii) Exporters or producers who account for a significant
proportion of exports of the subject merchandise, if the preliminary
determination was affirmative (see section 735(a)(2)(A) of the Act);
(3) In a countervailing duty investigation, not later than 165 days
after the preliminary determination, if, after the preliminary
determination, the Secretary decides to investigate an upstream subsidy
allegation and concludes that additional time is needed to investigate
the allegation (see section 703(g)(2) of the Act); or
(4) In a countervailing duty investigation, the same date as the
date of the final antidumping determination, if:
(i) In a situation where the Secretary simultaneously initiated
antidumping and countervailing duty investigations on the subject
merchandise (from the same or other countries), the petitioner requests
that the final countervailing duty determination be postponed to the
date of the final antidumping determination; and
(ii) If the final countervailing duty determination is not due on a
later date because of postponement due to an allegation of upstream
subsidies under section 703(g) of the Act (see section 705(a)(1) of the
Act).
(c) Contents of final determination and publication of notice. The
final determination will include, if appropriate, a final finding on
critical circumstances under section 705(a)(2) or section 735(a)(3) of
the Act (whichever is applicable). The Secretary will publish in the
Federal Register notice of ``Affirmative (Negative) Final Antidumping
(Countervailing Duty) Determination,'' including the rates, if any.
(d) Effect of affirmative final determination. If the final
determination is affirmative, the Secretary will take the actions
described in section 705(c)(1) or section 735(c)(1) of the Act
(whichever is applicable). In addition, in the case of a countervailing
duty investigation involving subject merchandise from a country that is
not a Subsidies Agreement country, the Secretary will instruct the
Customs Service to require a cash deposit, as provided in section
706(a)(3) of the Act, for each entry of the subject merchandise
entered, or withdrawn from warehouse, for consumption on or after the
date of publication of the order under section 706(a) of the Act.
(e) Request for postponement of final antidumping determination.
(1) In general. A request to postpone a final antidumping determination
under section 735(a)(2) of the Act (see paragraph (b)(2) of this
section) must be submitted in writing within the scheduled date of the
final determination. The Secretary may grant the request, unless the
Secretary finds compelling reasons to deny the request.
(2) Requests by exporters. In the case of a request submitted under
paragraph (e)(1) of this section by exporters who account for a
significant proportion of exports of subject merchandise (see section
735(a)(2)(A) of the Act), the Secretary will not grant the request
unless those exporters also submit a request described in the last
sentence of section 733(d) of the Act (extension of provisional
measures from a 4-month period to not more than 6 months).
(f) Deferral of decision concerning upstream subsidization to
review. Notwithstanding paragraph (b)(3) of this section, if the
petitioner so requests in writing and the preliminary countervailing
duty determination was affirmative, the Secretary, instead of
postponing the final determination, may defer a decision concerning
upstream subsidization until the conclusion of the first administrative
review of a countervailing duty order, if any (see section
703(g)(2)(B)(i) of the Act).
(g) Notification of postponement. If the Secretary postpones a
final determination under paragraph (b)(2), (b)(3), or (b)(4) of this
section, the Secretary will notify promptly all parties to the
proceeding of the postponement, and will publish in the Federal
Register notice of ``Postponement of Final Antidumping (Countervailing
Duty) Determination,'' stating the reasons for the postponement.
(h) Termination of suspension of liquidation in a countervailing
duty investigation. If the Secretary postpones a final countervailing
duty determination, the Secretary will end any suspension of
liquidation ordered in the preliminary determination not later than 120
days after the date of publication of the preliminary determination,
and will not resume it unless and until the Secretary publishes a
countervailing duty order.
(i) Postponement of final countervailing duty determination for
simultaneous investigations. A request by the petitioner to postpone a
final countervailing duty determination to the date of the final
antidumping determination must be submitted in writing within five days
of the date of publication of the preliminary countervailing duty
determination (see section 705(a)(1) and paragraph (b)(4) of this
section).
(j) Commission access to information. If the final determination is
affirmative, the Secretary will make available to the Commission and to
employees of the Commission directly involved in the proceeding the
information upon which the Secretary based the final determination and
that the Commission may consider relevant to its injury determination
(see section 705(c)(1)(A) or section 735(c)(1)(A) of the Act).
(k) Effect of negative final determination. An investigation
terminates upon publication in the Federal Register of the Secretary's
or the Commission's negative final determination, and the Secretary
will take the relevant actions described in section 705(c)(2) or
section 735(c)(2) of the Act (whichever is applicable).
Sec. 351.211 Antidumping order and countervailing duty order.
(a) Introduction. The Secretary issues an order when both the
Secretary and the Commission (except in certain countervailing duty
investigations) have made final affirmative determinations. The
issuance of an order ends the investigative phase of a proceeding.
Generally, upon the issuance of an order, importers no longer may post
bonds as security for antidumping or countervailing duties, but instead
must make a cash deposit of estimated duties. An order remains in
effect until it is revoked. This section contains rules regarding the
issuance of orders in general, as well as special rules for orders
where the Commission has found a regional industry to exist.
(b) In general. Not later than seven days after receipt of notice
of an affirmative final injury determination by the Commission under
section 705(b) or section 735(b) of the Act, or, in a countervailing
duty proceeding involving subject merchandise from a country not
entitled to an injury test (see Sec. 351.101(b)), simultaneously with
publication of an affirmative final countervailing duty determination
by the Secretary, the Secretary will publish in the Federal Register an
``Antidumping Order'' or ``Countervailing Duty Order'' that:
(1) Instructs the Customs Service to assess antidumping duties or
countervailing duties (whichever is applicable) on the subject
merchandise, in accordance with the Secretary's instructions at the
completion of each review requested under Sec. 351.213(b)
(administrative review), Sec. 351.214(b) (new shipper review), or
Sec. 351.215(b) (expedited antidumping review), or if a
---- page 27392 ----
review is not requested, in accordance with the Secretary's assessment
instructions under Sec. 351.212(c);
(2) Instructs the Customs Service to require a cash deposit of
estimated antidumping or countervailing duties at the rates included in
the Secretary's final determination; and
(3) Orders the suspension of liquidation ended for all entries of
the subject merchandise entered, or withdrawn from warehouse, for
consumption before the date of publication of the Commission's final
determination, and instructs the Customs Service to release the cash
deposit or bond on those entries, if in its final determination, the
Commission found a threat of material injury or material retardation of
the establishment of an industry, unless the Commission in its final
determination also found that, absent the suspension of liquidation
ordered under section 703(d)(2) or section 733(d)(2) of the Act, it
would have found material injury (see section 706(b) or section 736(b)
of the Act).
Sec. 351.212 Assessment of antidumping and countervailing duties;
provisional measures deposit cap; interest on certain overpayments and
underpayments.
(a) Introduction. Unlike the systems of some other countries, the
United States uses a ``retrospective'' assessment system under which
final liability for antidumping and countervailing duties is determined
after merchandise is imported. Generally, the amount of duties to be
assessed is determined in a review of the order covering a discrete
period of time. If a review is not requested, duties are assessed at
the rate established in the completed review covering the most recent
prior period or, if no review has been completed, the cash deposit rate
applicable at the time merchandise was entered. This section contains
rules regarding the assessment of duties, the provisional measures
deposit cap, and interest on over- or undercollections of estimated
duties.
(b) Assessment of antidumping and countervailing duties as the
result of a review. (1) Antidumping duties. If the Secretary has
conducted a review of an antidumping order under Sec. 351.213
(administrative review), Sec. 351.214 (new shipper review), or
Sec. 351.215 (expedited antidumping review), the Secretary normally
will calculate an assessment rate for each importer of subject
merchandise covered by the review. The Secretary normally will
calculate the assessment rate by dividing the dumping margin found on
the subject merchandise examined by the entered value of such
merchandise for normal customs duty purposes. The Secretary then will
instruct the Customs Service to assess antidumping duties by applying
the assessment rate to the entered value of the merchandise.
(2) Countervailing duties. If the Secretary has conducted a review
of a countervailing duty order under Sec. 351.213 (administrative
review) or Sec. 351.214 (new shipper review), the Secretary normally
will instruct the Customs Service to assess countervailing duties by
applying the rates included in the final results of the review to the
entered value of the merchandise.
(c) Automatic assessment of antidumping and countervailing duties
if no review is requested. (1) If the Secretary does not receive a
timely request for an administrative review of an order (see paragraph
(b)(1), (b)(2), or (b)(3) of Sec. 351.213), the Secretary, without
additional notice, will instruct the Customs Service to:
(i) Assess antidumping duties or countervailing duties, as the case
may be, on the subject merchandise described in Sec. 351.213(e) at
rates equal to the cash deposit of, or bond for, estimated antidumping
duties or countervailing duties required on that merchandise at the
time of entry, or withdrawal from warehouse, for consumption; and
(ii) To continue to collect the cash deposits previously ordered.
(2) If the Secretary receives a timely request for an
administrative review of an order (see paragraph (b)(1), (b)(2), or
(b)(3) of Sec. 351.213), the Secretary will instruct the Customs
Service to assess antidumping duties or countervailing duties, and to
continue to collect cash deposits, on the merchandise not covered by
the request in accordance with paragraph (c)(1) of this section.
(3) The automatic assessment provisions of paragraphs (c)(1) and
(c)(2) of this section will not apply to subject merchandise that is
the subject of a new shipper review (see Sec. 351.214) or an expedited
antidumping review (see Sec. 351.215).
(d) Provisional measures deposit cap. This paragraph applies to
subject merchandise entered, or withdrawn from warehouse, for
consumption before the date of publication of the Commission's notice
of an affirmative final injury determination or, in a countervailing
duty proceeding that involves merchandise from a country that is not
entitled to an injury test, the date of the Secretary's notice of an
affirmative final countervailing duty determination. If the amount of
duties that would be assessed by applying the rates included in the
Secretary's affirmative preliminary or affirmative final antidumping or
countervailing duty determination (``provisional duties'') is different
from the amount of duties that would be assessed by applying the
assessment rate under paragraphs (b)(1) and (b)(2) of this section
(``final duties''), the Secretary will instruct the Customs Service to
disregard the difference to the extent that the provisional duties are
less than the final duties, and to assess antidumping or countervailing
duties at the assessment rate if the provisional duties exceed the
final duties.
(e) Interest on certain overpayments and underpayments. Under
section 778 of the Act, the Secretary will instruct the Customs Service
to calculate interest for each entry on or after the publication of the
order from the date that a cash deposit is required to be deposited for
the entry through the date of liquidation of the entry.
(f) Special rule for regional industry cases. (1) In general. If
the Commission, in its final injury determination, found a regional
industry under section 771(4)(C) of the Act, the Secretary may direct
that duties not be assessed on subject merchandise of a particular
exporter or producer if the Secretary determines that:
(i) The exporter or producer did not export subject merchandise for
sale in the region concerned during or after the Department's period of
investigation;
(ii) The exporter or producer has certified that it will not export
subject merchandise for sale in the region concerned in the future so
long as the antidumping or countervailing duty order is in effect; and
(iii) No subject merchandise of the exporter or producer was
entered into the United States outside of the region and then sold into
the region during or after the Department's period of investigation.
(2) Procedures for obtaining an exception from the assessment of
duties. (i) Request for exception. An exporter or producer seeking an
exception from the assessment of duties under paragraph (f)(1) of this
section must request, subject to the provisions of Sec. 351.213 or
Sec. 351.214, an administrative review or a new shipper review to
determine whether subject merchandise of the exporter or producer in
question should be excepted from the assessment of duties under
paragraph (f)(1) of this section. The exporter or producer making the
request may request that the review be limited to a determination as to
whether the requirements of paragraph (f)(1) of this section are
satisfied. The request for a review must be accompanied by:
---- page 27393 ----
(A) A certification by the exporter or producer that it did not
export subject merchandise for sale in the region concerned during or
after the Department's period of investigation, and that it will not do
so in the future so long as the antidumping or countervailing duty
order is in effect; and
(B) A certification from each of the exporter's or producer's U.S.
importers of the subject merchandise that no subject merchandise of
that exporter or producer was entered into the United States outside
such region and then sold into the region during or after the
Department's period of investigation.
(ii) Limited review. If the Secretary initiates an administrative
review or a new shipper review based on a request for review that
includes a request for an exception from the assessment of duties under
paragraph (f)(2)(i) of this section, the Secretary, if requested, may
limit the review to a determination as to whether an exception from the
assessment of duties should be granted under paragraph (f)(1) of this
section.
(3) Exception granted. If, in the final results of the
administrative review or the new shipper review, the Secretary
determines that the requirements of paragraph (f)(1) of this section
are satisfied, the Secretary will instruct the Customs Service to
liquidate, without regard to antidumping or countervailing duties
(whichever is appropriate), entries of subject merchandise of the
exporter or producer concerned.
(4) Exception not granted. If, in the final results of the
administrative review or the new shipper review, the Secretary
determines that the requirements of paragraph (f)(1) are not satisfied,
the Secretary:
(i) Will issue assessment instructions to the Customs Service in
accordance with paragraph (b) of this section; or
(ii) If the review was limited to a determination as to whether an
exception from the assessment of duties should be granted, the
Secretary will instruct the Customs Service to assess duties in
accordance with paragraph (f)(1) or (f)(2) of this section, whichever
is appropriate (automatic assessment if no review is requested).
Sec. 351.213 Administrative review of orders and suspension agreements
under section 751(a)(1) of the Act.
(a) Introduction. As noted in Sec. 351.212(a), the United States
has a ``retrospective'' assessment system under which final liability
for antidumping and countervailing duties is determined after
merchandise is imported. Although duty liability may be determined in
the context of other types of reviews, the most frequently used
procedure for determining final duty liability is the administrative
review procedure under section 751(a)(1) of the Act. This section
contains rules regarding requests for administrative reviews and the
conduct of such reviews.
(b) Request for administrative review. (1) Each year during the
anniversary month of the publication of an antidumping or
countervailing duty order, a domestic interested party or an interested
party described in section 771(9)(B) of the Act (foreign government)
may request in writing that the Secretary conduct an administrative
review under section 751(a)(1) of the Act of specified individual
exporters or producers covered by an order (except for a countervailing
duty order in which the investigation or prior administrative review
was conducted on an aggregate basis), if the requesting person states
why the person desires the Secretary to review those particular
exporters or producers.
(2) During the same month, an exporter or producer covered by an
order (except for a countervailing duty order in which the
investigation or prior administrative review was conducted on an
aggregate basis) may request in writing that the Secretary conduct an
administrative review of only that person.
(3) During the same month, an importer of the merchandise may
request in writing that the Secretary conduct an administrative review
of only an exporter or producer (except for a countervailing duty order
in which the investigation or prior administrative review was conducted
on an aggregate basis) of the subject merchandise imported by that
importer.
(4) Each year during the anniversary month of the publication of a
suspension of investigation, an interested party may request in writing
that the Secretary conduct an administrative review of all producers or
exporters covered by an agreement on which the suspension of
investigation was based.
(c) Deferral of administrative review. (1) In general. The
Secretary may defer the initiation of an administrative review, in
whole or in part, for one year if:
(i) The request for administrative review is accompanied by a
request that the Secretary defer the review, in whole or in part; and
(ii) None of the following persons objects to the deferral: the
exporter or producer for which deferral is requested, an importer of
subject merchandise of that exporter or producer, a domestic interested
party and, in a countervailing duty proceeding, the foreign government.
(2) Timeliness of objection to deferral. An objection to a deferral
of the initiation of administrative review under paragraph (c)(1)(ii)
of this section must be submitted within 15 days after the end of the
anniversary month in which the administrative review is requested.
(3) Procedures and deadlines. If the Secretary defers the
initiation of an administrative review, the Secretary will publish
notice of the deferral in the Federal Register. The Secretary will
initiate the administrative review in the month immediately following
the next anniversary month, and the deadline for issuing preliminary
results of review (see paragraph (h)(1) of this section) and submitting
factual information (see Sec. 351.302(b)(2)) will run from the last day
of the next anniversary month.
(d) Rescission of administrative review. (1) Withdrawal of request
for review. The Secretary will rescind an administrative review under
this section, in whole or in part, if a party that requested a review
withdraws the request within 90 days of the date of publication of
notice of initiation of the requested review. The Secretary may extend
this time limit if the Secretary decides that it is reasonable to do
so.
(2) Self-initiated review. The Secretary may rescind an
administrative review that was self-initiated by the Secretary.
(3) No shipments. The Secretary may rescind an administrative
review, in whole or only with respect to a particular exporter or
producer, if the Secretary concludes that, during the period covered by
the review, there were no entries, exports, or sales of the subject
merchandise, as the case may be.
(4) Notice of rescission. If the Secretary rescinds an
administrative review (in whole or in part), the Secretary will publish
in the Federal Register notice of ``Rescission of Antidumping
(Countervailing Duty) Administrative Review'' or, if appropriate,
``Partial Rescission of Antidumping (Countervailing Duty)
Administrative Review.''
(e) Period of review. (1) Antidumping proceedings. (i) Except as
provided in paragraph (e)(1)(ii) of this section, an administrative
review under this section normally will cover, as appropriate, entries,
exports, or sales of the subject merchandise during the 12 months
immediately preceding the most recent anniversary month.
(ii) For requests received during the first anniversary month after
publication of an order or suspension of investigation, an
administrative review
---- page 27394 ----
under this section will cover, as appropriate, entries, exports, or
sales during the period from the date of suspension of liquidation
under this part or suspension of investigation to the end of the month
immediately preceding the first anniversary month.
(2) Countervailing duty proceedings. (i) Except as provided in
paragraph (e)(2)(ii) of this section, an administrative review under
this section normally will cover entries or exports of the subject
merchandise during the most recently completed calendar year. If the
review is conducted on an aggregate basis, the Secretary normally will
cover entries or exports of the subject merchandise during the most
recently completed fiscal year for the government in question.
(ii) For requests received during the first anniversary month after
publication of an order or suspension of investigation, an
administrative review under this section will cover entries or exports,
as appropriate, during the period from the date of suspension of
liquidation under this part or suspension of investigation to the end
of the most recently completed calendar or fiscal year as described in
paragraph (e)(2)(i) of this section.
(f) Voluntary respondents. In an administrative review, the
Secretary will examine voluntary respondents in accordance with section
782(a) of the Act and Sec. 351.204(d).
(g) Procedures. The Secretary will conduct an administrative review
under this section in accordance with Sec. 351.221.
(h) Time limits. (1) In general. The Secretary will issue
preliminary results of review (see Sec. 351.221(b)(4)) within 245 days
after the last day of the anniversary month of the order or suspension
agreement for which the administrative review was requested, and final
results of review (see Sec. 351.221(b)(5)) within 120 days after the
date on which notice of the preliminary results was published in the
Federal Register.
(2) Exception. If the Secretary determines that it is not
practicable to complete the review within the time specified in
paragraph (h)(1) of this section, the Secretary may extend the 245-day
period to 365 days and may extend the 120-day period to 180 days. If
the Secretary does not extend the time for issuing preliminary results,
the Secretary may extend the time for issuing final results from 120
days to 300 days.
(i) Possible cancellation or revision of suspension agreement. If
during an administrative review the Secretary determines or has reason
to believe that a signatory has violated a suspension agreement or that
the agreement no longer meets the requirements of section 704 or
section 734 of the Act (whichever is applicable), the Secretary will
take appropriate action under section 704(i) or section 734(i) of the
Act and Sec. 351.209. The Secretary may suspend the time limit in
paragraph (h) of this section while taking action under Sec. 351.209.
(j) Absorption of antidumping duties. (1) During any administrative
review covering all or part of a period falling between the first and
second or third and fourth anniversary of the publication of an
antidumping order under Sec. 351.211, or a determination under
Sec. 351.218(d) (sunset review), the Secretary, if requested by a
domestic interested party within 30 days of the date of publication of
the notice of initiation of the review, will determine whether
antidumping duties have been absorbed by an exporter or producer
subject to the review if the subject merchandise is sold in the United
States through an importer that is affiliated with such exporter or
producer. The request must include the name(s) of the exporter or
producer for which the inquiry is requested.
(2) For transition orders defined in section 751(c)(6) of the Act,
the Secretary will apply paragraph (j)(1) of this section to any
administrative review initiated in 1996 or 1998.
(3) In determining under paragraph (j)(1) of this section whether
antidumping duties have been absorbed, the Secretary will examine the
antidumping duties calculated in the administrative review in which the
absorption inquiry is requested.
(4) The Secretary will notify the Commission of the Secretary's
determination if:
(i) In the case of an administrative review other than one to which
paragraph (j)(2) of this section applies, the administrative review
covers all or part of a time period falling between the third and
fourth anniversary month of an order; or
(ii) In the case of an administrative review to which paragraph
(j)(2) of this section applies, the Secretary initiated the
administrative review in 1998.
(k) Administrative reviews of countervailing duty orders conducted
on an aggregate basis. (1) Request for zero rate. Where the Secretary
conducts an administrative review of a countervailing duty on an
aggregate basis under section 777A(e)(2)(B) of the Act, the Secretary
will consider and review requests for individual assessment and cash
deposit rates of zero to the extent practicable. An exporter or
producer that desires a zero rate must submit:
(i) A certification by the exporter or producer that it received
zero or de minimis net countervailable subsidies during the period of
review;
(ii) If the exporter or producer received a countervailable
subsidy, calculations demonstrating that the amount of net
countervailable subsidies received was de minimis during the period of
review;
(iii) If the exporter is not the producer of the subject
merchandise, certifications from the suppliers and producers of the
subject merchandise that those persons received zero or de minimis net
countervailable subsidies during the period of the review; and
(iv) A certification from the government of the affected country
that the government did not provide the exporter (or the exporter's
supplier) or producer with more than de minimis net countervailable
subsidies during the period of review.
(2) Application of country-wide subsidy rate. With the exception of
assessment and cash deposit rates of zero determined under paragraph
(k)(1) of this section, if, in the final results of an administrative
review under this section of a countervailing duty order, the Secretary
calculates a single country-wide subsidy rate under section
777A(e)(2)(B) of the Act, that rate will supersede, for cash deposit
purposes, all rates previously determined in the countervailing duty
proceeding in question.
(l) Exception from assessment in regional industry cases. For
procedures relating to a request for the exception from the assessment
of antidumping or countervailing duties in a regional industry case,
see Sec. 351.212(f).
Sec. 351.214 New shipper reviews under section 751(a)(2)(B) of the
Act.
(a) Introduction. The URAA established a new procedure by which so-
called ``new shippers'' can obtain their own individual dumping margin
or countervailable subsidy rate on an expedited basis. In general, a
new shipper is an exporter or producer that did not export, and is not
affiliated with an exporter or producer that did export, to the United
States during the period of investigation. This section contains rules
regarding requests for new shipper reviews and procedures for
conducting such reviews. In addition, this section contains rules
regarding requests for expedited reviews by noninvestigated exporters
in certain countervailing duty proceedings and procedures for
conducting such reviews.
---- page 27395 ----
(b) Request for new shipper review. (1) Requirement of sale or
export. Subject to the requirements of section 751(a)(2)(B) of the Act
and this section, an exporter or producer may request a new shipper
review if it has exported, or sold for export, subject merchandise to
the United States.
(2) Contents of request. A request for a new shipper review must
contain the following:
(i) If the person requesting the review is both the exporter and
producer of the merchandise, a certification that the person requesting
the review did not export subject 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;
(ii) If the person requesting the review is the exporter, but not
the producer, of the subject merchandise:
(A) The certification described in paragraph (b)(2)(i) of this
section; and
(B) A certification from the person that produced or supplied the
subject merchandise to the person requesting the review that that
producer or supplier did not export the subject 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;
(iii)(A) A certification that, since the investigation was
initiated, such exporter or producer has never been affiliated with any
exporter or producer who exported the subject merchandise to the United
States (or in the case of a regional industry, who exported the subject
merchandise for sale in the region concerned) during the period of
investigation, including those not individually examined during the
investigation;
(B) In an antidumping proceeding involving imports from a nonmarket
economy country, a certification that the export activities of such
exporter or producer are not controlled by the central government;
(iv) Documentation establishing:
(A) The date on which subject merchandise of the exporter or
producer making the request was first entered, or withdrawn from
warehouse, for consumption, or, if the exporter or producer cannot
establish the date of first entry, the date on which the exporter or
producer first shipped the subject merchandise for export to the United
States;
(B) The volume of that and subsequent shipments; and
(C) The date of the first sale to an unaffiliated customer in the
United States; and
(v) In the case of a review of a countervailing duty order, a
certification that the exporter or producer has informed the government
of the exporting country that the government will be required to
provide a full response to the Department's questionnaire.
(c) Deadline for requesting review. An exporter or producer may
request a new shipper review within one year of the date referred to in
paragraph (b)(2)(iv)(A) of this section.
(d) Time for new shipper review. (1) In general. The Secretary will
initiate a new shipper review under this section in the calendar month
immediately following the anniversary month or the semiannual
anniversary month if the request for the review is made during the 6-
month period ending with the end of the anniversary month or the
semiannual anniversary month (whichever is applicable).
(2) Semiannual anniversary month. The semiannual anniversary month
is the calendar month which is 6 months after the anniversary month.
(3) Example. An order is published in January. The anniversary
month would be January, and the semiannual anniversary month would be
July. If the Secretary received a request for a new shipper review at
any time during the period February-July, the Secretary would initiate
a new shipper review in August. If the Secretary received a request for
a new shipper review at any time during the period August-January, the
Secretary would initiate a new shipper review in February.
(e) Suspension of liquidation; posting bond or security. When the
Secretary initiates a new shipper review under this section, the
Secretary will direct the Customs Service to suspend liquidation of any
unliquidated entries of the subject merchandise from the relevant
exporter or producer, and to allow, at the option of the importer, the
posting, until the completion of the review, of a bond or security in
lieu of a cash deposit for each entry of the subject merchandise.
(f) Rescission of new shipper review. (1) Withdrawal of request for
review. The Secretary may rescind a new shipper review under this
section, in whole or in part, if a party that requested a review
withdraws its request not later than 60 days after the date of
publication of notice of initiation of the requested review.
(2) Absence of entry and sale to an unaffiliated customer. The
Secretary may rescind a new shipper review, in whole or in part, if the
Secretary concludes that:
(i) As of the end of the normal period of review referred to in
paragraph (g) of this section, there has not been an entry and sale to
an unaffiliated customer in the United States of subject merchandise;
and
(ii) An expansion of the normal period of review to include an
entry and sale to an unaffiliated customer in the United States of
subject merchandise would be likely to prevent the completion of the
review within the time limits set forth in paragraph (i) of this
section.
(3) Notice of Rescission. If the Secretary rescinds a new shipper
review (in whole or in part), the Secretary will publish in the Federal
Register notice of ``Rescission of Antidumping (Countervailing Duty)
New Shipper Review'' or, if appropriate, ``Partial Rescission of
Antidumping (Countervailing Duty) New Shipper Review.''
(g) Period of review. (1) Antidumping proceeding. (i) In general.
Except as provided in paragraph (g)(1)(ii) of this section, in an
antidumping proceeding, a new shipper review under this section
normally will cover, as appropriate, entries, exports, or sales during
the following time periods:
(A) If the new shipper review was initiated in the month
immediately following the anniversary month, the twelve-month period
immediately preceding the anniversary month; or
(B) If the new shipper review was initiated in the month
immediately following the semiannual anniversary month, the period of
review will be the six-month period immediately preceding the
semiannual anniversary month.
(ii) Exceptions. (A) If the Secretary initiates a new shipper
review under this section in the month immediately following the first
anniversary month, the review normally will cover, as appropriate,
entries, exports, or sales during the period from the date of
suspension of liquidation under this part to the end of the month
immediately preceding the first anniversary month.
(B) If the Secretary initiates a new shipper review under this
section in the month immediately following the first semiannual
anniversary month, the review normally will cover, as appropriate,
entries, exports, or sales during the period from the date of
suspension of liquidation under this part to the end of the month
immediately preceding the first semiannual anniversary month.
---- page 27396 ----
(2) Countervailing duty proceeding. In a countervailing duty
proceeding, the period of review for a new shipper review under this
section will be the same period as that specified in Sec. 351.213(e)(2)
for an administrative review.
(h) Procedures. The Secretary will conduct a new shipper review
under this section in accordance with Sec. 351.221.
(i) Time limits. (1) In general. Unless the time limit is waived
under paragraph (j)(3) of this section, the Secretary will issue
preliminary results of review (see Sec. 351.221(b)(4)) within 180 days
after the date on which the new shipper review was initiated, and final
results of review (see Sec. 351.221(b)(5)) within 90 days after the
date on which the preliminary results were issued.
(2) Exception. If the Secretary concludes that a new shipper review
is extraordinarily complicated, the Secretary may extend the 180-day
period to 300 days, and may extend the 90-day period to 150 days.
(j) Multiple reviews. Notwithstanding any other provision of this
subpart, if a review (or a request for a review) under Sec. 351.213
(administrative review), Sec. 351.214 (new shipper review),
Sec. 351.215 (expedited antidumping review), or Sec. 351.216 (changed
circumstances review) covers merchandise of an exporter or producer
subject to a review (or to a request for a review) under this section,
the Secretary may, after consulting with the exporter or producer:
(1) Rescind, in whole or in part, a review in progress under this
subpart;
(2) Decline to initiate, in whole or in part, a review under this
subpart; or
(3) Where the requesting party agrees in writing to waive the time
limits of paragraph (i) of this section, conduct concurrent reviews, in
which case all other provisions of this section will continue to apply
with respect to the exporter or producer.
(k) Expedited reviews in countervailing duty proceedings for
noninvestigated exporters. (1) Request for review. If, in a
countervailing duty investigation, the Secretary limited the number of
exporters or producers to be individually examined under section
777A(e)(2)(A) of the Act, an exporter that the Secretary did not select
for individual examination or that the Secretary did not accept as a
voluntary respondent (see Sec. 351.204(d)) may request a review under
this paragraph (k). An exporter must submit a request for review within
30 days of the date of publication in the Federal Register of the
countervailing duty order. A request must be accompanied by a
certification that:
(i) The requester exported the subject merchandise to the United
States during the period of investigation;
(ii) The requester is not affiliated with an exporter or producer
that the Secretary individually examined in the investigation; and
(iii) The requester has informed the government of the exporting
country that the government will be required to provide a full response
to the Department's questionnaire.
(2) Initiation of review. (i) In general. The Secretary will
initiate a review in the month following the month in which a request
for review is due under paragraph (k)(1) of this section.
(ii) Example. The Secretary publishes a countervailing duty order
on January 15. An exporter would have to submit a request for a review
by February 14. The Secretary would initiate a review in March.
(3) Conduct of review. The Secretary will conduct a review under
this paragraph (k) in accordance with the provisions of this section
applicable to new shipper reviews, subject to the following exceptions:
(i) The period of review will be the period of investigation used
by the Secretary in the investigation that resulted in the publication
of the countervailing duty order (see Sec. 351.204(b)(2));
(ii) The Secretary will not permit the posting of a bond or
security in lieu of a cash deposit under paragraph (e) of this section;
(iii) The final results of a review under this paragraph (k) will
not be the basis for the assessment of countervailing duties; and
(iv) The Secretary may exclude from the countervailing duty order
in question any exporter for which the Secretary determines an
individual net countervailable subsidy rate of zero or de minimis (see
Sec. 351.204(e)(1)), provided that the Secretary has verified the
information on which the exclusion is based.
(l) Exception from assessment in regional industry cases. For
procedures relating to a request for the exception from the assessment
of antidumping or countervailing duties in a regional industry case,
see Sec. 351.212(f).
Sec. 351.215 Expedited antidumping review and security in lieu of
estimated duty under section 736(c) of the Act.
(a) Introduction. Exporters and producers individually examined in
an investigation normally cannot obtain a review of entries until an
administrative review is requested. In addition, when an antidumping
order is published, importers normally must begin to make a cash
deposit of estimated antidumping duties upon the entry of subject
merchandise. Section 736(c), however, establishes a special procedure
under which exporters or producers may request an expedited review, and
bonds, rather than cash deposits, may continue to be posted for a
limited period of time if several criteria are satisfied. This section
contains rules regarding requests for expedited antidumping reviews and
the procedures applicable to such reviews.
(b) In general. If the Secretary determines that the criteria of
section 736(c)(1) of the Act are satisfied, the Secretary:
(1) May permit, for not more than 90 days after the date of
publication of an antidumping order, the posting of a bond or other
security instead of the deposit of estimated antidumping duties
required under section 736(a)(3) of the Act; and
(2) Will initiate an expedited antidumping review. Before making
such a determination, the Secretary will make business proprietary
information available, and will provide interested parties with an
opportunity to file written comments, in accordance with section
736(c)(4) of the Act.
(c) Procedures. The Secretary will conduct an expedited antidumping
review under this section in accordance with Sec. 351.221.
Sec. 351.216 Changed circumstances review under section 751(b) of the
Act.
(a) Introduction. Section 751(b) of the Act provides for what is
known as a ``changed circumstances'' review. This section contains
rules regarding requests for changed circumstances reviews and
procedures for conducting such reviews.
(b) Requests for changed circumstances review. At any time, an
interested party may request a changed circumstances review, under
section 751(b) of the Act, of an order or a suspended investigation.
Within 45 days after the date on which a request is filed, the
Secretary will determine whether to initiate a changed circumstances
review.
(c) Limitation on changed circumstances review. Unless the
Secretary finds that good cause exists, the Secretary will not review a
final determination in an investigation (see section 705(a) or section
735(a) of the Act) or a suspended investigation (see section 704 or
section 734 of the Act) less than 24 months after the date of
publication of notice of the final determination or the suspension of
the investigation.
---- page 27397 ----
(d) Procedures. If the Secretary decides that changed circumstances
sufficient to warrant a review exist, the Secretary will conduct a
changed circumstances review in accordance with Sec. 351.221.
(e) Time limits. The Secretary will issue final results of review
(see Sec. 351.221(b)(5)) within 270 days after the date on which the
changed circumstances review is initiated, or within 45 days if all
parties to the proceeding agree to the outcome of the review.
Sec. 351.217 Reviews to implement results of subsidies enforcement
proceeding under section 751(g) of the Act.
(a) Introduction. Section 751(g) provides a mechanism for
incorporating into an ongoing countervailing duty proceeding the
results of certain subsidy-related disputes under the WTO Subsidies
Agreement. Where the United States, in the WTO, has successfully
challenged the ``nonactionable'' (e.g., noncountervailable) status of a
foreign subsidy, or where the United States has successfully challenged
a prohibited or actionable subsidy, the Secretary may conduct a review
to determine the effect, if any, of the successful outcome on an
existing countervailing duty order or suspended investigation. This
section contains rules regarding the initiation and conduct of reviews
under section 751(g).
(b) Violations of Article 8 of the Subsidies Agreement. If:
(1) The Secretary receives notice from the Trade Representative of
a violation of Article 8 of the Subsidies Agreement;
(2) The Secretary has reason to believe that merchandise subject to
an existing countervailing duty order or suspended investigation is
benefiting from the subsidy or subsidy program found to have been in
violation of Article 8; and
(3) No administrative review is in progress, the Secretary will
initiate an Article 8 violation review of the order or suspended
investigation to determine whether the subject merchandise benefits
from the subsidy or subsidy program found to have been in violation of
Article 8 of the Subsidies Agreement.
(c) Withdrawal of subsidy or imposition of countermeasures. If the
Trade Representative notifies the Secretary that, under Article 4 or
Article 7 of the Subsidies Agreement:
(1)(i)(A) The United States has imposed countermeasures; and
(B) Such countermeasures are based on the effects in the United
States of imports of merchandise that is the subject of a
countervailing duty order; or
(ii) A WTO member country has withdrawn a countervailable subsidy
provided with respect to merchandise subject to a countervailing duty
order, then
(2) The Secretary will initiate an Article 4/Article 7 review of
the order to determine if the amount of estimated duty to be deposited
should be adjusted or the order should be revoked.
(d) Procedures. The Secretary will conduct an Article 8 violation
review or an Article 4/Article 7 review under this section in
accordance with Sec. 351.221.
(e) Expedited reviews. The Secretary will conduct reviews under
this section on an expedited basis.
Sec. 351.218 Sunset reviews under section 751(c) of the Act.
(a) Introduction. The URAA added a new procedure, commonly referred
to as ``sunset reviews,'' in section 751(c) of the Act. In general, no
later than once every five years, the Secretary must determine whether
dumping or countervailable subsidies would be likely to continue or
resume if an order were revoked or a suspended investigation were
terminated. The Commission must conduct a similar review to determine
whether injury would be likely to continue or resume in the absence of
an order or suspended investigation. If the determinations under
section 751(c) of both the Secretary and the Commission are
affirmative, the order (or suspended investigation) remains in place.
If either determination is negative, the order will be revoked (or the
suspended investigation will be terminated). This section contains
rules regarding the procedures for sunset reviews.
(b) In general. The Secretary will conduct a sunset review, under
section 751(c) of the Act, of each antidumping and countervailing duty
order and suspended investigation, and, under section 752(b) or section
752(c) (whichever is applicable), will determine whether revocation of
an antidumping or countervailing duty order or termination of a
suspended investigation would be likely to lead to continuation or
recurrence of dumping or a countervailable subsidy.
(c) Notice of initiation of review; early initiation. (1) Initial
sunset review. No later than 30 days before the fifth anniversary date
of an order or suspension of an investigation (see section 751(c)(1) of
the Act), the Secretary will publish a notice of initiation of a sunset
review (see section 751(c)(2) of the Act).
(2) Subsequent sunset reviews. In the case of an order or suspended
investigation that is continued following a sunset review initiated
under paragraph (c)(1) of this section, no later than 30 days before
the fifth anniversary of the date of the last determination by the
Commission to continue the order or suspended investigation, the
Secretary will publish a notice of initiation of a sunset review (see
section 751(c)(2) of the Act).
(3) Early initiation. The Secretary may publish a notice of
initiation at an earlier date than the dates described in paragraph (c)
(1) and (2) of this section if a domestic interested party demonstrates
to the Secretary's satisfaction that an early initiation would promote
administrative efficiency. However, if the Secretary determines that
the domestic interested party that requested early initiation is a
related party or an importer under section 771(4)(B) of the Act and
Sec. 351.203(e)(4), the Secretary may decline the request for early
initiation.
(4) Transition orders. The Secretary will initiate sunset reviews
of transition orders, as defined in section 751(c)(6)(C) of the Act, in
accordance with section 751(c)(6) of the Act.
(d) Conduct of review. Upon receipt of responses to the notice of
initiation that the Secretary deems adequate to conduct a sunset
review, the Secretary will conduct a sunset review in accordance with
Sec. 351.221.
(e) Time limits. (1) In general. Unless the review has been
completed under section 751(c)(3) of the Act (no or inadequate
response) or, under section 751(c)(4)(B) of the Act, all respondent
interested parties waived their participation in the Secretary's sunset
review, the Secretary will issue final results of review within 240
days after the date on which the review was initiated. If the Secretary
concludes that the sunset review is extraordinarily complicated (see
section 751(c)(5)(C) of the Act), the Secretary may extend the period
for issuing final results by not more than 90 days.
(2) Transition orders. The time limits described in paragraph
(e)(1) of this section will not apply to a sunset review of a
transition order (see section 751(c)(6) of the Act).
Sec. 351.219 Reviews of countervailing duty orders in connection with
an investigation under section 753 of the Act.
(a) Introduction. Section 753 of the Act is a transition provision
for countervailing duty orders that were issued under section 303 of
the Act without an injury determination by the Commission. Under the
Subsidies Agreement, one country may not impose countervailing duties
on imports from another WTO Member without first
---- page 27398 ----
making a determination that such imports have caused injury to a
domestic industry. Section 753 provides a mechanism for providing an
injury test with respect to those ``no-injury'' orders under section
303 that apply to merchandise from WTO Members. This section contains
rules regarding requests for section 753 investigations by a domestic
interested party; and the procedures that the Department will follow in
reviewing a countervailing duty order and providing the Commission with
advice regarding the amount and nature of a countervailable subsidy.
(b) Notification of domestic interested parties. The Secretary will
notify directly domestic interested parties as soon as possible after
the opportunity arises for requesting an investigation by the
Commission under section 753 of the Act.
(c) Initiation and conduct of section 753 review. Where the
Secretary deems it necessary in order to provide to the Commission
information on the amount or nature of a countervailable subsidy (see
section 753(b)(2) of the Act), the Secretary may initiate a section 753
review of the countervailing duty order in question. The Secretary will
conduct a section 753 review in accordance with Sec. 351.221.
Sec. 351.220 Countervailing duty review at the direction of the
President under section 762 of the Act.
At the direction of the President or a designee, the Secretary will
conduct a review under section 762(a)(1) of the Act to determine if a
countervailable subsidy is being provided with respect to merchandise
subject to an understanding or other kind of quantitative restriction
agreement accepted under section 704(a)(2) or section 704(c)(3) of the
Act. The Secretary will conduct a review under this section in
accordance with Sec. 351.221. If the Secretary's final results of
review under this section and the Commission's final results of review
under section 762(a)(2) of the Act are both affirmative, the Secretary
will issue a countervailing duty order and order suspension of
liquidation in accordance with section 762(b) of the Act.
Sec. 351.221 Review procedures.
(a) Introduction. The procedures for reviews are similar to those
followed in investigations. This section details the procedures
applicable to reviews in general, as well as procedures that are unique
to certain types of reviews.
(b) In general. After receipt of a timely request for a review, or
on the Secretary's own initiative when appropriate, the Secretary will:
(1) Promptly publish in the Federal Register notice of initiation
of the review;
(2) Before or after publication of notice of initiation of the
review, send to appropriate interested parties or other persons (or, if
appropriate, a sample of interested parties or other persons)
questionnaires requesting factual information for the review;
(3) Conduct, if appropriate, a verification under Sec. 351.307;
(4) Issue preliminary results of review, based on the available
information, and publish in the Federal Register notice of the
preliminary results of review that include:
(i) the rates determined, if the review involved the determination
of rates; and
(ii) an invitation for argument consistent with Sec. 351.309;
(5) Issue final results of review and publish in the Federal
Register notice of the final results of review that include the rates
determined, if the review involved the determination of rates;
(6) If the type of review in question involves a determination as
to the amount of duties to be assessed, promptly after publication of
the notice of final results instruct the Customs Service to assess
antidumping duties or countervailing duties (whichever is applicable)
on the subject merchandise covered by the review, except as otherwise
provided in Sec. 351.106(c) with respect to de minimis duties; and
(7) If the review involves a revision to the cash deposit rates for
estimated antidumping duties or countervailing duties, instruct the
Customs Service to collect cash deposits at the revised rates on future
entries.
(c) Special rules. (1) Administrative reviews and new shipper
reviews. In an administrative review under section 751(a)(1) of the Act
and Sec. 351.213 and a new shipper review under section 751(a)(2)(B) of
the Act and Sec. 351.214 the Secretary:
(i) Will publish the notice of initiation of the review no later
than the last day of the month following the anniversary month or the
semiannual anniversary month (as the case may be); and
(ii) Normally will send questionnaires no later than 30 days after
the date of publication of the notice of initiation.
(2) Expedited antidumping review. In an expedited antidumping
review under section 736(c) of the Act and Sec. 351.215, the Secretary:
(i) Will include in the notice of initiation of the review an
invitation for argument consistent with Sec. 351.309, and a statement
that the Secretary is permitting the posting of a bond or other
security instead of a cash deposit of estimated antidumping duties;
(ii) Will instruct the Customs Service to accept, instead of the
cash deposit of estimated antidumping duties under section 736(a)(3) of
the Act, a bond for each entry of the subject merchandise entered, or
withdrawn from warehouse, for consumption on or after the date of
publication of the notice of initiation of the investigation and
through the date not later than 90 days after the date of publication
of the order; and
(iii) Will not issue preliminary results of review.
(3) Changed circumstances review. In a changed circumstances review
under section 751(b) of the Act and Sec. 351.216, the Secretary:
(i) Will include in the preliminary results of review and the final
results of review a description of any action the Secretary proposed
based on the preliminary or final results;
(ii) May combine the notice of initiation of the review and the
preliminary results of review in a single notice if the Secretary
concludes that expedited action is warranted; and
(iii) May refrain from issuing questionnaires under paragraph
(b)(2) of this section.
(4) Article 8 Violation review and Article 4/Article 7 review. In
an Article 8 Violation review or an Article 4/Article 7 review under
section 751(g) of the Act and Sec. 351.217, the Secretary:
(i) Will include in the notice of initiation of the review an
invitation for argument consistent with Sec. 351.309 and will notify
all parties to the proceeding at the time the Secretary initiates the
review;
(ii) Will not issue preliminary results of review; and
(iii) In the final results of review will indicate the amount, if
any, by which the estimated duty to be deposited should be adjusted,
and, in an Article 4/Article 7 review, any action, including
revocation, that the Secretary will take based on the final results.
(5) Sunset review. In a sunset review under section 751(c) of the
Act and Sec. 351.218:
(i) The notice of initiation of the review will contain a request
for the information described in section 751(c)(2) of the Act; and
(ii) The Secretary, without issuing preliminary results of review,
may issue final results of review under paragraphs (3) or (4) of
subsection 751(c) of the Act if the conditions of those paragraphs are
satisfied.
(6) Section 753 review. In a section 753 review under section 753
of the Act and Sec. 351.219, the Secretary:
---- page 27399 ----
(i) Will include in the notice of initiation of the review an
invitation for argument consistent with Sec. 351.309, and will notify
all parties to the proceeding at the time the Secretary initiates the
review; and
(ii) May decline to issue preliminary results of review.
(7) Countervailing duty review at the direction of the President.
In a countervailing duty review at the direction of the President under
section 762 of the Act and Sec. 351.220, the Secretary will:
(i) Include in the notice of initiation of the review a description
of the merchandise, the period under review, and a summary of the
available information which, if accurate, would support the imposition
of countervailing duties;
(ii) Notify the Commission of the initiation of the review and the
preliminary results of review;
(iii) Include in the preliminary results of review the
countervailable subsidy, if any, during the period of review and a
description of official changes in the subsidy programs made by the
government of the affected country that affect the estimated
countervailable subsidy; and
(iv) Include in the final results of review the countervailable
subsidy, if any, during the period of review and a description of
official changes in the subsidy programs, made by the government of the
affected country not later than the date of publication of the notice
of preliminary results, that affect the estimated countervailable
subsidy.
Sec. 351.222 Revocation of orders; termination of suspended
investigations.
(a) Introduction. ``Revocation'' is a term of art that refers to
the end of an antidumping or countervailing proceeding in which an
order has been issued. ``Termination'' is the companion term for the
end of a proceeding in which the investigation was suspended due to the
acceptance of a suspension agreement. Generally, a revocation or
termination may occur only after the Department or the Commission have
conducted one or more reviews under section 751 of the Act. This
section contains rules regarding requirements for a revocation or
termination; and procedures that the Department will follow in
determining whether to revoke an order or terminate a suspended
investigation.
(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) It is not likely that those persons will in the future sell
the subject merchandise at less than normal value.
(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) It is not likely that those persons will in the future sell
the subject merchandise at less than normal value; and
(iii) 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 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.
(3) Revocation of nonproducing exporter. In the case of an exporter
that is not the producer of subject merchandise, the Secretary normally
will revoke an order in part under paragraph (b)(2) of this section
only with respect to subject merchandise produced or supplied by those
companies that supplied the exporter during the time period that formed
the basis for the revocation.
(c) Revocation or termination based on absence of countervailable
subsidy. (1) The Secretary may revoke a countervailing duty order or
terminate a suspended countervailing duty investigation if the
Secretary concludes that:
(i) The government of the affected country has eliminated all
countervailable subsidies on the subject merchandise by abolishing for
the subject merchandise, for a period of at least three consecutive
years, all programs that the Secretary has found countervailable;
(ii) It is not likely that the government of the affected country
will in the future reinstate for the subject merchandise those programs
or substitute other countervailable programs; and
(iii) Exporters and producers of the subject merchandise are not
continuing to receive any net countervailable subsidy from an abolished
program referred to in paragraph (c)(1)(i) of this section.
(2) The Secretary may revoke a countervailing duty order or
terminate a suspended countervailing duty 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 not applied for or
received any net countervailable subsidy on the subject merchandise for
a period of at least five consecutive years; and
(ii) It is not likely that those persons will in the future apply
for or receive any net countervailable subsidy on the subject
merchandise from those programs the Secretary has found countervailable
in any proceeding involving the affected country or from other
countervailable programs.
(3) The Secretary may revoke a countervailing duty order in part if
the Secretary concludes that:
(i) One or more exporters or producers covered by the order have
not applied for or received any net countervailable subsidy on the
subject merchandise for a period of at least five consecutive years;
(ii) It is not likely that those persons will in the future apply
for or receive any net countervailable subsidy on the subject
merchandise from those programs the Secretary has found countervailable
in any proceeding involving the affected country or from other
countervailable programs; and
(iii) Except for exporters or producers that the Secretary
previously has determined have not received any net countervailable
subsidy on the subject merchandise, the exporters or producers agree in
writing to their immediate reinstatement 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,
has received any net countervailable subsidy on the subject
merchandise.
(4) Revocation of nonproducing exporter. In the case of an exporter
that is not the producer of subject merchandise, the Secretary normally
will revoke an order in part under paragraph (c)(3) of this section
only with respect to subject merchandise produced or supplied by those
companies that supplied the exporter during the time period that formed
the basis for the revocation.
(d) Treatment of unreviewed intervening years. (1) In general. The
Secretary will not revoke an order or terminate a suspended
investigation under paragraphs (b) or (c) of this section unless the
Secretary has
---- page 27400 ----
conducted a review under this subpart of the first and third (or fifth)
years of the three-and five-year consecutive time periods referred to
in those paragraphs. The Secretary need not have conducted a review of
an intervening year (see paragraph (d)(2) of this section). However,
except in the case of a revocation or termination under paragraph
(c)(1) of this section (government abolition of countervailable subsidy
programs), before revoking an order or terminating a suspended
investigation, 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.
(2) Intervening year. ``Intervening year'' means any year between
the first and final year of the consecutive period on which revocation
or termination is conditioned.
(e) Request for revocation or termination. (1) Antidumping
proceeding. During the third and subsequent annual anniversary months
of the publication of an antidumping order or suspension of an
antidumping investigation, an exporter or producer may request in
writing that the Secretary revoke an order or terminate a suspended
investigation under paragraph (b) of this section with regard to that
person if the person submits with the request:
(i) The person's certification that the person sold the subject
merchandise at not less than normal value during the period of review
described in Sec. 351.213(e)(1), and that in the future the person will
not sell the merchandise at less than normal value;
(ii) the person's certification that, during each of the
consecutive years referred to in paragraph (b) of this section, the
person sold the subject merchandise to the United States in commercial
quantities; and
(iii) If applicable, the agreement regarding reinstatement in the
order or suspended investigation described in paragraph (b)(2)(iii) of
this section.
(2) Countervailing duty proceeding. (i) During the third and
subsequent annual anniversary months of the publication of a
countervailing duty order or suspension of a countervailing duty
investigation, the government of the affected country may request in
writing that the Secretary revoke an order or terminate a suspended
investigation under paragraph (c)(1) of this section if the government
submits with the request its certification that it has satisfied,
during the period of review described in Sec. 351.213(e)(2), the
requirements of paragraph (c)(1)(i) of this section regarding the
abolition of countervailable subsidy programs, and that it will not
reinstate for the subject merchandise those programs or substitute
other countervailable subsidy programs;
(ii) During the fifth and subsequent annual anniversary months of
the publication of a countervailing duty order or suspended
countervailing duty investigation, the government of the affected
country may request in writing that the Secretary revoke an order or
terminate a suspended investigation under paragraph (c)(2) of this
section if the government submits with the request:
(A) Certifications for all exporters and producers covered by the
order or suspension agreement that they have not applied for or
received any net countervailable subsidy on the subject merchandise for
a period of at least five consecutive years (see paragraph (c)(2)(i) of
this section);
(B) Those exporters' and producers' certifications that they will
not apply for or receive any net countervailable subsidy on the subject
merchandise from any program the Secretary has found countervailable in
any proceeding involving the affected country or from other
countervailable programs (see paragraph (c)(2)(ii) of this section);
and
(C) A certification from each exporter or producer that, during
each of the consecutive years referred to in paragraph (c)(2) of this
section, that person sold the subject merchandise to the United States
in commercial quantities; or
(iii) During the fifth and subsequent annual anniversary months of
the publication of a countervailing duty order, an exporter or producer
may request in writing that the Secretary revoke the order with regard
to that person if the person submits with the request:
(A) A certification that the person has not applied for or received
any net countervailable subsidy on the subject merchandise for a period
of at least five consecutive years (see paragraph (c)(3)(i) of this
section), including calculations demonstrating the basis for the
conclusion that the person received zero or de minimis net
countervailable subsidies during the review period of the
administrative review in connection with which the person has submitted
the request for revocation;
(B) A certification that the person will not apply for or receive
any net countervailable subsidy on the subject merchandise from any
program the Secretary has found countervailable in any proceeding
involving the affected country or from other countervailable programs
(see paragraph (c)(3)(ii) of this section);
(C) The person's certification that, during each of the consecutive
years referred to in paragraph (c)(3) of this section, the person sold
the subject merchandise to the United States in commercial quantities;
and
(D) The agreement described in paragraph (c)(3)(iii) of this
section (reinstatement in order).
(f) Procedures. (1) Upon receipt of a timely request for revocation
or termination under paragraph (e) of this section, the Secretary will
consider the request as including a request for an administrative
review and will initiate and conduct a review under Sec. 351.213.
(2) In addition to the requirements of Sec. 351.221 regarding the
conduct of an administrative review, the Secretary will:
(i) Publish with the notice of initiation under Sec. 351.221(b)(1),
notice of ``Request for Revocation of Order (in part)'' or ``Request
for Termination of Suspended Investigation'' (whichever is applicable);
(ii) Conduct a verification under Sec. 351.307;
(iii) Include in the preliminary results of review under
Sec. 351.221(b)(4) the Secretary's decision whether there is a
reasonable basis to believe that the requirements for revocation or
termination are met;
(iv) If the Secretary decides that there is a reasonable basis to
believe that the requirements for revocation or termination are met,
publish with the notice of preliminary results of review under
Sec. 351.221(b)(4) notice of ``Intent to Revoke Order (in Part)'' or
``Intent to Terminate Suspended Investigation'' (whichever is
applicable);
(v) Include in the final results of review under Sec. 351.221(b)(5)
the Secretary's final decision whether the requirements for revocation
or termination are met; and
(vi) If the Secretary determines that the requirements for
revocation or termination are met, publish with the notice of final
results of review under Sec. 351.221(b)(5) notice of ``Revocation of
Order (in Part)'' or ``Termination of Suspended Investigation''
(whichever is applicable).
(3) If the Secretary revokes an order in whole or in part, the
Secretary will order the suspension of liquidation terminated for the
merchandise covered by the revocation on the first day after the period
under review, and will instruct the Customs Service to release any cash
deposit or bond.
(g) Revocation or termination based on changed circumstances. (1)
The
---- page 27401 ----
Secretary may revoke an order, in whole or in part, or terminate a
suspended investigation if the Secretary concludes that:
(i) Producers 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 have expressed a
lack of interest in the order, in whole or in part, or suspended
investigation (see section 782(h) of the Act); or
(ii) Other changed circumstances sufficient to warrant revocation
or termination exist.
(2) If at any time the Secretary concludes from the available
information that changed circumstances sufficient to warrant revocation
or termination may exist, the Secretary will conduct a changed
circumstances review under Sec. 351.216.
(3) In addition to the requirements of Sec. 351.221, the Secretary
will:
(i) Publish with the notice of initiation (see Sec. 353.221(b)(1),
notice of ``Consideration of Revocation of Order (in Part)'' or
``Consideration of Termination of Suspended Investigation'' (whichever
is applicable);
(ii) If the Secretary's conclusion regarding the possible existence
of changed circumstances (see paragraph (g)(2) of this section), is not
based on a request, the Secretary, not later than the date of
publication of the notice of ``Consideration of Revocation of Order (in
Part)'' or ``Consideration of Termination of Suspended Investigation''
(whichever is applicable) (see paragraph (g)(3)(i) of this section),
will serve written notice of the consideration of revocation or
termination on each interested party listed on the Department's service
list and on any other person that the Secretary has reason to believe
is a domestic interested party;
(iii) Conduct a verification, if appropriate, under Sec. 351.307;
(iv) Include in the preliminary results of review, under
Sec. 351.221(b)(4), the Secretary's decision whether there is a
reasonable basis to believe that changed circumstances warrant
revocation or termination;
(v) If the Secretary's preliminary decision is that changed
circumstances warrant revocation or termination, publish with the
notice of preliminary results of review, under Sec. 351.221(b)(4),
notice of ``Intent to Revoke Order (in Part)'' or ``Intent to Terminate
Suspended Investigation'' (whichever is applicable);
(vi) Include in the final results of review, under
Sec. 351.221(b)(5), the Secretary's final decision whether changed
circumstances warrant revocation or termination; and
(vii) If the Secretary's determines that changed circumstances
warrant revocation or termination, publish with the notice of final
results of review, under Sec. 351.221(b)(5), notice of ``Revocation of
Order (in Part)'' or ``Termination of Suspended Investigation''
(whichever is applicable).
(4) If the Secretary revokes an order, in whole or in part, under
paragraph (g) of this section, the Secretary will order the suspension
of liquidation ended for the merchandise covered by the revocation on
the effective date of the notice of revocation, and will instruct the
Customs Service to release any cash deposit or bond.
(h) Revocation or termination based on injury reconsideration. If
the Commission determines in a changed circumstances review under
section 751(b)(2) of the Act that the revocation of an order or
termination of a suspended investigation is not likely to lead to
continuation or recurrence of material injury, the Secretary will
revoke, in whole or in part, the order or terminate the suspended
investigation, and will publish in the Federal Register notice of
``Revocation of Order (in Part)'' or ``Termination of Suspended
Investigation'' (whichever is applicable).
(i) Revocation or termination based on sunset review. (1) In
general. In the case of a sunset review under Sec. 351.218, the
Secretary will revoke an order or terminate a suspended investigation,
unless:
(i) The Secretary makes a determination that revocation or
termination would be likely to lead to continuation or recurrence of a
countervailable subsidy or dumping (see section 752(b) and section
752(c) of the Act); and
(ii) The Commission makes a determination that revocation or
termination would be likely to lead to continuation or recurrence of
material injury (see section 752(a) of the Act).
(2) Exception for transition orders. Before January 1, 2000, the
Secretary will not revoke a transition order (see section 751(c)(6) of
the Act) as the result of a sunset review under Sec. 351.218.
(j) Revocation of countervailing duty order based on Commission
negative determination under section 753 of the Act. The Secretary will
revoke a countervailing duty order, and will order the refund, with
interest, of any estimated countervailing duties collected during the
period liquidation was suspended under section 753(a)(4) of the Act
upon being notified by the Commission that:
(1) The Commission has determined that an industry in the United
States is not likely to be materially injured if the countervailing
duty order in question is revoked (see section 753(a)(1) of the Act);
or
(2) A domestic interested party did not make a timely request for
an investigation under section 753(a) of the Act (see section 753(a)(3)
of the Act).
(k) Revocation based on Article 4/Article 7 review.
(1) In general. The Secretary may revoke a countervailing duty
order, in whole or in part, following an Article 4/Article 7 review
under Sec. 351.217(c), due to the imposition of countermeasures by the
United States or the withdrawal of a countervailable subsidy by a WTO
member country (see section 751(g)(2) of the Act).
(2) Additional Requirements. In addition to the requirements of
Sec. 351.221, if the Secretary determines to revoke an order as the
result of an Article 4/Article 7 review, the Secretary will:
(i) Conduct a verification, if appropriate, under Sec. 351.307;
(ii) Include in the final results of review, under
Sec. 351.221(b)(5), the Secretary's final decision whether the order
should be revoked;
(iii) If the Secretary's final decision is that the order should be
revoked:
(A) Determine the effective date of the revocation;
(B) Publish with the notice of final results of review, under
Sec. 351.221(b)(5), a notice of ``Revocation of Order (in Part),'' that
will include the effective date of the revocation; and
(C) Order any suspension of liquidation ended for merchandise
covered by the revocation that was entered on or after the effective
date of the revocation, and instruct the Customs Service to release any
cash deposit or bond.
(l) Revocation under section 129. The Secretary may revoke an order
under section 129 of the URAA (implementation of WTO dispute
settlement).
(m) Transition rule. In the case of time periods that, under
section 291(a)(2) of the URAA, are subject to review under the
provisions of the Act prior to its amendment by the URAA, and for
purposes of determining whether the three-or five-year requirements of
paragraphs (b) and (c) of this section are satisfied, the following
rules will apply:
(1) Antidumping proceedings. The Secretary will consider sales at
not less than foreign market value to be equivalent to sales at not
less than normal value.
---- page 27402 ----
(2) Countervailing duty proceedings. The Secretary will consider
the absence of a subsidy, as defined in section 771(5) of the Act prior
to its amendment by the URAA, to be equivalent to the absence of a
countervailable subsidy, as defined in section 771(5) of the Act, as
amended by the URAA.
(n) Cross-reference. For the treatment in a subsequent
investigation of business proprietary information submitted to the
Secretary in connection with a changed circumstances review under
Sec. 351.216 or a sunset review under Sec. 351.218 that results in the
revocation of an order (or termination of a suspended investigation),
see section 777(b)(3) of the Act.
Sec. 351.223 Procedures for initiation of downstream product
monitoring.
(a) Introduction. Section 780 of the Act establishes a mechanism
for monitoring imports of ``downstream products.'' In general, section
780 is aimed at situations where, following the issuance of an
antidumping or countervailing duty order on a product that is used as a
component in another product, exports to the United States of that
other (or ``downstream'') product increase. Although the Department is
responsible for determining whether trade in the downstream product
should be monitored, the Commission is responsible for conducting the
actual monitoring. The Commission must report the results of its
monitoring to the Department, and the Department must consider the
reports in determining whether to self-initiate an antidumping or
countervailing duty investigation on the downstream product. This
section contains rules regarding applications for the initiation of
downstream product monitoring and decisions regarding such
applications.
(b) Contents of application. An application to designate a
downstream product for monitoring under section 780 of the Act must
contain the following information, to the extent reasonably available
to the applicant:
(1) The name and address of the person requesting the monitoring
and a description of the article it produces which is the basis for
filing its application;
(2) A detailed description of the downstream product in question;
(3) A detailed description of the component product that is
incorporated into the downstream product, including the value of the
component part in relation to the value of the downstream product, and
the extent to which the component part has been substantially
transformed as a result of its incorporation into the downstream
product;
(4) The name of the country of production of both the downstream
and component products and the name of any intermediate country from
which the merchandise is imported;
(5) The name and address of all known producers of component parts
and downstream products in the relevant countries and a detailed
description of any relationship between such producers;
(6) Whether the component part is already subject to monitoring to
aid in the enforcement of a bilateral arrangement within the meaning of
section 804 of the Trade and Tariff Act of 1984;
(7) A list of all antidumping or countervailing duty investigations
that have been suspended, or antidumping or countervailing duty orders
that have been issued, on merchandise that is related to the component
part and that is manufactured in the same foreign country in which the
component part is manufactured;
(8) A list of all antidumping or countervailing duty investigations
that have been suspended, or antidumping or countervailing duty orders
that have been issued, on merchandise that is manufactured or exported
by the manufacturer or exporter of the component part and that is
similar in description and use to the component part; and
(9) The reasons for suspecting that the imposition of antidumping
or countervailing duties has resulted in a diversion of exports of the
component part into increased production and exportation to the United
States of the downstream product.
(c) Determination of sufficiency of application. Within 14 days
after an application is filed under paragraph (b) of this section, the
Secretary will rule on the sufficiency of the application by making the
determinations described in section 780(a)(2) of the Act.
(d) Notice of Determination. The Secretary will publish in the
Federal Register notice of each affirmative or negative ``monitoring''
determination made under section 780(a)(2) of the Act, and if the
determination under section 780(a)(2)(A) of the Act and a determination
made under any clause of section 780(a)(2)(B) of the Act are
affirmative, will transmit to the Commission a copy of the
determination and the application. The Secretary will make available to
the Commission, and to its employees directly involved in the
monitoring, the information upon which the Secretary based the
initiation.
Sec. 351.224 Disclosure of calculations and procedures for the
correction of ministerial errors.
(a) Introduction. In the interests of transparency, the Department
has long had a practice of providing parties with the details of its
antidumping and countervailing duty calculations. This practice has
come to be referred to as a ``disclosure.'' This section contains rules
relating to requests for disclosure and procedures for correcting
ministerial errors.
(b) Disclosure. The Secretary will disclose to a party to the
proceeding calculations performed, if any, in connection with a
preliminary determination under section 703(b) or section 733(b) of the
Act, a final determination under section 705(a) or section 735(a) of
the Act, and a final results of a review under section 736(c), section
751, or section 753 of the Act, normally within five days after the
date of any public announcement or, if there is no public announcement
of, within five days after the date of publication of, the preliminary
determination, final determination, or final results of review
(whichever is applicable). The Secretary will disclose to a party to
the proceeding calculations performed, if any, in connection with a
preliminary results of review under section 751 or section 753 of the
Act, normally not later than ten days after the date of the public
announcement of, or, if there is no public announcement, within five
days after the date of publication of, the preliminary results of
review.
(c) Comments regarding ministerial errors. (1) In general. A party
to the proceeding to whom the Secretary has disclosed calculations
performed in connection with a preliminary determination may submit
comments concerning a significant ministerial error in such
calculations. A party to the proceeding to whom the Secretary has
disclosed calculations performed in connection with a final
determination or the final results of a review may submit comments
concerning any ministerial error in such calculations. Comments
concerning ministerial errors made in the preliminary results of a
review should be included in a party's case brief.
(2) Time limits for submitting comments. A party to the proceeding
must file comments concerning ministerial errors within five days after
the earlier of:
(i) The date on which the Secretary released disclosure documents
to that party; or
(ii) The date on which the Secretary held a disclosure meeting with
that party.
---- page 27403 ----
(3) Replies to comments. Replies to comments submitted under
paragraph (c)(1) of this section must be filed within five days after
the date on which the comments were filed with the Secretary. The
Secretary will not consider replies to comments submitted in connection
with a preliminary determination.
(4) Extensions. A party to the proceeding may request an extension
of the time limit for filing comments concerning a ministerial error in
a final determination or final results of review under Sec. 351.302(c)
within three days after the date of any public announcement, or, if
there is no public announcement, within five days after the date of
publication of the final determination or final results of review, as
applicable. The Secretary will not extend the time limit for filing
comments concerning a significant ministerial error in a preliminary
determination.
(d) Contents of comments and replies. Comments filed under
paragraph (c)(1) of this section must explain the alleged ministerial
error by reference to applicable evidence in the official record, and
must present what, in the party's view, is the appropriate correction.
In addition, comments concerning a preliminary determination must
demonstrate how the alleged ministerial error is significant (see
paragraph (g) of this section) by illustrating the effect on individual
weighted-average dumping margin or countervailable subsidy rate, the
all-others rate, or the country-wide subsidy rate (whichever is
applicable). Replies to any comments must be limited to issues raised
in such comments.
(e) Corrections. The Secretary will analyze any comments received
and, if appropriate, correct any significant ministerial error by
amending the preliminary determination, or correct any ministerial
error by amending the final determination or the final results of
review (whichever is applicable). Where practicable, the Secretary will
announce publicly the issuance of a correction notice, and normally
will do so within 30 days after the date of public announcement, or, if
there is no public announcement, within 30 days after the date of
publication, of the preliminary determination, final determination, or
final results of review (whichever is applicable). In addition, the
Secretary will publish notice of such corrections in the Federal
Register. A correction notice will not alter the anniversary month of
an order or suspended investigation for purposes of requesting an
administrative review (see Sec. 351.213) or a new shipper review (see
Sec. 351.214) or initiating a sunset review (see Sec. 351.218).
(f) Definition of ``ministerial error.'' Under this section,
ministerial error means an error in addition, subtraction, or other
arithmetic function, clerical error resulting from inaccurate copying,
duplication, or the like, and any other similar type of unintentional
error which the Secretary considers ministerial.
(g) Definition of ``significant ministerial error.'' Under this
section, significant ministerial error means a ministerial error (see
paragraph (f) of this section), the correction of which, either singly
or in combination with other errors:
(1) Would result in a change of at least five absolute percentage
points in, but not less than 25 percent of, the weighted-average
dumping margin or the countervailable subsidy rate (whichever is
applicable) calculated in the original (erroneous) preliminary
determination; or
(2) Would result in a difference between a weighted-average dumping
margin or countervailable subsidy rate (whichever is applicable) of
zero (or de minimis) and a weighted-average dumping margin or
countervailable subsidy rate of greater than de minimis, or vice versa.
Sec. 351.225 Scope rulings.
(a) Introduction. Issues arise as to whether a particular product
is included within the scope of an antidumping or countervailing duty
order or a suspended investigation. Such issues can arise because the
descriptions of subject merchandise contained in the Department's
determinations must be written in general terms. At other times, a
domestic interested party may allege that changes to an imported
product or the place where the imported product is assembled
constitutes circumvention under section 781 of the Act. When such
issues arise, the Department issues ``scope rulings'' that clarify the
scope of an order or suspended investigation with respect to particular
products. This section contains rules regarding scope rulings, requests
for scope rulings, procedures for scope inquiries, and standards used
in determining whether a product is within the scope of an order or
suspended investigation.
(b) Self-initiation. If the Secretary determines from available
information that an inquiry is warranted to determine whether a product
is included within the scope of an antidumping or countervailing duty
order or a suspended investigation, the Secretary will initiate an
inquiry, and will notify all parties on the Department's scope service
list of its initiation of a scope inquiry.
(c) By application. (1) Contents and service of application. Any
interested party may apply for a ruling as to whether a particular
product is within the scope of an order or a suspended investigation.
The application must be served upon all parties on the scope service
list described in paragraph (n) of this section, and must contain the
following, to the extent reasonably available to the interested party:
(i) A detailed description of the product, including its technical
characteristics and uses, and its current U.S. Tariff Classification
number;
(ii) A statement of the interested party's position as to whether
the product is within the scope of an order or a suspended
investigation, including:
(A) A summary of the reasons for this conclusion,
(B) Citations to any applicable statutory authority, and
(C) Any factual information supporting this position, including
excerpts from portions of the Secretary's or the Commission's
investigation, and relevant prior scope rulings.
(2) Deadline for action on application. Within 45 days of the date
of receipt of an application for a scope ruling, the Secretary will
issue a final ruling under paragraph (d) of this section or will
initiate a scope inquiry under paragraph (e) of this section.
(d) Ruling based upon the application. If the Secretary can
determine, based solely upon the application and the descriptions of
the merchandise referred to in paragraph (k)(1) of this section,
whether a product is included within the scope of an order or a
suspended investigation, the Secretary will issue a final ruling as to
whether the product is included within the order or suspended
investigation. The Secretary will notify all persons on the
Department's scope service list (see paragraph (n) of this section) of
the final ruling.
(e) Ruling where further inquiry is warranted. If the Secretary
finds that the issue of whether a product is included within the scope
of an order or a suspended investigation cannot be determined based
solely upon the application and the descriptions of the merchandise
referred to in paragraph (k)(1) of this section, the Secretary will
notify by mail all parties on the Department's scope service list of
the initiation of a scope inquiry.
(f) Notice and procedure. (1) Notice of the initiation of a scope
inquiry issued under paragraph (b) or (e) of this section will include:
---- page 27404 ----
(i) A description of the product that is the subject of the scope
inquiry; and
(ii) An explanation of the reasons for the Secretary's decision to
initiate a scope inquiry;
(iii) A schedule for submission of comments that normally will
allow interested parties 20 days in which to provide comments on, and
supporting factual information relating to, the inquiry, and 10 days in
which to provide any rebuttal to such comments.
(2) The Secretary may issue questionnaires and verify submissions
received, where appropriate.
(3) Whenever the Secretary finds that a scope inquiry presents an
issue of significant difficulty, the Secretary will issue a preliminary
scope ruling, based upon the available information at the time, as to
whether there is a reasonable basis to believe or suspect that the
product subject to a scope inquiry is included within the order or
suspended investigation. The Secretary will notify all parties on the
Department's scope service list (see paragraph (n) of this section) of
the preliminary scope ruling, and will invite comment. Unless otherwise
specified, interested parties will have within twenty days from the
date of receipt of the notification in which to submit comments, and
ten days thereafter in which to submit rebuttal comments.
(4) The Secretary will issue a final ruling as to whether the
product which is the subject of the scope inquiry is included within
the order or suspended investigation, including an explanation of the
factual and legal conclusions on which the final ruling is based. The
Secretary will notify all parties on the Department's scope service
list (see paragraph (n) of this section) of the final scope ruling.
(5) The Secretary will issue a final ruling under paragraph (k) of
this section (other scope rulings) normally within 120 days of the
initiation of the inquiry under this section. The Secretary will issue
a final ruling under paragraph (g), (h), (i), or (j) of this section
(circumvention rulings under section 781 of the Act) normally within
300 days from the date of the initiation of the scope inquiry.
(6) When an administrative review under Sec. 351.213, a new shipper
review under Sec. 351.214, or an expedited antidumping review under
Sec. 351.215 is in progress at the time the Secretary provides notice
of the initiation of a scope inquiry (see paragraph (e)(1) of this
section), the Secretary may conduct the scope inquiry in conjunction
with that review.
(7)(i) The Secretary will notify the Commission in writing of the
proposed inclusion of products in an order prior to issuing a final
ruling under paragraph (f)(4) of this section based on a determination
under:
(A) Section 781(a) of the Act with respect to merchandise completed
or assembled in the United States (other than minor completion or
assembly);
(B) Section 781(b) of the Act with respect to merchandise completed
or assembled in other foreign countries; or
(C) Section 781(d) of the Act with respect to later-developed
products which incorporate a significant technological advance or
significant alteration of an earlier product.
(ii) If the Secretary notifies the Commission under paragraph
(f)(7)(i) of this section, upon the written request of the Commission,
the Secretary will consult with the Commission regarding the proposed
inclusion, and any such consultation will be completed within 15 days
after the date of such request. If, after consultation, the Commission
believes that a significant injury issue is presented by the proposed
inclusion of a product within an order, the Commission may provide
written advice to the Secretary as to whether the inclusion would be
inconsistent with the affirmative injury determination of the
Commission on which the order is based.
(g) Products completed or assembled in the United States. Under
section 781(a) of the Act, the Secretary may include within the scope
of an antidumping or countervailing duty order imported parts or
components referred to in section 781(a)(1)(B) of the Act that are used
in the completion or assembly of the merchandise in the United States
at any time such order is in effect. In making this determination, the
Secretary will not consider any single factor of section 781(a)(2) of
the Act to be controlling. In determining the value of parts or
components purchased from an affiliated person under section
781(a)(1)(D) of the Act, or of processing performed by an affiliated
person under section 781(a)(2)(E) of the Act, the Secretary may
determine the value of the part or component on the basis of the cost
of producing the part or component under section 773(f)(3) of the Act.
(h) Products completed or assembled in other foreign countries.
Under section 781(b) of the Act, the Secretary may include within the
scope of an antidumping or countervailing duty order, at any time such
order is in effect, imported merchandise completed or assembled in a
foreign country other than the country to which the order applies. In
making this determination, the Secretary will not consider any single
factor of section 781(b)(2) of the Act to be controlling. In
determining the value of parts or components purchased from an
affiliated person under section 781(b)(1)(D) of the Act, or of
processing performed by an affiliated person under section 781(b)(2)(E)
of the Act, the Secretary may determine the value of the part or
component on the basis of the cost of producing the part or component
under section 773(f)(3) of the Act.
(i) Minor alterations of merchandise. Under section 781(c) of the
Act, the Secretary may include within the scope of an antidumping or
countervailing duty order articles altered in form or appearance in
minor respects.
(j) Later-developed merchandise. In determining whether later-
developed merchandise is within the scope of an antidumping or
countervailing duty order, the Secretary will apply section 781(d) of
the Act.
(k) Other scope determinations. With respect to those scope
determinations that are not covered under paragraphs (g) through (j) of
this section, in considering whether a particular product is included
within the scope of an order or a suspended investigation, the
Secretary will take into account the following:
(1) The descriptions of the merchandise contained in the petition,
the initial investigation, and the determinations of the Secretary
(including prior scope determinations) and the Commission.
(2) When the above criteria are not dispositive, the Secretary will
further consider:
(i) The physical characteristics of the product;
(ii) The expectations of the ultimate purchasers;
(iii) The ultimate use of the product;
(iv) The channels of trade in which the product is sold; and
(v) The manner in which the product is advertised and displayed.
(l) Suspension of liquidation. (1) When the Secretary conducts a
scope inquiry under paragraph (b) or (e) of this section, and the
product in question is already subject to suspension of liquidation,
that suspension of liquidation will be continued, pending a preliminary
or a final scope ruling, at the cash deposit rate that would apply if
the product were ruled to be included within the scope of the order.
(2) If the Secretary issues a preliminary scope ruling under
paragraph (f)(3) of this section to the effect that the product in
question is included within the scope of the order, any suspension of
liquidation described in paragraph (l)(1) of this section will
---- page 27405 ----
continue. If liquidation has not been suspended, the Secretary will
instruct the Customs Service to suspend liquidation and to require a
cash deposit of estimated duties, at the applicable rate, for each
unliquidated entry of the product entered, or withdrawn from warehouse,
for consumption on or after the date of initiation of the scope
inquiry. If the Secretary issues a preliminary scope ruling to the
effect that the product in question is not included within the scope of
the order, the Secretary will order any suspension of liquidation on
the product ended, and will instruct the Customs Service to refund any
cash deposits or release any bonds relating to that product.
(3) If the Secretary issues a final scope ruling, under either
paragraph (d) or (f)(4) of this section, to the effect that the product
in question is included within the scope of the order, any suspension
of liquidation under paragraph (l)(1) or (l)(2) of this section will
continue. Where there has been no suspension of liquidation, the
Secretary will instruct the Customs Service to suspend liquidation and
to require a cash deposit of estimated duties, at the applicable rate,
for each unliquidated entry of the product entered, or withdrawn from
warehouse, for consumption on or after the date of initiation of the
scope inquiry. If the Secretary's final scope ruling is to the effect
that the product in question is not included within the scope of the
order, the Secretary will order any suspension of liquidation on the
subject product ended and will instruct the Customs Service to refund
any cash deposits or release any bonds relating to this product.
(4) If, within 90 days of the initiation of a review of an order or
a suspended investigation under this subpart, the Secretary issues a
final ruling that a product is included within the scope of the order
or suspended investigation that is the subject of the review, the
Secretary, where practicable, will include sales of that product for
purposes of the review and will seek information regarding such sales.
If the Secretary issues a final ruling after 90 days of the initiation
of the review, the Secretary may consider sales of the product for
purposes of the review on the basis of non-adverse facts available.
However, notwithstanding the pendency of a scope inquiry, if the
Secretary considers it appropriate, the Secretary may request
information concerning the product that is the subject of the scope
inquiry for purposes of a review under this subpart.
(m) Orders covering identical products. Except for a scope inquiry
and a scope ruling that involves section 781(a) or section 781(b) of
the Act (assembly of parts or components in the United States or in a
third country), if more than one order or suspended investigation cover
the same subject merchandise, and if the Secretary considers it
appropriate, the Secretary may conduct a single inquiry and issue a
single scope ruling that applies to all such orders or suspended
investigations.
(n) Service of applications; scope service list. The requirements
of Sec. 351.303(f) apply to this section, except that an application
for a scope ruling must be served on all persons on the Department's
scope service list. For purposes of this section, the ``scope service
list'' will include all persons that have participated in any segment
of the proceeding. If an application for a scope ruling in one
proceeding results in a single inquiry that will apply to another
proceeding (see paragraph (m) of this section), the Secretary will
notify persons on the scope service list of the other proceeding of the
application for a scope ruling.
(o) Publication of list of scope rulings. On a quarterly basis, the
Secretary will publish in the Federal Register a list of scope rulings
issued within the last three months. This list will include the case
name, reference number, and a brief description of the ruling.
Subpart C--Information and Argument
Sec. 351.301 Time limits for submission of factual information.
(a) Introduction. The Department obtains most of its factual
information in antidumping and countervailing duty proceedings from
submissions made by interested parties during the course of the
proceeding. This section sets forth the time limits for submitting such
factual information, including information in questionnaire responses,
publicly available information to value factors in nonmarket economy
cases, allegations concerning market viability, allegations of sales at
prices below the cost of production, countervailable subsidy
allegations, and upstream subsidy allegations. Section 351.302 sets
forth the procedures for requesting an extension of such time limits.
Section 351.303 contains the procedural rules regarding filing, format,
translation, service, and certification of documents.
(b) Time limits in general. Except as provided in paragraphs (c)
and (d) of this section and Sec. 351.302, a submission of factual
information is due no later than:
(1) For a final determination in a countervailing duty
investigation or an antidumping investigation, seven days before the
date on which the verification of any person is scheduled to commence,
except that factual information requested by the verifying officials
from a person normally will be due no later than seven days after the
date on which the verification of that person is completed;
(2) For the final results of an administrative review, 140 days
after the last day of the anniversary month, except that factual
information requested by the verifying officials from a person normally
will be due no later than seven days after the date on which the
verification of that person is completed;
(3) For the final results of a changed circumstances review, sunset
review, or section 762 review, 140 days after the date of publication
of notice of initiation of the review, except that factual information
requested by the verifying officials from a person normally will be due
no later than seven days after the date on which the verification of
that person is completed;
(4) For the final results of a new shipper review, 100 days after
the date of publication of notice of initiation of the review, except
that factual information requested by the verifying officials from a
person normally will be due no later than seven days after the date on
which the verification of that person is completed; and
(5) For the final results of an expedited antidumping review,
Article 8 violation review, Article 4/Article 7 review, or section 753
review, a date specified by the Secretary.
(c) Time limits for certain submissions. (1) Rebuttal,
clarification, or correction of factual information. 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 deadline provided in this section for submission of such
factual information. If 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 such factual
information, an interested party may submit factual information to
rebut, clarify, or correct the factual information no later than 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.
(2) Questionnaire responses and other submissions on request. (i)
Notwithstanding paragraph (b) of this section, the Secretary may
request any person to submit factual information at any time during a
proceeding.
---- page 27406 ----
(ii) In the Secretary's written request to an interested party for
a response to a questionnaire or for other factual information, the
Secretary will specify the following: the time limit for the response;
the information to be provided; the form and manner in which the
interested party must submit the information; and that failure to
submit requested information in the requested form and manner by the
date specified may result in use of the facts available under section
776 of the Act and Sec. 351.308.
(iii) Interested parties will have at least 30 days from the date
of receipt to respond to the full initial questionnaire. 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. The
date of receipt will be seven days from the date on which the initial
questionnaire was transmitted.
(iv) A notification by an interested party, under section 782(c)(1)
of the Act, of difficulties in submitting information in response to a
questionnaire issued by the Secretary is to be submitted in writing
within 14 days after the date of receipt of the initial questionnaire.
(v) A respondent interested party may request in writing that the
Secretary conduct a questionnaire presentation. The Secretary may
conduct a questionnaire presentation if the Secretary notifies the
government of the affected country and that government does not object.
(3) Submission of publicly available information to value factors
under Sec. 351.408(c). Notwithstanding paragraph (b) of this section,
interested parties may submit publicly available information to value
factors under Sec. 351.408(c) within:
(i) For a final determination in an antidumping investigation, 40
days after the date of publication of the preliminary determination;
(ii) For the final results of an administrative review, new shipper
review, or changed circumstances review, 20 days after the date of
publication of the preliminary results of review; and
(iii) For the final results of an expedited antidumping review, a
date specified by the Secretary.
(d) Time limits for certain allegations. (1) Market viability and
the basis for determining a price-based normal value. In an antidumping
investigation or administrative review, allegations regarding market
viability, including the exceptions in Sec. 351.404(c)(2), are due,
with all supporting factual information, within 40 days after the date
on which the initial questionnaire was transmitted, unless the
Secretary alters this time limit.
(2) Sales at prices below the cost of production. An allegation of
sales at prices below the cost of production made by the petitioner or
other domestic interested party is due within:
(i) In an antidumping investigation,
(A) On a country-wide basis, 20 days after the date on which the
initial questionnaire was transmitted to any person, unless the
Secretary alters this time limit; or
(B) On a company-specific basis, 20 days after a respondent
interested party files the response to the relevant section of the
questionnaire, unless the relevant questionnaire response is, in the
Secretary's view, incomplete, in which case the Secretary will
determine the time limit;
(ii) In an administrative review, new shipper review, or changed
circumstances review, on a company-specific basis, 20 days after a
respondent interested party files the response to the relevant section
of the questionnaire, unless the relevant questionnaire response is, in
the Secretary's view, incomplete, in which case the Secretary will
determine the time limit; or
(iii) In an expedited antidumping review, on a company-specific
basis, 10 days after the date of publication of the notice of
initiation of the review.
(3) Purchases of major inputs from an affiliated party at prices
below the affiliated party's cost of production. An allegation of
purchases of major inputs from an affiliated party at prices below the
affiliated party's cost of production made by the petitioner or other
domestic interested party is due within 20 days after a respondent
interested party files the response to the relevant section of the
questionnaire, unless the relevant questionnaire response is, in the
Secretary's view, incomplete, in which case the Secretary will
determine the time limits.
(4) Countervailable subsidy; upstream subsidy. (i) In general. A
countervailable subsidy allegation made by the petitioner or other
domestic interested party is due no later than:
(A) In a countervailing duty investigation, 40 days before the
scheduled date of the preliminary determination; or
(B) In an administrative review, new shipper review, or changed
circumstances review, 20 days after all responses to the initial
questionnaire are filed with the Department, unless the Secretary
alters this time limit.
(ii) Exception for upstream subsidy allegation in an investigation.
In a countervailing duty investigation, an allegation of upstream
subsidies made by the petitioner or other domestic interested party is
due no later than:
(A) 10 days before the scheduled date of the preliminary
determination; or
(B) 15 days before the scheduled date of the final determination.
(5) Targeted dumping. In an antidumping investigation, an
allegation of targeted dumping made by the petitioner or other domestic
interested party under Sec. 351.414(f)(3) is due no later than 30 days
before the scheduled date of the preliminary determination.
Sec. 351.302 Extension of time limits; return of untimely filed or
unsolicited material.
(a) Introduction. This section sets forth the procedures for
requesting an extension of a time limit. In addition, this section
explains that certain untimely filed or unsolicited material will be
returned to the submitter together with an explanation of the reasons
for the return of such material.
(b) Extension of time limits. Unless expressly precluded by
statute, the Secretary may, for good cause, extend any time limit
established by this part.
(c) Requests for extension of specific time limit. Before the
applicable time limit specified under Sec. 351.301 expires, a party may
request an extension pursuant to paragraph (b) of this section. The
request must be in writing and state the reasons for the request. An
extension granted to a party must be approved in writing.
(d) Return of untimely filed or unsolicited material. (1) Unless
the Secretary extends a time limit under paragraph (b) of this section,
the Secretary will not consider or retain in the official record of the
proceeding:
(i) Untimely filed factual information, written argument, or other
material that the Secretary returns to the submitter, except as
provided under Sec. 351.104(a)(2); or
(ii) Unsolicited questionnaire responses, except as provided under
Sec. 351.204(d)(2).
(2) The Secretary will return such information, argument, or other
material, or unsolicited questionnaire response with, to the extent
practicable, written notice stating the reasons for return.
Sec. 351.303 Filing, format, translation, service, and certification
of documents.
(a) Introduction. This section contains the procedural rules
regarding filing, format, service, translation, and certification of
documents and applies to all persons submitting documents to the
Department for consideration in an antidumping or countervailing duty
proceeding.
---- page 27407 ----
(b) Where to file; time of filing. Persons must address and submit
all documents to the Secretary of Commerce, Attention: Import
Administration, Central Records Unit, Room 1870, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230, between the hours of 8:30 a.m. and 5:00 p.m. on business days
(see Sec. 351.103(b)). If the applicable time limit expires on a non-
business day, the Secretary will accept documents that are filed on the
next business day.
(c) Number of copies; filing of business proprietary and public
versions under the one-day lag rule; information in double brackets.
(1) In general. Except as provided in paragraphs (c)(2) and (c)(3) of
this section, a person must file six copies of each submission with the
Department.
(2) Application of the one-day lag rule. (i) Filing the business
proprietary version. A person must file one copy of the business
proprietary version of any document with the Department within the
applicable time limit. Business proprietary version means the version
of a document containing information for which a person claims business
proprietary treatment under Sec. 351.304.
(ii) Filing the final business proprietary version; bracketing
corrections. By the close of business one business day after the date
the business proprietary version is filed under paragraph (c)(2)(i) of
this section, a person must file six copies of the final business
proprietary version of the document with the Department. The final
business proprietary version must be identical to the business
proprietary version filed on the previous day except for any bracketing
corrections. Although a person must file six copies of the complete
final business proprietary version with the Department, the person may
serve other persons with only those pages containing bracketing
corrections.
(iii) Filing the public version. Simultaneously with the filing of
the final business proprietary version under paragraph (c)(2)(ii) of
this section, a person also must file three copies of the public
version of such document (see Sec. 351.304(c)) with the Department.
(iv) Information in double brackets. If a person serves authorized
applicants with a business proprietary version of a document that
excludes information in double brackets pursuant to Sec. 351.304(b)(2),
the person simultaneously must file with the Department one copy of
those pages in which information in double brackets has been excluded.
(3) Computer media and printouts. The Secretary may require
submission of factual information on computer media unless the
Secretary modifies such requirements under section 782(c) of the Act
(see Sec. 351.301(c)(2)(iv)). The computer medium must be accompanied
by the number of copies of any computer printout specified by the
Secretary. All information on computer media must be releasable under
APO (see Sec. 351.305).
(d) Format of copies. (1) In general. Unless the Secretary alters
the requirements of this section, documents filed with the Department
must conform to the specification and marking requirements under
paragraph (d)(2) of this section or the Secretary may refuse to accept
such documents for the official record of the proceeding.
(2) Specifications and markings. A person must submit documents on
letter-size paper, single-sided and double-spaced, and must securely
bind each copy as a single document with any letter of transmittal as
the first page of the document. A submitter must mark the first page of
each document in the upper right-hand corner with the following
information in the following format:
(i) On the first line, except for a petition, indicate the
Department case number;
(ii) On the second line, indicate the total number of pages in the
document including cover pages, appendices, and any unnumbered pages;
(iii) On the third line, indicate whether the document is for an
investigation, scope inquiry, circumvention inquiry, downstream product
monitoring application, or review and, if the latter, indicate the
inclusive dates of the review, the type of review, and the section
number of the Act corresponding to the type of review;
(iv) On the fourth line, indicate the Department office conducting
the proceeding;
(v) On the fifth and subsequent lines, indicate whether any portion
of the document contains business proprietary information and, if so,
list the applicable page numbers and state either ``Document May be
Released Under APO'' or ``Document May Not be Released Under APO.''
Indicate ``Business Proprietary Treatment Requested'' on the top of
each page containing business proprietary information. In addition,
include the warning ``Bracketing of Business Proprietary Information is
Not Final for One Business Day After Date of Filing'' on the top of
each page containing business proprietary information in the copy of
the business proprietary version filed under Sec. 351.303(c)(2)(i)
(one-day lag rule). Do not include this warning in the copies of the
final business proprietary version filed on the next business day under
Sec. 351.303(c)(2)(ii) (see Sec. 351.303(c)(2) and Sec. 351.304(c));
and
(vi) For public versions of business proprietary documents required
under Sec. 351.304(c), complete the marking as required in paragraphs
(d)(2)(i)-(v) of this section for the business proprietary document,
but conspicuously mark the first page ``Public Version.''
(e) Translation to English. A document submitted in a foreign
language must be accompanied by an English translation of the entire
document or of only pertinent portions, where appropriate, unless the
Secretary waives this requirement for an individual document. A party
must obtain the Department's approval for submission of an English
translation of only portions of a document prior to submission to the
Department.
(f) Service of copies on other persons. (1)(i) In general. Except
as provided in Sec. 351.202(c) (filing of petition), Sec. 351.207(f)(1)
(submission of proposed suspension agreement), and paragraph (f)(3) of
this section, a person filing a document with the Department
simultaneously must serve a copy of the document on all other persons
on the service list by personal service or first class mail.
(ii) Service of public versions or a party's own business
proprietary information. Notwithstanding paragraphs (f)(1)(i) and
(f)(3) of this section, service of the public version of a document or
of the business proprietary version of a document containing only the
server's own business proprietary information, on persons on the
service list, may be made by facsimile transmission or other electronic
transmission process, with the consent of the person to be served.
(2) Certificate of service. Each document filed with the Department
must include a certificate of service listing each person served
(including agents), the type of document served, and the date and
method of service on each person. The Secretary may refuse to accept
any document that is not accompanied by a certificate of service.
(3) Service requirements for certain documents. (i) Briefs. In
addition to the certificate of service requirements contained in
paragraph (f)(2) of this section, a person filing a case or rebuttal
brief with the Department simultaneously must serve a copy of that
brief on all persons on the service list and on any U.S. Government
agency that has submitted a case or rebuttal brief in the segment of
the proceeding. If, under Sec. 351.103(c), a person has
---- page 27408 ----
designated an agent to receive service that is located in the United
States, service on that person must be either by personal service on
the same day the brief is filed or by overnight mail or courier on the
next day. If the person has designated an agent to receive service that
is located outside the United States, service on that person must be by
first class airmail.
(ii) Request for review. In addition to the certificate of service
requirements under paragraph (f)(2) of this section, an interested
party that files with the Department a request for an expedited
antidumping review, an administrative review, a new shipper review, or
a changed circumstances review must serve a copy of the request by
personal service or first class mail on each exporter or producer
specified in the request and on the petitioner by the end of the
anniversary month or within ten days of filing the request for review,
whichever is later. If the interested party that files the request is
unable to locate a particular exporter or producer, or the petitioner,
the Secretary may accept the request for review if the Secretary is
satisfied that the party made a reasonable attempt to serve a copy of
the request on such person.
(g) Certifications. A person must file with each submission
containing factual information the certification in paragraph (g)(1) of
this section and, in addition, if the person has legal counsel or
another representative, the certification in paragraph (g)(2) of this
section:
(1) For the person's officially responsible for presentation of the
factual information:
I, (name and title), currently employed by (person), certify
that (1) I have read the attached submission, and (2) the
information contained in this submission is, to the best of my
knowledge, complete and accurate.
(2) For the person's legal counsel or other representative:
I, (name), of (law or other firm), counsel or representative to
(person), certify that (1) I have read the attached submission, and
(2) based on the information made available to me by (person), I
have no reason to believe that this submission contains any material
misrepresentation or omission of fact.
Sec. 351.304 Establishing business proprietary treatment of
information [Reserved].
Sec. 351.305 Access to business proprietary information [Reserved].
Sec. 351.306 Use of business proprietary information [Reserved].
Sec. 351.307 Verification of information.
(a) Introduction. Prior to making a final determination in an
investigation or issuing final results of review, the Secretary may
verify relevant factual information. This section clarifies when
verification will occur, the contents of a verification report, and the
procedures for verification.
(b) In general. (1) Subject to paragraph (b)(4) of this section,
the Secretary will verify factual information upon which the Secretary
relies in:
(i) A final determination in a continuation of a previously
suspended countervailing duty investigation (section 704(g) of the
Act), countervailing duty investigation, continuation of a previously
suspended antidumping investigation (section 705(a) of the Act), or
antidumping investigation;
(ii) The final results of an expedited antidumping review;
(iii) A revocation under section 751(d) of the Act;
(iv) The final results of an administrative review, new shipper
review, or changed circumstances review, if the Secretary decides that
good cause for verification exists; and
(v) The final results of an administrative review if:
(A) A domestic interested party, not later than 100 days after the
date of publication of the notice of initiation of review, submits a
written request for verification; and
(B) The Secretary conducted no verification under this paragraph
during either of the two immediately preceding administrative reviews.
(2) The Secretary may verify factual information upon which the
Secretary relies in a proceeding or a segment of a proceeding not
specifically provided for in paragraph (b)(1) of this section.
(3) If the Secretary decides that, because of the large number of
exporters or producers included in an investigation or administrative
review, it is impractical to verify relevant factual information for
each person, the Secretary may select and verify a sample.
(4) The Secretary may conduct verification of a person if that
person agrees to verification and the Secretary notifies the government
of the affected country and that government does not object. If the
person or the government objects to verification, the Secretary will
not conduct verification and may disregard any or all information
submitted by the person in favor of use of the facts available under
section 776 of the Act and Sec. 351.308.
(c) Verification report. The Secretary will report the methods,
procedures, and results of a verification under this section prior to
making a final determination in an investigation or issuing final
results in a review.
(d) Procedures for verification. The Secretary will notify the
government of the affected country that employees of the Department
will visit with the persons listed below in order to verify the
accuracy and completeness of submitted factual information. The
notification will, where practicable, identify any member of the
verification team who is not an officer of the U.S. Government. As part
of the verification, employees of the Department will request access to
all files, records, and personnel which the Secretary considers
relevant to factual information submitted of:
(1) Producers, exporters, or importers;
(2) Persons affiliated with the persons listed in paragraph (d)(1)
of this section, where applicable;
(3) Unaffiliated purchasers, or
(4) The government of the affected country as part of verification
in a countervailing duty proceeding.
Sec. 351.308 Determinations on the basis of the facts available.
(a) Introduction. The Secretary 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. If the Secretary
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 Secretary may use an inference that is adverse to the interests of
that party in selecting from among the facts otherwise available. This
section lists some of the sources of information upon which the
Secretary may base an adverse inference and explains the actions the
Secretary will take with respect to corroboration of information.
(b) In general. The Secretary may make a determination under the
Act and this part based on the facts otherwise available in accordance
with section 776(a) of the Act.
(c) Adverse Inferences. For purposes of section 776(b) of the Act,
an adverse inference may include reliance on:
(1) Secondary information, such as information derived from:
(i) The petition;
(ii) A final determination in a countervailing duty investigation
or an antidumping investigation;
(iii) Any previous administrative review, new shipper review,
expedited antidumping review, section 753 review, or section 762
review; or
---- page 27409 ----
(2) Any other information placed on the record.
(d) Corroboration of secondary information. Under section 776(c) of
the Act, when the Secretary relies on secondary information, the
Secretary will, to the extent practicable, corroborate that information
from independent sources that are reasonably at the Secretary's
disposal. Independent sources 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. Corroborate means that the Secretary will
examine whether the secondary information to be used has probative
value. The fact that corroboration may not be practicable in a given
circumstance will not prevent the Secretary from applying an adverse
inference as appropriate and using the secondary information in
question.
(e) Use of certain information. In reaching a determination under
the Act and this part, the Secretary 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 Secretary if the conditions listed under section
782(e) of the Act are met.
Sec. 351.309 Written argument.
(a) Introduction. Written argument may be submitted during the
course of an antidumping or countervailing duty proceeding. This
section sets forth the time limits for submission of case and rebuttal
briefs and provides guidance on what should be contained in these
documents.
(b) Written argument. (1) In general. In making the final
determination in a countervailing duty investigation or antidumping
investigation or the final results of an administrative review, new
shipper review, expedited antidumping review, section 753 review, or
section 762 review, the Secretary will consider written arguments in
case or rebuttal briefs filed within the time limits in this section.
(2) Written argument on request. Notwithstanding paragraph (b)(1)
of this section, the Secretary may request written argument on any
issue from any person or U.S. Government agency at any time during a
proceeding.
(c) Case brief. (1) Any interested party or U.S. Government agency
may submit a ``case brief'' within:
(i) For a final determination in a countervailing duty
investigation or antidumping investigation, 50 days after the date of
publication of the preliminary determination, unless the Secretary
alters this time limit;
(ii) For the final results of an administrative review, new shipper
review, changed circumstances review, or section 762 review, 30 days
after the date of publication of the preliminary results of review,
unless the Secretary alters the time limit; or
(iii) For the final results of an expedited antidumping review,
sunset review, Article 8 violation review, Article 4/Article 7 review,
or section 753 review, a date specified by the Secretary.
(2) The case brief must present all arguments that continue in the
submitter's view to be relevant to the Secretary's final determination
or final results, including any arguments presented before the date of
publication of the preliminary determination or preliminary results. As
part of the case brief, parties are encouraged to provide a summary of
the arguments not to exceed five pages and a table of statutes,
regulations, and cases cited.
(d) Rebuttal brief. (1) Any interested party or U.S. Government
agency may submit a ``rebuttal brief'' within five days after the time
limit for filing the case brief, unless the Secretary alters this time
limit.
(2) The rebuttal brief may respond only to arguments raised in case
briefs and should identify the arguments to which it is responding. As
part of the rebuttal brief, parties are encouraged to provide a summary
of the arguments not to exceed five pages and a table of statutes,
regulations, and cases cited.
Sec. 351.310 Hearings.
(a) Introduction. This section sets forth the procedures for
requesting a hearing, indicates that the Secretary may consolidate
hearings, and explains when the Secretary may hold closed hearing
sessions.
(b) Pre-hearing conference. The Secretary may conduct a telephone
pre-hearing conference with representatives of interested parties to
facilitate the conduct of the hearing.
(c) Request for hearing. Any interested party may request that the
Secretary hold a public hearing on arguments to be raised in case or
rebuttal briefs within 30 days after the date of publication of the
preliminary determination or preliminary results of review, unless the
Secretary alters this time limit, or in a proceeding where the
Secretary will not issue a preliminary determination, not later than a
date specified by the Secretary. To the extent practicable, a party
requesting a hearing must identify arguments to be raised at the
hearing. At the hearing, an interested party may make an affirmative
presentation only on arguments included in that party's case brief and
may make a rebuttal presentation only on arguments included in that
party's rebuttal brief.
(d) Hearings in general. (1) If an interested party submits a
request under paragraph (c) of this section, the Secretary will hold a
public hearing on the date stated in the notice of the Secretary's
preliminary determination or preliminary results of administrative
review (or otherwise specified by the Secretary in an expedited
antidumping review), unless the Secretary alters the date. Ordinarily,
the hearing will be held two days after the scheduled date for
submission of rebuttal briefs.
(2) The hearing is not subject to 5 U.S.C. Secs. 551-559, and
Sec. 702 (Administrative Procedure Act). Witness testimony, if any,
will not be under oath or subject to cross-examination by another
interested party or witness. During the hearing, the chair may question
any person or witness and may request persons to present additional
written argument.
(e) Consolidated hearings. At the Secretary's discretion, the
Secretary may consolidate hearings in two or more cases.
(f) Closed hearing sessions. An interested party may request a
closed session of the hearing no later than the date the case briefs
are due in order to address limited issues during the course of the
hearing. The requesting party must identify the subjects to be
discussed, specify the amount of time requested, and justify the need
for a closed session with respect to each subject. If the Secretary
approves the request for a closed session, only authorized applicants
and other persons authorized by the regulations may be present for the
closed session (see Sec. 351.305).
(g) Transcript of hearing. The Secretary will place a verbatim
transcript of the hearing in the public and official records of the
proceeding and will announce at the hearing how interested parties may
obtain copies of the transcript.
Sec. 351.311 Countervailable subsidy practice discovered during
investigation or review.
(a) Introduction. During the course of a countervailing duty
investigation or review, Department officials may discover or receive
notice of a practice that appears to provide a countervailable subsidy.
This section explains when the Secretary will examine such a practice.
(b) Inclusion in proceeding. If during a countervailing duty
investigation or a
---- page 27410 ----
countervailing duty administrative review the Secretary discovers a
practice that appears to provide a countervailable subsidy with respect
to the subject merchandise and the practice was not alleged or examined
in the proceeding, or if, pursuant to section 775 of the Act, the
Secretary receives notice from the United States Trade Representative
that a subsidy or subsidy program is in violation of Article 8 of the
Subsidies Agreement, the Secretary will examine the practice, subsidy,
or subsidy program if the Secretary concludes that sufficient time
remains before the scheduled date for the final determination or final
results of review.
(c) Deferral of examination. If the Secretary concludes that
insufficient time remains before the scheduled date for the final
determination or final results of review to examine the practice,
subsidy, or subsidy program described in paragraph (b) of this section,
the Secretary will:
(1) During an investigation, allow the petitioner to withdraw the
petition without prejudice and resubmit it with an allegation with
regard to the newly discovered practice, subsidy, or subsidy program;
or
(2) During an investigation or review, defer consideration of the
newly discovered practice, subsidy, or subsidy program until a
subsequent administrative review, if any.
(d) Notice. The Secretary will notify the parties to the proceeding
of any practice the Secretary discovers, or any subsidy or subsidy
program with respect to which the Secretary receives notice from the
United States Trade Representative, and whether or not it will be
included in the then ongoing proceeding.
Sec. 351.312 Industrial users and consumer organizations.
(a) Introduction. The URAA provides for opportunity for comment by
consumer organizations and industrial users on matters relevant to a
particular determination of dumping, subsidization, or injury. This
section indicates under what circumstances such persons may submit
relevant information and argument.
(b) Opportunity to submit relevant information and argument. In an
antidumping or countervailing duty proceeding under title VII of the
Act and this part, an industrial user of the subject merchandise or a
representative consumer organization, as described in section 777(h) of
the Act, may submit relevant factual information and written argument
to the Department under paragraphs (b), (c)(1), and (c)(3) of
Sec. 351.301 and paragraphs (c) and (d) of Sec. 351.309 concerning
dumping or a countervailable subsidy. All such submissions must be
filed in accordance with Sec. 351.303.
(c) Business proprietary information. Persons described in
paragraph (b) of this section may request business proprietary
treatment of information under Sec. 351.304, but will not be granted
access under Sec. 351.305 to business proprietary information submitted
by other persons.
Subpart D--Calculation of Export Price, Constructed Export Price,
Fair Value, and Normal Value
Sec. 351.401 In general.
(a) Introduction. In general terms, an antidumping analysis
involves a comparison of export price or constructed export price in
the United States with normal value in the foreign market. This section
establishes certain general rules that apply to the calculation of
export price, constructed export price and normal value. (See section
772, section 773, and section 773A of the Act.)
(b) Adjustments in general. In making adjustments to export price,
constructed export price, or normal value, the Secretary will adhere to
the following principles:
(1) The interested party that is 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; and
(2) The Secretary will not double-count adjustments.
(c) Use of price net of price adjustments. In calculating export
price, constructed export price, and normal value (where normal value
is based on price), the Secretary will use a price that is net of any
price adjustment, as defined in Sec. 351.102(b), that is reasonably
attributable to the subject merchandise or the foreign like product
(whichever is applicable).
(d) Delayed payment or pre-payment of expenses. Where cost is the
basis for determining the amount of an adjustment to export price,
constructed export price, or normal value, the Secretary will not
factor in any delayed payment or pre-payment of expenses by the
exporter or producer.
(e) Adjustments for movement expenses. (1) Original place of
shipment. In making adjustments for movement expenses to establish
export price or constructed export price under section 772(c)(2)(A) of
the Act, or normal value under section 773(a)(6)(B)(ii) of the Act, the
Secretary normally will consider the production facility as being the
``original place of shipment. However, where the Secretary bases export
price, constructed export price, or normal value on a sale by an
unaffiliated reseller, the Secretary may treat the original place from
which the reseller shipped the merchandise as the ``original place of
shipment.''
(2) Warehousing. The Secretary will consider warehousing expenses
that are incurred after the subject merchandise or foreign like product
leaves the original place of shipment as movement expenses.
(f) Treatment of affiliated producers in antidumping proceedings.
(1) In general. In an antidumping proceeding under this part, the
Secretary will treat two or more affiliated producers as a single
entity where those 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
the Secretary concludes that there is a significant potential for the
manipulation of price or production.
(2) Significant potential for manipulation. In identifying a
significant potential for the manipulation of price or production, the
factors the Secretary may consider include:
(i) The level of common ownership;
(ii) The extent to which managerial employees or board members of
one firm sit on the board of directors of an affiliated firm; and
(iii) Whether operations are intertwined, such as through the
sharing of sales information, involvement in production and pricing
decisions, the sharing of facilities or employees, or significant
transactions between the affiliated producers.
(g) Allocation of expenses and price adjustments. (1) In general.
The Secretary may consider allocated expenses and price adjustments
when transaction-specific reporting is not feasible, provided the
Secretary is satisfied that the allocation method used does not cause
inaccuracies or distortions.
(2) Reporting allocated expenses and price adjustments. Any party
seeking to report an expense or a price adjustment on an allocated
basis must demonstrate to the Secretary's satisfaction that the
allocation is calculated on as specific a basis as is feasible, and
must explain why the allocation methodology used does not cause
inaccuracies or distortions.
(3) Feasibility. In determining the feasibility of transaction-
specific reporting or whether an allocation is calculated on as
specific a basis as is
---- page 27411 ----
feasible, the Secretary will take into account the records maintained
by the party in question in the ordinary course of its business, as
well as such factors as the normal accounting practices in the country
and industry in question and the number of sales made by the party
during the period of investigation or review.
(4) Expenses and price adjustments relating to merchandise not
subject to the proceeding. The Secretary will not reject an allocation
method solely because the method includes expenses incurred, or price
adjustments made, with respect to sales of merchandise that does not
constitute subject merchandise or a foreign like product (whichever is
applicable).
(h) Treatment of subcontractors (``tolling'' operations). The
Secretary will not consider a toller or subcontractor to be a
manufacturer or producer where the toller or subcontractor does not
acquire ownership, and does not control the relevant sale, of the
subject merchandise or foreign like product.
(i) Date of sale. In identifying the date of sale of the subject
merchandise or foreign like product, the Secretary normally will use
the date of invoice, as recorded in the exporter or producer's records
kept in the ordinary course of business. However, the Secretary may use
a date other than the date of invoice if the Secretary is satisfied
that a different date better reflects the date on which the exporter or
producer establishes the material terms of sale.
Sec. 351.402 Calculation of export price and constructed export price;
reimbursement of antidumping and countervailing duties.
(a) Introduction. In order to establish export price, constructed
export price, and normal value, the Secretary must make certain
adjustments to the price to the unaffiliated purchaser (often called
the ``starting price'') in both the United States and foreign markets.
This regulation clarifies how the Secretary will make certain of the
adjustments to the starting price in the United States that are
required by section 772 of the Act.
(b) Additional adjustments to constructed export price. In
establishing constructed export price under section 772(d) of the Act,
the Secretary will make adjustments for expenses associated with
commercial activities in the United States that relate to the sale to
an unaffiliated purchaser, no matter where or when paid. The Secretary
will not make an adjustment for any expense that is related solely to
the sale to an affiliated importer in the United States, although the
Secretary may make an adjustment to normal value for such expenses
under section 773(a)(6)(C)(iii) of the Act.
(c) Special rule for merchandise with value added after
importation. (1) Merchandise imported by affiliated persons. In
applying section 772(e) of the Act, merchandise imported by and value
added by a person affiliated with the exporter or producer includes
merchandise imported and value added for the account of such an
affiliated person.
(2) Estimation of value added. The Secretary normally will
determine that the value added in the United States by the affiliated
person is likely to exceed substantially the value of the subject
merchandise if the Secretary estimates the value added to be at least
65 percent of the price charged to the first unaffiliated purchaser for
the merchandise as sold in the United States. The Secretary normally
will estimate the value added based on the difference between the price
charged to the first unaffiliated purchaser for the merchandise as sold
in the United States and the price paid for the subject merchandise by
the affiliated person. The Secretary normally will base this
determination on averages of the prices and the value added to the
subject merchandise.
(3) Determining dumping margins. For purposes of determining
dumping margins under paragraphs (1) and (2) of section 772(e) of the
Act, the Secretary may use the weighted-average dumping margins
calculated on sales of identical or other subject merchandise sold to
unaffiliated persons.
(d) Special rule for determining profit. This paragraph sets forth
rules for calculating profit in establishing constructed export price
under section 772(f) of the Act.
(1) Basis for total expenses and total actual profit. In
calculating total expenses and total actual profit, the Secretary
normally will use the aggregate of expenses and profit for all subject
merchandise sold in the United States and all foreign like products
sold in the exporting country, including sales that have been
disregarded as being below the cost of production. (See section 773(b)
of the Act (sales at less than cost of production).)
(2) Use of financial reports. For purposes of determining profit
under section 772(d)(3) of the Act, the Secretary may rely on any
appropriate financial reports, including public, audited financial
statements, or equivalent financial reports, and internal financial
reports prepared in the ordinary course of business.
(3) Voluntary reporting of costs of production. The Secretary will
not require the reporting of costs of production solely for purposes of
determining the amount of profit to be deducted from the constructed
export price. The Secretary will base the calculation of profit on
costs of production if such costs are reported voluntarily by the date
established by the Secretary, and provided that it is practicable to do
so and the costs of production are verifiable.
(e) Treatment of payments between affiliated persons. Where a
person affiliated with the exporter or producer incurs any of the
expenses deducted from constructed export price under section 772(d) of
the Act and is reimbursed for such expenses by the exporter, producer
or other affiliate, the Secretary normally will make an adjustment
based on the actual cost to the affiliated person. If the Secretary is
satisfied that information regarding the actual cost to the affiliated
person is unavailable to the exporter or producer, the Secretary may
determine the amount of the adjustment on any other reasonable basis,
including the amount of the reimbursement to the affiliated person if
the Secretary is satisfied that such amount reflects the amount usually
paid in the market under consideration.
(f) Reimbursement of antidumping duties and countervailing duties.
(1) In general. (i) In calculating the export price (or the constructed
export price), the Secretary will deduct the amount of any antidumping
duty or countervailing duty which the exporter or producer:
(A) Paid directly on behalf of the importer; or
(B) Reimbursed to the importer.
(ii) The Secretary will not deduct the amount of any antidumping
duty or countervailing duty paid or reimbursed if the exporter or
producer granted to the importer before initiation of the antidumping
investigation in question a warranty of nonapplicability of antidumping
duties or countervailing duties with respect to subject merchandise
which was:
(A) Sold before the date of publication of the Secretary's order
applicable to the merchandise in question; and
(B) Exported before the date of publication of the Secretary's
final antidumping determination.
(iii) Ordinarily, under paragraph (f)(1)(i) of this section, the
Secretary will deduct the amount reimbursed only once in the
calculation of the export price (or constructed export price).
(2) Certificate. The importer must file prior to liquidation a
certificate in the
---- page 27412 ----
following form with the appropriate District Director of Customs:
I hereby certify that I (have) (have not) entered into any
agreement or understanding for the payment or for the refunding to
me, by the manufacturer, producer, seller, or exporter, of all or
any part of the antidumping duties or countervailing duties assessed
upon the following importations of (commodity) from (country): (List
entry numbers) which have been purchased on or after (date of
publication of antidumping notice suspending liquidation in the
Federal Register) or purchased before (same date) but exported on or
after (date of final determination of sales at less than fair
value).
(3) Presumption. The Secretary may presume from an importer's
failure to file the certificate required in paragraph (f)(2) of this
section that the exporter or producer paid or reimbursed the
antidumping duties or countervailing duties.
Sec. 351.403 Sales used in calculating normal value; transactions
between affiliated parties.
(a) Introduction. This section clarifies when the Secretary may use
offers for sale in determining normal value. Additionally, this section
clarifies the authority of the Secretary to use sales to or through an
affiliated party as a basis for normal value. (See section 773(a)(5) of
the Act (indirect sales or offers for sale).)
(b) Sales and offers for sale. In calculating normal value, the
Secretary normally will consider offers for sale only in the absence of
sales and only if the Secretary concludes that acceptance of the offer
can be reasonably expected.
(c) Sales to an affiliated party. If an exporter or producer sold
the foreign like product to an affiliated party, the Secretary may
calculate normal value based on that sale only if satisfied that the
price is comparable to the price at which the exporter or producer sold
the foreign like product to a person who is not affiliated with the
seller.
(d) Sales through an affiliated party. If an exporter or producer
sold the foreign like product through an affiliated party, the
Secretary may calculate normal value based on the sale by such
affiliated party. However, the Secretary normally will not calculate
normal value based on the sale by an affiliated party if sales of the
foreign like product by an exporter or producer to affiliated parties
account for less than five percent of the total value (or quantity) of
the exporter's or producer's sales of the foreign like product in the
market in question or if sales to the affiliated party are comparable,
as defined in paragraph (c) of this section.
Sec. 351.404 Selection of the market to be used as the basis for
normal value.
(a) Introduction. Although in most circumstances sales of the
foreign like product in the home market are the most appropriate basis
for determining normal value, section 773 of the Act also permits use
of sales to a third country or constructed value as the basis for
normal value. This section clarifies the rules for determining the
basis for normal value.
(b) Determination of viable market. (1) In general. The Secretary
will consider the exporting country or a third country as constituting
a viable market if the Secretary is satisfied that sales of the foreign
like product in that country are of sufficient quantity to form the
basis of normal value.
(2) Sufficient quantity. ``Sufficient quantity'' normally means
that the aggregate quantity (or, if quantity is not appropriate, value)
of the foreign like product sold by an exporter or producer in a
country is 5 percent or more of the aggregate quantity (or value) of
its sales of the subject merchandise to the United States.
(c) Calculation of price-based normal value in viable market. (1)
In general. Subject to paragraph (c)(2) of this section:
(i) If the exporting country constitutes a viable market, the
Secretary will calculate normal value on the basis of price in the
exporting country (see section 773(a)(1)(B)(i) of the Act (price used
for determining normal value)); or
(ii) If the exporting country does not constitute a viable market,
but a third country does constitute a viable market, the Secretary may
calculate normal value on the basis of price to a third country (see
section 773(a)(1)(B)(ii) of the Act (use of third country prices in
determining normal value)).
(2) Exception. The Secretary may decline to calculate normal value
in a particular market under paragraph (c)(1) of this section if it is
established to the satisfaction of the Secretary that:
(i) In the case of the exporting country or a third country, a
particular market situation exists that does not permit a proper
comparison with the export price or constructed export price (see
section 773(a)(1)(B)(ii)(III) or section 773(a)(1)(C)(iii) of the Act);
or
(ii) In the case of a third country, the price is not
representative (see section 773(a)(1)(B)(ii)(I) of the Act).
(d) Allegations concerning market viability and the basis for
determining a price-based normal value. In an antidumping investigation
or review, allegations regarding market viability or the exceptions in
paragraph (c)(2) of this section, must be filed, with all supporting
factual information, in accordance with Sec. 351.301(d)(1).
(e) Selection of third country. For purposes of calculating normal
value based on prices in a third country, where prices in more than one
third country satisfy the criteria of section 773(a)(1)(B)(ii) of the
Act and this section, the Secretary generally will select the third
country based on the following criteria:
(1) The foreign like product exported to a particular third country
is more similar to the subject merchandise exported to the United
States than is the foreign like product exported to other third
countries;
(2) The volume of sales to a particular third country is larger
than the volume of sales to other third countries;
(3) Such other factors as the Secretary considers appropriate.
(f) Third country sales and constructed value. The Secretary
normally will calculate normal value based on sales to a third country
rather than on constructed value if adequate information is available
and verifiable (see section 773(a)(4) of the Act (use of constructed
value)).
Sec. 351.405 Calculation of normal value based on constructed value.
(a) Introduction. In certain circumstances, the Secretary may
determine normal value by constructing a value based on the cost of
manufacture, selling general and administrative expenses, and profit.
The Secretary may use constructed value as the basis for normal value
where: neither the home market nor a third country market is viable;
sales below the cost of production are disregarded; sales outside the
ordinary course of trade, or sales the prices of which are otherwise
unrepresentative, are disregarded; sales used to establish a fictitious
market are disregarded; no contemporaneous sales of comparable
merchandise are available; or in other circumstances where the
Secretary determines that home market or third country prices are
inappropriate. (See section 773(e) and section 773(f) of the Act.) This
section clarifies the meaning of certain terms relating to constructed
value.
(b) Profit and selling, general, and administrative expenses. In
determining the amount to be added to constructed value for profit and
for selling, general, and administrative expenses, the following rules
will apply:
(1) Under section 773(e)(2)(A) of the Act, ``foreign country''
means the country in which the merchandise is produced or a third
country selected by the Secretary under Sec. 351.404(e), as
appropriate.
---- page 27413 ----
(2) Under section 773(e)(2)(B) of the Act, ``foreign country''
means the country in which the merchandise is produced.
Sec. 351.406 Calculation of normal value if sales are made at less
than cost of production.
(a) Introduction. In determining normal value, the Secretary may
disregard sales of the foreign like product made at prices that are
less than the cost of production of that product. However, such sales
will be disregarded only if they are made within an extended period of
time, in substantial quantities, and are not at prices which permit
recovery of costs within a reasonable period of time. (See section
773(b) of the Act.) This section clarifies the meaning of the term
``extended period of time'' as used in the Act.
(b) Extended period of time. The ``extended period of time'' under
section 773(b)(1)(A) of the Act normally will coincide with the period
in which the sales under consideration for the determination of normal
value were made.
Sec. 351.407 Calculation of constructed value and cost of production.
(a) Introduction. This section sets forth certain rules that are
common to the calculation of constructed value and the cost of
production. (See section 773(f) of the Act.)
(b) Determination of value under the major input rule. For purposes
of section 773(f)(3) of the Act, the Secretary normally will determine
the value of a major input purchased from an affiliated person based on
the higher of:
(1) The price paid by the exporter or producer to the affiliated
person for the major input;
(2) The amount usually reflected in sales of the major input in the
market under consideration; or
(3) The cost to the affiliated person of producing the major input.
(c) Allocation of costs. In determining the appropriate method for
allocating costs among products, the Secretary may take into account
production quantities, relative sales values, and other quantitative
and qualitative factors associated with the manufacture and sale of the
subject merchandise and the foreign like product.
(d) Startup costs. (1) In identifying startup operations under
section 773(f)(1)(C)(ii) of the Act:
(i) ``New production facilities'' includes the substantially
complete retooling of an existing plant. Substantially complete
retooling involves the replacement of nearly all production machinery
or the equivalent rebuilding of existing machinery.
(ii) A ``new product'' is one requiring substantial additional
investment, including products which, though sold under an existing
nameplate, involve the complete revamping or redesign of the product.
Routine model year changes will not be considered a new product.
(iii) Mere improvements to existing products or ongoing
improvements to existing facilities will not be considered startup
operations.
(iv) An expansion of the capacity of an existing production line
will not qualify as a startup operation unless the expansion
constitutes such a major undertaking that it requires the construction
of a new facility and results in a depression of production levels due
to technical factors associated with the initial phase of commercial
production of the expanded facilities.
(2) In identifying the end of the startup period under clauses (ii)
and (iii) of section 773(f)(1)(C) of the Act:
(i) The attainment of peak production levels will not be the
standard for identifying the end of the startup period, because the
startup period may end well before a company achieves optimum capacity
utilization.
(ii) The startup period will not be extended to cover improvements
and cost reductions that may occur over the entire life cycle of a
product.
(3) In determining when a producer reaches commercial production
levels under section 773(f)(1)(C)(ii) of the Act:
(i) The Secretary will consider the actual production experience of
the merchandise in question, measuring production on the basis of units
processed.
(ii) To the extent necessary, the Secretary will examine factors in
addition to those specified in section 773(f)(1)(C)(ii) of the Act,
including historical data reflecting the same producer's or other
producers' experiences in producing the same or similar products. A
producer's projections of future volume or cost will be accorded little
weight.
(4) In making an adjustment for startup operations under section
773(f)(1)(C)(iii) of the Act:
(i) The Secretary will determine the duration of the startup period
on a case-by-case basis.
(ii) The difference between actual costs and the costs of
production calculated for startup costs will be amortized over a
reasonable period of time subsequent to the startup period over the
life of the product or machinery, as appropriate.
(iii) The Secretary will consider unit production costs to be items
such as depreciation of equipment and plant, labor costs, insurance,
rent and lease expenses, material costs, and factory overhead. The
Secretary will not consider sales expenses, such as advertising costs,
or other general and administrative or non-production costs (such as
general research and development costs), as startup costs.
Sec. 351.408 Calculation of normal value of merchandise from nonmarket
economy countries.
(a) Introduction. In identifying dumping from a nonmarket economy
country, the Secretary normally will calculate normal value by valuing
the nonmarket economy producers' factors of production in a market
economy country. (See section 773(c) of the Act.) This section
clarifies when and how this special methodology for nonmarket economies
will be applied.
(b) Economic Comparability. In determining whether a country is at
a level of economic development comparable to the nonmarket economy
under section 773(c)(2)(B) or section 773(c)(4)(A) of the Act, the
Secretary will place primary emphasis on per capita GDP as the measure
of economic comparability.
(c) Valuation of Factors of Production. For purposes of valuing the
factors of production, general expenses, profit, and the cost of
containers, coverings, and other expenses (referred to collectively as
``factors'') under section 773(c)(1) of the Act the following rules
will apply:
(1) Information used to value factors. The Secretary normally will
use publicly available information to value factors. However, where a
factor is purchased from a market economy supplier and paid for in a
market economy currency, the Secretary normally will use the price paid
to the market economy supplier. In those instances where a portion of
the factor is purchased from a market economy supplier and the
remainder from a nonmarket economy supplier, the Secretary normally
will value the factor using the price paid to the market economy
supplier.
(2) Valuation in a single country. Except for labor, as provided in
paragraph (d)(3) of this section, the Secretary normally will value all
factors in a single surrogate country.
(3) Labor. For labor, the Secretary will use regression-based wage
rates reflective of the observed relationship between wages and
national income in market economy countries. The Secretary will
calculate the wage rate to
---- page 27414 ----
be applied in nonmarket economy proceedings each year. The calculation
will be based on current data, and will be made available to the
public.
(4) Manufacturing overhead, general expenses, and profit. For
manufacturing overhead, general expenses, and profit, the Secretary
normally will use non-proprietary information gathered from producers
of identical or comparable merchandise in the surrogate country.
Sec. 351.409 Differences in quantities.
(a) Introduction. Because the quantity of merchandise sold may
affect the price, in comparing export price or constructed export price
with normal value, the Secretary will make a reasonable allowance for
any difference in quantities to the extent the Secretary is satisfied
that the amount of any price differential (or lack thereof) is wholly
or partly due to that difference in quantities. (See section
773(a)(6)(C)(i) of the Act.)
(b) Sales with quantity discounts in calculating normal value. The
Secretary normally will calculate normal value based on sales with
quantity discounts only if:
(1) During the period examined, or during a more representative
period, the exporter or producer granted quantity discounts of at least
the same magnitude on 20 percent or more of sales of the foreign like
product for the relevant country; or
(2) The exporter or producer demonstrates to the Secretary's
satisfaction that the discounts reflect savings specifically
attributable to the production of the different quantities.
(c) Sales with quantity discounts in calculating weighted-average
normal value. If the exporter or producer does not satisfy the
conditions of paragraph (b) of this section, the Secretary will
calculate normal value based on weighted-average prices that include
sales at a discount.
(d) Price lists. In determining whether a discount has been
granted, the existence or lack of a published price list reflecting
such a discount will not be controlling. Ordinarily, the Secretary will
give weight to a price list only if, in the line of trade and market
under consideration, the exporter or producer demonstrates that it has
adhered to its price list.
(e) Relationship to level of trade adjustment. If adjustments are
claimed for both differences in quantities and differences in level of
trade, the Secretary will not make an adjustment for differences in
quantities unless the Secretary is satisfied that the effect on price
comparability of differences in quantities has been identified and
established separately from the effect on price comparability of
differences in the levels of trade.
Sec. 351.410 Differences in circumstances of sale
(a) Introduction. In calculating normal value the Secretary may
make adjustments to account for certain differences in the
circumstances of sales in the United States and foreign markets. (See
section 773(a)(6)(C)(iii) of the Act.) This section clarifies certain
terms used in the statute regarding circumstances of sale adjustments
and describes the adjustment when commissions are paid only in one
market.
(b) In general. With the exception of the allowance described in
paragraph (e) of this section concerning commissions paid in only one
market, the Secretary will make circumstances of sale adjustments under
section 773(a)(6)(C)(iii) of the Act only for direct selling expenses
and assumed expenses.
(c) Direct selling expenses. ``Direct selling expenses'' are
expenses, such as commissions, credit expenses, guarantees, and
warranties, that result from, and bear a direct relationship to, the
particular sale in question.
(d) Assumed expenses. Assumed expenses are selling expenses that
are assumed by the seller on behalf of the buyer, such as advertising
expenses.
(e) Commissions paid in one market. The Secretary normally will
make a reasonable allowance for other selling expenses if the Secretary
makes a reasonable allowance for commissions in one of the markets
under considerations, and no commission is paid in the other market
under consideration. The Secretary will limit the amount of such
allowance to the amount of the other selling expenses incurred in the
one market or the commissions allowed in the other market, whichever is
less.
(f) Reasonable allowance. In deciding what is a reasonable
allowance for any difference in circumstances of sale, the Secretary
normally will consider the cost of such difference to the exporter or
producer but, if appropriate, may also consider the effect of such
difference on the market value of the merchandise.
Sec. 351.411 Differences in physical characteristics.
(a) Introduction. In comparing United States sales with foreign
market sales, the Secretary may determine that the merchandise sold in
the United States does not have the same physical characteristics as
the merchandise sold in the foreign market, and that the difference has
an effect on prices. In calculating normal value, the Secretary will
make a reasonable allowance for such differences. (See section
773(a)(6)(C)(ii) of the Act.)
(b) Reasonable allowance. In deciding what is a reasonable
allowance for differences in physical characteristics, the Secretary
will consider only differences in variable costs associated with the
physical differences. Where appropriate, the Secretary may also
consider differences in the market value. The Secretary will not
consider differences in cost of production when compared merchandise
has identical physical characteristics.
Sec. 351.412 Levels of trade; adjustment for difference in level of
trade; constructed export price offset.
(a) Introduction. In comparing United States sales with foreign
market sales, the Secretary may determine that sales in the two markets
were not made at the same level of trade, and that the difference has
an effect on the comparability of the prices. The Secretary is
authorized to adjust normal value to account for such a difference.
(See section 773(a)(7) of the Act.)
(b) Adjustment for difference in level of trade. The Secretary will
adjust normal value for a difference in level of trade if:
(1) The Secretary calculates normal value at a different level of
trade from the level of trade of the export price or the constructed
export price (whichever is applicable); and
(2) The Secretary determines that the difference in level of trade
has an effect on price comparability.
(c) Identifying levels of trade and differences in levels of trade.
(1) Basis for identifying levels of trade. The Secretary will identify
the level of trade based on:
(i) In the case of export price, the starting price;
(ii) In the case of constructed export price, the starting price,
as adjusted under section 772(d) of the Act; and
(iii) In the case of normal value, the starting price or
constructed value.
(2) Differences in levels of trade. The Secretary will determine
that sales are made at different levels of trade if they are made at
different marketing stages (or their equivalent). Substantial
differences in selling activities are a necessary, but not sufficient,
condition for determining that there is a difference in the stage of
marketing. Some overlap in selling activities will not preclude a
determination that two sales are at different stages of marketing.
(d) Effect on price comparability. (1) In general. The Secretary
will determine that a difference in level of trade has an
---- page 27415 ----
effect on price comparability only if it is established to the
satisfaction of the Secretary that there is a pattern of consistent
price differences between sales in the market in which normal value is
determined:
(i) At the level of trade of the export price or constructed export
price (whichever is appropriate); and
(ii) At the level of trade at which normal value is determined.
(2) Relevant sales. Where possible, the Secretary will make the
determination under paragraph (d)(1) of this section on the basis of
sales of the foreign like product by the producer or exporter. Where
this is not possible, the Secretary may use sales of different or
broader product lines, sales by other companies, or any other
reasonable basis.
(e) Amount of adjustment. The Secretary normally will calculate the
amount of a level of trade adjustment by:
(1) Calculating the weighted-averages of the prices of sales at the
two levels of trade identified in paragraph (d), after making any other
adjustments to those prices appropriate under section 773(a)(6) of the
Act and this subpart;
(2) Calculating the average of the percentage differences between
those weighted-average prices; and
(3) Applying the percentage difference to normal value, where it is
at a different level of trade from the export price or constructed
export price (whichever is applicable), after making any other
adjustments to normal value appropriate under section 773(a)(6) of the
Act and this subpart.
(f) Constructed export price offset. (1) In general. The Secretary
will grant a constructed export price offset only where:
(i) Normal value is compared to constructed export price;
(ii) Normal value is determined at a more advanced level of trade
than the level of trade of the constructed export price; and
(iii) Despite the fact that a person has cooperated to the best of
its ability, the data available do not provide an appropriate basis to
determine under paragraph (d) of this section whether the difference in
level of trade affects price comparability.
(2) Amount of the offset. The amount of the constructed export
price offset will be the amount of indirect selling expenses included
in normal value, up to the amount of indirect selling expenses deducted
in determining constructed export price. In making the constructed
export price offset, ``indirect selling expenses'' means selling
expenses, other than direct selling expenses or assumed selling
expenses (see Sec. 351.410), that the seller would incur regardless of
whether particular sales were made, but that reasonably may be
attributed, in whole or in part, to such sales.
(3) Where data permit determination of affect on price
comparability. Where available data permit the Secretary to determine
under paragraph (d) of this section whether the difference in level of
trade affects price comparability, the Secretary will not grant a
constructed export price offset. In such cases, if the Secretary
determines that price comparability has been affected, the Secretary
will make a level of trade adjustment. If the Secretary determines that
price comparability has not been affected, the Secretary will not grant
either a level of trade adjustment or a constructed export price
offset.
Sec. 351.413 Disregarding insignificant adjustments.
Ordinarily, under section 777A(a)(2) of the Act, an ``insignificant
adjustment'' is any individual adjustment having an ad valorem effect
of less than 0.33 percent, or any group of adjustments having an ad
valorem effect of less than 1.0 percent, of the export price,
constructed export price, or normal value, as the case may be. Groups
of adjustments are adjustments for differences in circumstances of sale
under Sec. 351.410, adjustments for differences in the physical
characteristics of the merchandise under Sec. 351.411, and adjustments
for differences in the levels of trade under Sec. 351.412.
Sec. 351.414 Comparison of normal value with export price (constructed
export price).
(a) Introduction. The Secretary normally will average prices used
as the basis for normal value and, in an investigation, prices used as
the basis for export price or constructed export price as well. This
section explains when and how the Secretary will average prices in
making comparisons of export price or constructed export price with
normal value. (See section 777A(d) of the Act.)
(b) Description of methods of comparison. (1) Average-to-average
method. The ``average-to-average'' method involves a comparison of the
weighted average of the normal values with the weighted average of the
export prices (and constructed export prices) for comparable
merchandise.
(2) Transaction-to-transaction method. The ``transaction-to-
transaction'' method involves a comparison of the normal values of
individual transactions with the export prices (or constructed export
prices) of individual transactions for comparable merchandise.
(3) Average-to-transaction method. The ``average-to-transaction''
method involves a comparison of the weighted average of the normal
values to the export prices (or constructed export prices) of
individual transactions for comparable merchandise.
(c) Preferences. (1) In an investigation, the Secretary normally
will use the average-to-average method. The Secretary will use the
transaction-to-transaction method only in unusual situations, such as
when there are very few sales of subject merchandise and the
merchandise sold in each market is identical or very similar or is
custom-made.
(2) In a review, the Secretary normally will use the average-to-
transaction method.
(d) Application of the average-to-average method. (1) In general.
In applying the average-to-average method, the Secretary will identify
those sales of the subject merchandise to the United States that are
comparable, and will include such sales in an ``averaging group.'' The
Secretary will calculate a weighted average of the export prices and
the constructed export prices of the sales included in the averaging
group, and will compare this weighted average to the weighted average
of the normal values of such sales.
(2) Identification of the averaging group. An averaging group will
consist of subject merchandise that is identical or virtually identical
in all physical characteristics and that is sold to the United States
at the same level of trade. In identifying sales to be included in an
averaging group, the Secretary also will take into account, where
appropriate, the region of the United States in which the merchandise
is sold, and such other factors as the Secretary considers relevant.
(3) Time period over which weighted average is calculated. When
applying the average-to-average method, the Secretary normally will
calculate weighted averages for the entire period of investigation or
review, as the case may be. However, when normal values, export prices,
or constructed export prices differ significantly over the course of
the period of investigation or review, the Secretary may calculate
weighted averages for such shorter period as the Secretary deems
appropriate.
(e) Application of the average-to-transaction method. (1) In
general. In applying the average-to-transaction method in a review,
when normal value is based on the weighted average of sales of the
foreign like product, the
---- page 27416 ----
Secretary will limit the averaging of such prices to sales incurred
during the contemporaneous month.
(2) Contemporaneous month. Normally, the Secretary will select as
the contemporaneous month the first of the following which applies:
(i) The month during which the particular U.S. sale under
consideration was made;
(ii) If there are no sales of the foreign like product during this
month, the most recent of the three months prior to the month of the
U.S. sale in which there was a sale of the foreign like product.
(iii) If there are no sales of the foreign like product during any
of these months, the earlier of the two months following the month of
the U.S. sale in which there was a sale of the foreign like product.
(f) Targeted dumping. (1) In general. Notwithstanding paragraph
(c)(1) of this section, the Secretary may apply the average-to-
transaction method, as described in paragraph (e) of this section, in
an antidumping investigation if:
(i) As determined through the use of, among other things, standard
and appropriate statistical techniques, there is targeted dumping in
the form of a pattern of export prices (or constructed export prices)
for comparable merchandise that differ significantly among purchasers,
regions, or periods of time; and
(ii) The Secretary determines that such differences cannot be taken
into account using the average-to-average method or the transaction-to-
transaction method and explains the basis for that determination.
(2) Limitation of average-to-transaction method to targeted
dumping. Where the criteria for identifying targeted dumping under
paragraph (f)(1) of this section are satisfied, the Secretary normally
will limit the application of the average-to-transaction method to
those sales that constitute targeted dumping under paragraph (f)(1)(i)
of this section.
(3) Allegations concerning targeted dumping. The Secretary normally
will examine only targeted dumping described in an allegation, filed
within the time indicated in Sec. 351.301(d)(5). Allegations must
include all supporting factual information, and an explanation as to
why the average-to-average or transaction-to-transaction method could
not take into account any alleged price differences.
(g) Requests for information. In an investigation, the Secretary
will request information relevant to the identification of averaging
groups under paragraph (d)(2) of this section and to the analysis of
possible targeted dumping under paragraph (f) of this section. If a
response to a request for such information is such as to warrant the
application of the facts otherwise available, within the meaning of
section 776 of the Act and Sec. 351.308, the Secretary may apply the
average-to-transaction method to all the sales of the producer or
exporter concerned.
Sec. 351.415 Conversion of currency.
(a) In general. In an antidumping proceeding, the Secretary will
convert foreign currencies into United States dollars using the rate of
exchange on the date of sale of the subject merchandise.
(b) Exception. If the Secretary establishes that a currency
transaction on forward markets is directly linked to an export sale
under consideration, the Secretary will use the exchange rate specified
with respect to such foreign currency in the forward sale agreement to
convert the foreign currency.
(c) Exchange rate fluctuations. The Secretary will ignore
fluctuations in exchange rates.
(d) Sustained movement in foreign currency value. In an antidumping
investigation, if there is a sustained movement increasing the value of
the foreign currency relative to the United States dollar, the
Secretary will allow exporters 60 days to adjust their prices to
reflect such sustained movement.
Subpart E--[Reserved]
Subpart F--Subsidy Determinations Regarding Cheese Subject to an
In-Quota Rate of Duty
Sec. 351.601 Annual list and quarterly update of subsidies.
The Secretary will make the determinations called for by section
702(a) of the Trade Agreements Act of 1979, as amended (19 U.S.C. 1202
note) based on the available information, and will publish the annual
list and quarterly updates described in such section in the Federal
Register.
Sec. 351.602 Determination upon request.
(a) Request for determination. (1) Any person, including the
Secretary of Agriculture, who has reason to believe there have been
changes in or additions to the latest annual list published under
Sec. 351.601 may request in writing that the Secretary determine under
section 702(a)(3) of the Trade Agreements Act of 1979 whether there are
any changes or additions. The person must file the request with the
Central Records Unit (see Sec. 351.103). The request must allege either
a change in the type or amount of any subsidy included in the latest
annual list or quarterly update or an additional subsidy not included
in that list or update provided by a foreign government, and must
contain the following, to the extent reasonably available to the
requesting person:
(i) The name and address of the person;
(ii) The article of cheese subject to an in-quota rate of duty
allegedly benefitting from the changed or additional subsidy;
(iii) The country of origin of the article of cheese subject to an
in-quota rate of duty; and
(iv) The alleged subsidy or changed subsidy and relevant factual
information (particularly documentary evidence) regarding the alleged
changed or additional subsidy including the authority under which it is
provided, the manner in which it is paid, and the value of the subsidy
to producers or exporters of the article.
(2) The requirements of Sec. 351.303 (c) and (d) apply to this
section.
(b) Determination. Not later than 30 days after receiving an
acceptable request, the Secretary will:
(1) In consultation with the Secretary of Agriculture, determine
based on the available information whether there has been any change in
the type or amount of any subsidy included in the latest annual list or
quarterly update or an additional subsidy not included in that list or
update is being provided by a foreign government;
(2) Notify the Secretary of Agriculture and the person making the
request of the determination; and
(3) Promptly publish in the Federal Register notice of any changes
or additions.
Sec. 351.603 Complaint of price-undercutting by subsidized imports.
Upon receipt of a complaint filed with the Secretary of Agriculture
under section 702(b) of the Trade Agreements Act concerning price-
undercutting by subsidized imports, the Secretary will promptly
determine, under section 702(a)(3) of the Trade Agreements Act of 1979,
whether or not the alleged subsidies are included in or should be added
to the latest annual list or quarterly update.
Sec. 351.604 Access to information.
Subpart C of this part applies to factual information submitted in
connection with this subpart.
Subpart G--Applicability Dates
Sec. 351.701 Applicability dates.
The regulations contained in this part 351 apply to all
administrative reviews initiated on the basis of requests made
---- page 27417 ----
on or after the first day of July, 1997, to all investigations and
other segments of proceedings initiated on the basis of petitions filed
or requests made after June 18, 1997 and to segments of proceedings
self-initiated by the Department after June 18, 1997. Segments of
proceedings to which part 351 do not apply will continue to be governed
by the regulations in effect on the date the petitions were filed or
requests were made for those segments, to the extent that those
regulations were not invalidated by the URAA or replaced by the interim
final regulations published on May 11, 1995 (60 FR 25130 (1995)). For
segments of proceedings initiated on the basis of petitions filed or
requests made after January 1, 1995, but before part 351 applies, part
351 will serve as a restatement of the Department's interpretation of
the requirements of the Act as amended by the URAA.
Annex I.--Deadlines for Parties in Countervailing Investigations
------------------------------------------------------------------------
Day {1} Event Regulation
------------------------------------------------------------------------
0 days...................... Initiation.......... ....................
31 days {2}................. Notification of 351.301(c)(2)(iv)
difficulty in (14 days after date
responding to of receipt of
questionnaire. initial
questionnaire).
37 days..................... Application for an 351.305(b)(3).
administrative
protective order.
40 days..................... Request for 351.205(e) (25 days
postponement by or more before
petitioner. preliminary
determination).
45 days..................... Allegation of 351.206(c)(2)(i) (20
critical days before
circumstances. preliminary
determination).
47 days..................... Questionnaire 351.301(c)(2)(iii)
response. (30 days from date
of receipt of
initial
questionnaire).
55 days..................... Allegation of 351.301(d)(4)(ii)(A)
upstream subsidies. (10 days before
preliminary
determination).
65 days (Can be extended)... Preliminary 351.205(b)(1).
determination.
72 days..................... Submission of 351.208(f)(1)(B) (7
proposed suspension days after
agreement. preliminary
determination).
75 days {3}................. Submission of 351.301(b)(1) (7
factual information. days before date on
which verification
is to commence).
75 days..................... Submission of 351.224(c)(2) (5
ministerial error days after release
comments. of disclosure
documents).
77 days {4}................. Request to align a 351.210(i) (5 days
CVD case with a after date of
concurrent AD case. publication of
preliminary
determination).
102 days.................... Request for a 351.310(c) (30 days
hearing. after date of
publication of
preliminary
determination).
119 days.................... Critical 351.206(e) (21 days
circumstances or more before
allegation. final
determination).
122 days.................... Requests for closed 351.310(f) (No later
hearing sessions. than the date the
case briefs are
due).
122 days.................... Submission of briefs 351.309(c)(1)(i) (50
days after date of
publication of
preliminary
determination).
125 days.................... Allegation of 351.301(d)(4)(ii)(B)
upstream subsidies. (15 days before
final
determination).
127 days.................... Submission of 351.309(d) (5 days
rebuttal briefs. after dead-line for
filing case brief).
129 days.................... Hearing............. 351.310(d)(1) (2
days after
submission of
rebuttal briefs).
140 days (Can be extended).. Final determination. 351.210(b)(1) (75
days after
preliminary
determination).
150 days.................... Submission of 351.224(c)(2) (5
ministerial error days after release
comments. of disclosure
documents).
155 days.................... Submission of 351.224(c)(3) (5
replies to days after filing
ministerial error of comments).
comments.
192 days.................... Order issued........ 351.211(b).
------------------------------------------------------------------------
{1} Indicates the number of days from the date of initiation. Most of
the deadlines shown here are approximate. The actual deadline in any
particular segment of a proceeding may depend on the date of an
earlier event or be established by the Secretary.
{2} Assumes that the Department sends out the questionnaire within 10
days of the initiation and allows 7 days for receipt of the
questionnaire from the date on which it was transmitted.
{3} Assumes about 17 days between the preliminary determination and
verification.
{4} Assumes that the preliminary determination is published 7 days after
issuance (i.e., signature).
Annex II.--Deadlines for Parties in Countervailing Administrative
Reviews
------------------------------------------------------------------------
Day {1} Event Regulation
------------------------------------------------------------------------
0 days...................... Request for review.. 351.213(b) (Last day
of the anniversary
month).
30 days..................... Publication of 351.221(c)(1)(i)
initiation notice. (End of month
following the
anniversary month).
66 days {2}................. Notification of 351.301(c)(2)(iv)
difficulty in (14 days after date
responding to of receipt of
questionnaire. initial
questionnaire).
75 days..................... Application for an 351.305(b)(3).
administrative
protective order.
---- page 27418 ----
90 days {3}................. Questionnaire 351.301(c)(2)(iii)
response. (At least 30 days
after date of
receipt of initial
questionnaire).
120 days.................... Withdrawal of 351.213(d)(1) (90
request for review. days after date of
publication of
initiation).
130 days.................... Request for 351.307(b)(1)(v)
verification. (100 days after
date of publication
of initiation).
140 days.................... Submission of 351.301(b)(2).
factual information.
245 days (Can be extended).. Preliminary results 351.213(h)(1).
of review.
282 days {4}................ Request for a 351.310(c);
hearing and/or 351.310(f) (30 days
closed hearing after date of
session. publication of
preliminary
results).
282 days.................... Submission of briefs 351.309(c)(1)(ii)
(30 days after date
of publication of
preliminary
results).
287 days.................... Submission of 351.309(d)(1) (5
rebuttal briefs. days after deadline
for filing case
briefs).
289 days.................... Hearing............. 351.310(d)(1) (2
days after
submission of
rebuttal briefs).
372 days (Can be extended).. Final results of 351.213(h)(1) (120
review. days after date of
publication of
preliminary
results).
382 days.................... Submission of 351.224(c)(2) (5
ministerial error days after release
comments. of disclosure
documents).
387 days.................... Replies to 351.224(c)(3) (5
ministerial error days after filing
comments. of comments).
------------------------------------------------------------------------
{1} Indicates the number of days from the end of the anniversary month.
Most of the deadlines shown here are approximate. The actual deadline
in any particular segment of a proceeding may depend on the date of an
earlier event or be established by the Secretary.
{2} Assumes that the Department sends out the questionnaire 45 days
after the last day of the anniversary month and allows 7 days for
receipt of the questionnaire from the date on which it was
transmitted.
{3} Assumes that the Department sends out the questionnaire on day 45
and the response is due 45 days later.
{4} Assumes that the preliminary results are published 7 days after
issuance (i.e., signature).
Annex III.--Deadlines for Parties in Antidumping Investigations
------------------------------------------------------------------------
Day {1} Event Regulation
------------------------------------------------------------------------
0 days...................... Initiation.......... ....................
37 days..................... Application for an 351.305(b)(3).
administrative
protective order.
50 days..................... Country-wide cost 351.301(d)(2)(i)(A)
allegation. (20 days after date
on which initial
questionnaire was
transmitted).
51 days {2}................. Notification of 351.301(c)(2)(iv)
difficulty in (Within 14 days
responding to after date of
questionnaire. receipt of initial
questionnaire).
51 days..................... Section A response.. None.
67 days..................... Sections B, C, D, E 351.301(c)(2)(iii)
responses. (At least 30 days
after date of
receipt of initial
questionnaire).
70 days..................... Viability arguments. 351.301(d)(1) (40
days after date on
which initial
questionnaire was
transmitted).
87 days..................... Company-specific 351.301(d)(2)(i)(B).
cost allegations.
87 days..................... Major input cost 351.301(d)(3).
allegations.
115 days.................... Request for 351.205(e) (25 days
postponement by or more before
petitioner. preliminary
determination).
120 days.................... Allegation of 351.206(c)(2)(i) (20
critical days before
circumstances. preliminary
determination).
140 days (Can be extended).. Preliminary 351.205(b)(1).
determination.
150 days.................... Submission of 351.224(c)(2) (5
ministerial error days after release
comments. of disclosure
documents).
155 days.................... Submission of 351.208(f)(1)(A) (15
proposed suspension days after
agreement. preliminary
determination).
161 days {3}................ Submission of 351.301(b)(1) (7
factual information. days before date on
which verification
is to commence).
177 days {4}................ Request for a 351.310(c) (30 days
hearing. after date of
publication of
preliminary
determination).
187 days.................... Submission of 351.301(c)(3)(i) (40
publicly available days after date of
information to publication of
value factors preliminary
(NME's). determination).
194 days.................... Critical 351.206(e) (21 days
circumstance before final
allegation. determination).
197 days (Can be changed)... Request for closed 351.310(f) (No later
hearing sessions. than the date the
case briefs are
due).
197 days (Can be changed)... Submission of briefs 351.309(c)(1)(i) (50
days after date of
publication of
preliminary
determination).
202 days.................... Submission of 351.309(d) (5 days
rebuttal briefs. after dealine for
filing case
briefs).
204 days.................... Hearing............. 351.310(d)(1) (2
days after
submission of
rebuttal briefs).
---- page 27419 ----
215 days.................... Request for 351.210(e).
postponement of the
final determination.
215 days (Can be extended).. Final determination. 351.210(b)(1) (75
days after
preliminary
determination).
225 days.................... Submission 351.224(c)(2) (5
ministerial error days after release
comments. of disclosure
documents).
230 days.................... Replies to 351.224(c)(3) (5
ministerial error days after filing
comments. of comments).
267 days.................... Order issued........ 351.211(b).
------------------------------------------------------------------------
{1} Indicates the number of days from the date of initiation. Most of
the deadlines shown here are approximate. The actual deadline in any
particular segment of a proceeding may depend on the date of an
earlier event or be established by the Secretary.
{2} Assumes that the Department sends out the questionnaire 5 days after
the ITC vote and allows 7 days for receipt of the questionnaire from
the date on which it was transmitted.
{3} Assumes about 28 days between the preliminary determination and
verification.
{4} Assumes that the preliminary determination is published 7 days after
issuance (i.e., signature).
Annex IV.--Deadlines for Parties in Antidumping Administrative Reviews
------------------------------------------------------------------------
Day{1} Event Regulation
------------------------------------------------------------------------
0 days...................... Request for review.. 351.213(b) (Last day
of the anniversary
month).
30 days..................... Publication of 351.221 (c)(1)(i)
initiation. (End of month
following the
anniversary month).
37 days..................... Application for an 351.305(b)(3).
administrative
protective order.
60 days..................... Request to examine 351.213(j) (30 days
absorption of after date of
duties (AD). publication of
initiation).
66 days {2}................. Notification of 351.301(c)(2)(iv)
difficulty in (14 days after date
responding to of receipt of
questionnaire. initial
questionnaire).
66 days..................... Section A response.. None.
85 days..................... Viability arguments. 351.301(d)(1) (40
days after date of
transmittal of
initial
questionnaire).
90 days{3}.................. Sections B, C, D, E 351.301(c)(2)(iii)
response. (At least 30 days
after date of
receipt of initial
questionnaire).
110 days.................... Company-specific 351.301(d)(2)(i)(B)
cost allegations. (20 days after
relevant section is
filed).
110 days.................... Major input cost 351.301(d)(3) (20
allegations. days after relevant
section is filed).
120 days.................... Withdrawal of 351.213(d)(1) (90
request for review. days after date of
publication of
initiation)
130 days.................... Request for 351.307(b)(1)(v)
verification. (100 days after
date of publication
of initiation).
140 days.................... Submission of 351.301(b)(2).
factual information.
245 days (Can be extended).. Preliminary results 351.213(h)(1).
of review.
272 days{4}................. Submission of 351.301(c)(3)(ii)
publicly available (20 days after date
information to of publication of
value factors preliminary
(NME's). results).
282 days.................... Request for a 351.310(c);
hearing and/or 351.310(f) (30 days
closed hearing after date of
session. publication of
preliminary
results).
282 days.................... Submission of briefs 351.309(c)(1)(ii)
(30 days after date
of publication of
preliminary
results).
287 days.................... Submission of 351.309(d)(1) (5
rebuttal briefs. days after deadline
for filing case
briefs).
289 days.................... Hearing; closed 351.310(d)(1) (2
hearing session. days after
submission of
rebuttal briefs).
372 days (Can be extended).. Final results of 351.213(h)(1) (120
review. days after date of
publication of
preliminary
results).
382 days.................... Ministerial error 351.224(c)(2) (5
comments. days after release
of disclosure
documents).
387 days.................... Replies to 351.224(c)(3) (5
ministerial error days after filing
comments. of comments).
------------------------------------------------------------------------
{1} Indicates the number of days from the end of the anniversary month.
Most of the deadlines shown here are approximate. The actual deadline
in any particular segment of a proceeding may depend on the date of an
earlier event or be established by the Secretary.
{2} Assumes that the Department sends out the questionnaire 45 days
after the last day of the anniversary month and allows 7 days for
receipt of the questionnaire from the date on which it was
transmitted.
{3} Assumes that the Department sends out the questionnaire on day 45
and the response is due 45 days later.
{4} Assumes that the preliminary results are published 7 days after
issuance (i.e., signature).
---- page 27420 ----
Annex V.--Comparison of Prior and New Regulations
----------------------------------------------------------------------------------------------------------------
Prior New Description
----------------------------------------------------------------------------------------------------------------
PART 353--ANTIDUMPING DUTIES
----------------------------------------------------------------------------------------------------------------
Subpart A--Scope and Definitions
----------------------------------------------------------------------------------------------------------------
353.1.................................... 351.101................................. Scope of regulations.
353.2.................................... 351.102................................. Definitions.
353.3.................................... 351.104................................. Record of proceedings.
353.4.................................... 351.105................................. Public, proprietary,
privileged & classified.
353.5.................................... Removed................................. Trade and Tariff Act of
1984 amendments.
353.6.................................... 351.106................................. De minimis weighted-average
dumping margin.
----------------------------------------------------------------------------------------------------------------
Subpart B--Antidumping Duty Procedures
----------------------------------------------------------------------------------------------------------------
353.11................................... 351.201................................. Self-initiation.
353.12................................... 351.202................................. Petition requirements.
353.13................................... 351.203................................. Determination of
sufficiency of petition.
353.14................................... 351.204(e).............................. Exclusion from antidumping
duty order.
353.15................................... 351.205................................. Preliminary determination.
353.16................................... 351.206................................. Critical circumstances.
353.17................................... 351.207................................. Termination of
investigation.
353.18................................... 351.208................................. Suspension of
investigation.
353.19................................... 351.209................................. Violation of suspension
agreement.
353.20................................... 351.210................................. Final determination.
353.21................................... 351.211................................. Antidumping duty order.
353.21(c)................................ 351.204(e).............................. Exclusion from antidumping
duty order.
1353.22 (a)-(d).......................... 351.213,................................ Administrative reviews
351.221................................. under 751(a) of the Act.
353.22(e)................................ 351.212(c).............................. Automatic assessment of
duties.
353.22(f)................................ 351.216,................................ Changed circumstances
351.221(c)(3)........................... reviews.
353.22(g)................................ 351.215,................................ Expedited antidumping
351.221(c)(2)........................... review.
353.23................................... 351.212(d).............................. Provisional measures
deposit cap.
353.24................................... 351.212(e).............................. Interest on overpayments
and under-payments.
353.25................................... 351.222................................. Revocation of orders;
termination of suspended
investigations.
353.26................................... 351.402(f).............................. Reimbursement of duties.
353.27................................... 351.223................................. Downstream product
monitoring.
353.28................................... 351.224................................. Correction of ministerial
errors.
353.29................................... 351.225................................. Scope rulings.
----------------------------------------------------------------------------------------------------------------
Subpart C--Information and Argument
----------------------------------------------------------------------------------------------------------------
353.31 (a)-(c)........................... 351.301................................. Time Limits for submission
of factual information.
353.31(a)(3)............................. 351.301(d),............................. Return of untimely
351.104(a)(2)........................... material.
353.31(b)(3)............................. 351.302(c).............................. Request for extension of
time.
353.31 (d)-(i)........................... 351.303................................. Filing, format,
translation, service and
certification.
353.32................................... 351.304................................. Request for proprietary
treatment of information.
353.33................................... 351.104, 351.304(a)(2).................. Information exempt from
disclosure.
353.34................................... 351.305, 351.306........................ Disclosure of information
under protective order.
353.35................................... Removed................................. Ex parte meeting.
353.36................................... 351.307................................. Verification.
353.37................................... 351.308................................. Determination on the basis
of the facts available.
353.38 (a)-(e)........................... 351.309................................. Written argument.
353.38(f)................................ 351.310................................. Hearings.
----------------------------------------------------------------------------------------------------------------
Subpart D--Calculation of Export Price, Constructed Export Price, Fair Value and Normal Value
----------------------------------------------------------------------------------------------------------------
353.41................................... 351.402................................. Calculation of export
price.
353.42(a)................................ 351.102................................. Fair value (definition).
353.42(b)................................ 351.104(c).............................. Transaction and persons
examined.
353.43................................... 351.403(b).............................. Sales used in calculating
normal value.
353.44................................... Removed................................. Sales at varying prices.
353.45................................... 351.403................................. Transactions between
affiliated parties.
353.46................................... 351.404................................. Selection of home market as
the basis for normal
value.
353.47................................... Removed................................. Intermediate countries.
353.48................................... 351.404................................. Basis for normal value if
home market sales are
inadequate.
353.49................................... 351.404................................. Sales to a third country.
353.50................................... 351.405, 351.407........................ Calculation of normal value
based on constructed
value.
353.51................................... 351.406, 351.407........................ Sales at less than the cost
of production.
353.52................................... 351.408................................. Nonmarket economy
countries.
353.53................................... Removed................................. Multinational corporations.
---- page 27421 ----
353.54................................... 351.401(b).............................. Claims for adjustments.
353.55................................... 351.409................................. Differences in quantities.
353.56................................... 351.410................................. Differences in
circumstances of sale.
353.57................................... 351.411................................. Differences in physical
characteristics.
353.58................................... 351.412................................. Levels of trade.
353.59(a)................................ 351.413................................. Insignificant adjustments.
353.59(b)................................ 351.414................................. Use of averaging.
353.60................................... 351.415................................. Conversion of currency.
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PART 355--COUNTERVAILING DUTIES
----------------------------------------------------------------------------------------------------------------
Subpart A--Scope and Definitions
----------------------------------------------------------------------------------------------------------------
355.1.................................... 351.001................................. Scope of regulations.
355.2.................................... 351.002................................. Definitions.
355.3.................................... 351.004................................. Record of proceeding.
355.4.................................... 351.005................................. Public, proprietary,
privileged & classified.
355.5.................................... 351.003(a).............................. Subsidy library.
355.6.................................... Removed................................. Trade and Tariff Act of
1984 amendments.
355.7.................................... 351.006................................. De minimis net subsidies.
----------------------------------------------------------------------------------------------------------------
Subpart B--Countervailing Duty Procedures
----------------------------------------------------------------------------------------------------------------
355.11................................... 351.101................................. Delf-initiation.
355.12................................... 351.102................................. Petition requirements.
355.13................................... 351.103................................. Determination of
sufficiency of petition.
355.14................................... 351.104(e).............................. Exclusion from
countervailing duty order.
355.15................................... 351.105................................. Preliminary determination.
355.16................................... 351.106................................. Critical circumstances.
355.17................................... 351.107................................. Termination of
investigation.
355.18................................... 351.108................................. Suspension of
investigation.
355.19................................... 351.109................................. Violation of agreement.
355.20................................... 351.110................................. Final determination.
355.21................................... 351.111................................. Countervailing duty order.
355.21(c)................................ 351.104(e).............................. Exclusion from
countervailing duty order.
355.22 (a)-(c)........................... 351.113, 351.121........................ Administrative reviews
under 751(a) of the Act.
355.22(d)................................ Removed................................. Calculation of individual
rates.
355.22(e)................................ 351.113(h).............................. Possible cancellation or
revision of suspension
agreements.
355.22(f)................................ Removed................................. Review of individual
producer or exporter.
355.22(g)................................ 351.112(c).............................. Automatic assessment of
duties
355.22(h)................................ 351.116,................................ Changed circumstances
351.121(c)(3)........................... review
355.22(i)................................ 351.120,................................ Review at the direction of
351.221(c)(7)........................... the President.
355.23................................... 351.112(d).............................. Provisional measures
deposit cap
355.24................................... 351.112(e).............................. Interest on overpayments
and underpayments.
355.25................................... 351.112................................. Revocation of orders;
termination of suspended
investigations.
355.27................................... 351.123................................. Downstream product
monitoring.
355.28................................... 351.124................................. Correction of ministerial
errors.
355.29................................... 351.125................................. Scope determinations.
----------------------------------------------------------------------------------------------------------------
Subpart C--Information and Argument
----------------------------------------------------------------------------------------------------------------
355.31 (a)-(c)........................... 351.301................................. Time limits for submission
of factual information.
355.31(a)(3)............................. 351.302(d),............................. Return of untimely
351.104(a)(2)........................... material.
355.31(b)(3)............................. 351.302(c).............................. Request for extension of
time.
355.31 (d)-(i)........................... 351.303................................. Filing, format,
translation, service and
certification.
355.32................................... 351.304................................. Request for proprietary
treatment of information.
355.33................................... 351.104,................................ Information exempt from
351.304(a)(2)........................... disclosure.
355.34................................... 351.305,................................ Disclosure of information
351.306................................. under protective order.
355.35................................... Removed................................. Ex parte meeting.
355.36................................... 351.307................................. Verification.
355.37................................... 351.308................................. Determinations on the basis
of the facts available.
355.38 (a)-(e)........................... 351.309................................. Written argument.
355.38(f)................................ 351.310................................. Hearings.
355.39................................... 351.311................................. Subsidy practice discovered
during investigation or
review.
----------------------------------------------------------------------------------------------------------------
Subpart D--Quota Cheese Subsidy Determinations
----------------------------------------------------------------------------------------------------------------
355.41................................... Removed................................. Definition of subsidy.
---- page 27422 ----
355.42................................... 351.601................................. Annual list and quarterly
update.
355.43................................... 351.602................................. Determination upon request.
355.44................................... 351.603................................. Complaint of price-
undercutting.
355.45................................... 351.604................................. Access to information.
----------------------------------------------------------------------------------------------------------------
---- page 27423 ----
Annex VI--Countervailing Investigations Timeline
>>>>27423_01 See the accompanying hardcopy volume for non-
machine-readable data that appears at this point. <<<<
---- page 27424 ----
Annex VII--Antidumping Investigations Timeline
>>>>27424_01 See the accompanying hardcopy volume for non-
machine-readable data that appears at this point. <<<<
[FR Doc. 97-12201 Filed 5-16-97; 8:45 am]
BILLING CODE 3510-DS-C
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The Contents entry for this article reads as follows:
International Trade Administration
RULES
Uruguay Round Agreements Act (URAA); conformance:
Antidumping and countervailing duties; Federal regulatory review, 27296
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