Antidumping Duties; Countervailing Duties
Federal RegisterFeb 27, 1996
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[[Page 7308]]
DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Parts 351, 353, and 355
[Docket No. 951122274-5274-01]
RIN 0625-AA45
Antidumping Duties; Countervailing Duties
AGENCY: International Trade Administration, Commerce.
ACTION: Notice of proposed rulemaking and request for Public Comments.
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SUMMARY: The Department of Commerce (``the Department'') proposes to
establish regulations to conform the Department's existing antidumping
duty and countervailing duty regulations to the Uruguay Round
Agreements Act, which implemented the results of the Uruguay Round
multilateral trade negotiations. In addition to conforming changes, the
Department has sought to issue regulations that: 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: Written comments will be due on April 29, 1996.
ADDRESSES: Address written comments to Susan G. Esserman, Assistant
Secretary for Import Administration, Central Records Unit, Room B-099,
U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW.,
Washington, D.C. 20230. Attention: Proposed Regulations/Uruguay Round
Agreements Act. Each person submitting a comment is requested to
include his or her name and address, and give reasons for any
recommendation.
FOR FURTHER INFORMATION CONTACT: William D. Hunter (202) 482-1930, or
Penelope Naas, (202) 482-3534.
SUPPLEMENTARY INFORMATION:
Background
In March, 1995, President Clinton issued a directive to Federal
agencies regarding their responsibilities under his Regulatory Reform
Initiative. This initiative is part of the National Performance review,
and calls for immediate, comprehensive regulatory reform. The President
directed all agencies to undertake an exhaustive review of all their
regulations, with an emphasis on eliminating or modifying those that
are obsolete or otherwise in need of reform. This proposed rule
represents one of the steps in the Import Administration's response to
the President's directive.
On January 3, 1995, the Department published an Advance Notice of
Proposed Rulemaking and Request for Comments in the Federal Register
(Antidumping Duties; Countervailing Duties; Article 1904 of the North
American Free Trade Agreement, 60 FR 80 (``Advance Notice'')), as the
first step in the process of developing regulations under the Uruguay
Round Agreements Act (``URAA'').1 The Department took the step of
requesting comments in advance of issuing a proposed rule in order to
ensure that, at the earliest possible stage, we could consider and take
account the views of the private sector entities that are subject to
the antidumping and countervailing duty laws.2
\1\ Among other things, the URAA amended the antidumping and
countervailing duty provisions of the Tariff Act of 1930 to conform
those provisions to the Agreement on Implementation of Article VI of
the General Agreement on Tariffs and Trade 1994 (``AD Agreement'')
and the Agreement on Subsidies and Countervailing Measures (``SCM
Agreement''), both of which are part of the Marrakesh Agreement
Establishing the World Trade Organization (``WTO Agreement'').
\2\ On February 22, 1995, the Department published in the
Federal Register (60 FR 9802) a notice extending until April 3,
1995, the deadline for filing final comments pursuant to the Advance
Notice. In addition, on May 11, 1995, the Department published in
the Federal Register (60 FR 25130) a Notice of Interim Regulations
and Request for Comments (``Interim Regulations''). The Interim
Regulations dealt with certain new or revised procedures resulting
from the URAA that would have an immediate impact on the orderly
administration of the antidumping and countervailing duty laws.
Although the Department invited immediate comments on the Interim
Regulations, it allowed the deadline for comments on the Interim
Regulations to coincide with the deadline for comments on this
proposed rulemaking.
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In these proposed regulations, the Department has been guided by
the following objectives. First, the Department is proposing to revise
the regulations to conform to the statutory amendments made by the
URAA. Second, consistent with the Administration's commitment in the
Statement of Administrative Action accompanying H.R. 5110 (H.R. Doc.
No. 316, Vol. 1, 103d Cong., 2d Sess. (1994) (``SAA''), the Department
has fleshed out through regulation certain statements contained in the
SAA. Under section 102(d) of the URAA, the SAA constitutes an
authoritative expression concerning the interpretation and application
of the provisions of the URAA, including those provisions relating to
antidumping and countervailing duties. Finally, the Department has
developed proposed regulations mindful of President Clinton's
Regulatory Reform Initiative and his directive to identify and either
eliminate or modify obsolete and burdensome regulations.
The Department has carefully reviewed its existing regulations, and
has taken several steps to enhance their effectiveness and make them
more accessible to the business community. We have consolidated the
antidumping and countervailing duty regulations (which currently are
contained in separate Parts 353 and 355) into a single Part 351.
Because, for the most part, antidumping and countervailing duty
procedures are identical, the consolidation of those portions of the
regulations dealing with procedures will make the regulations easier to
use, will make it easier to identify those instances where antidumping
and countervailing duty procedures differ, and, by reducing the sheer
size of the regulations, will make the regulations less burdensome to
the non-expert.
To the extent possible, we have proposed regulations that simplify
and streamline the antidumping/countervailing duty process. For
example, in the case of administrative reviews, we have added a new
provision which allows, under certain circumstances, the Department to
cover two review periods in a single review, an approach which should
be more efficient for all parties concerned. We have attempted to
harmonize, to the extent possible, the rules applicable to both the
investigation and review phases of antidumping and countervailing duty
proceedings. Because the maintenance of different rules for different
phases of antidumping and countervailing duty proceedings merely adds
another layer of complexity to an already complex area, we have
attempted to eliminate needless differences. For example, in the case
of correction of ministerial errors, we generally have made the
procedures identical for both investigations and reviews.
In addition, we have developed rules which reduce burdens and
facilitate the use of the regulations and administrative procedures.
For example, we have consolidated and harmonized the rules governing
the submission of information. We have reduced the
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number of copies that parties must file when they make submissions to
the Department. We also have included charts which set forth in a
single place the various deadlines in antidumping and countervailing
duty investigations and reviews.
Further, where possible, we have proposed regulations that
supplement, rather than repeat, the statute. We have included narrative
explanations that put a particular regulation in context and explain
how the regulation fits in the administrative process. We have also
sought to use language that will be readily understood by members of
the business community.
Finally, where possible, we have tried to use these regulations as
a vehicle for enhancing the predictability of the antidumping and
countervailing duty laws. We recognize that there are many areas in
which the statute provides the Department with discretion, and we have
attempted to provide guidance as to how the Department will exercise
that discretion. For example, in the regulation that deals with so-
called ``price averaging'' in antidumping proceedings, we have
attempted to flesh out how the Department will apply this new
methodology added to the law by the URAA.
In this regard, however, there are limits as to the amount of
detail that the Department can provide in these regulations at this
time. In some instances, the statute or the SAA already provides
extremely detailed rules, thereby obviating the need for additional
regulatory guidance. In other instances, the SAA expressly directs the
Department to take a case-by-case approach and to eschew hard-and-fast
rules. Finally, in many instances, the URAA has created new procedural
and methodological issues on which the Department has little, if any,
experience. Absent such experience, the Department lacks a basis for
promulgating detailed rules.
Streamlining the regulations is only one part of a larger effort of
the Department to simplify its practices. For example, we have been
revising our standard questionnaires to make them more ``user
friendly'' and efficient. We have made significant changes to our
verification procedures in the interest of increased effectiveness. We
also will publicly announce the issuance of Policy Bulletins and ensure
that they are easily accessible to the public.
Timetable
Certain regulations dealing with the treatment of business
proprietary information and administrative protective order procedures
were the subject of a separate Notice of Proposed Rulemaking and
Request for Public Comment on [Insert date and citation when published]
(``APO Rule''). However, the Department intends that, when it publishes
final regulations, it will publish a single document that will include
the regulations contained in this proposed rule, as well as those
regulations contained in the APO Rule.
In addition, the Department intends to publish separately proposed
rules regarding countervailing duty methodology. When completed, these
rules will be included as subpart E of proposed Part 351.
The issuance of final regulations on this topic is a priority for
the Department. After reviewing and analyzing comments on this proposed
rule and the APO Rule, the Department intends to issue final
regulations as soon as possible.
Comments--In General
The Department wishes to emphasize that the regulations contained
in this proposed rule reflect our best judgment at this time regarding
the appropriate style and content of antidumping and countervailing
duty regulations. We have not foreclosed consideration of any issue
raised herein, and we would appreciate greatly public comment and
suggestions. In particular, while there are certain matters on which,
in our view, the statute and its legislative history give the
Department relatively little flexibility, there are other matters where
the Department has a much greater degree of discretion in interpreting
and applying the statute. With respect to this latter category of
matters, the fact that in these proposed regulations the Department has
exercised its discretion in a particular manner (or has declined to
exercise its discretion at all in the form of regulations) should not
be construed as an indication that the Department's position on these
matters is immutable. We welcome any and all suggestions.
Therefore, we are very interested in receiving public comment on
these proposed regulations. We have found the dialogue that commenced
with the Advance Notice to be extremely useful, and we hope and expect
that it will continue. We encourage the submission of new comments, as
well as the resubmission of old comments if commentators believe that
the Department did not fully understand or appreciate a comment the
first time around.
Comments--Format and Number of Copies
Each person submitting a comment should include his or her name and
address, and give reasons for any recommendation. To facilitate their
consideration by the Department, comments regarding these proposed
regulations should be submitted in the following format: (1) Number
each comment in accordance with the number designated for that issue as
indicated in the list of issues set forth below; (2) begin each comment
on a separate page; (3) concisely state the issue identified and
discussed in the comment; and (4) provide a brief summary of the
comment (a maximum of 3 sentences) and label this section ``summary of
the comment.''
To simplify the processing and distribution of comments, the
Department encourages the submission of documents in electronic form
accompanied by an original and two copies in paper form. We request
that documents filed in electronic form be on DOS formatted 3.5''
diskettes and prepared in either WordPerfect 5.1 format or a format
that the WordPerfect program can convert and import into WordPerfect
5.1. Please submit comments on a separate file on the diskette and
labeled by the number designated for that issue based upon the list of
issues set forth below.
Comments received on diskette will be made available to the public
on the Internet at the following addresses:
FTP://FWUX.FEDWORLD.GOV/PUB/IMPORT or
FTP://FTP.FEDWORLD.GOV/PUB/IMPORT/IMPORT.HTM
In addition, the Department will make comments available to the public
on 3.5'' diskettes, with specific instructions for accessing compressed
data, at cost, and paper copies will be available for reading and
photocopying in the Central Records Unit, Room B-099, U.S. Department
of Commerce, Pennsylvania Avenue and 14th Street, NW., Washington, D.C.
20230. Any questions concerning file formatting, document conversion,
access on the Internet, or other file requirements should be addressed
to Andrew Lee Beller, Director of Central Records, (202) 482-1248.
Classification of Issues for Comment
Antidumping Issues
11. Comparison Methodology:
a. Viability, third-country sales, intermediate country sales, and
tolling;
b. Constructed export price deductions and value-added deductions;
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c. Normal value adjustments;
d. Level of trade matching, level of trade adjustments, and
constructed export price offset;
12. Start-up
13. Profit and selling, general and administrative expenses in
constructed value;
14. Sales below cost of production and constructed value generally;
15. Currency conversion;
16. Price averaging;
17. Anticircumvention;
18. Affiliated persons (address separately for AD and CVD);
19. AD methodology issues other than those outlined above;
Procedural issues
20. Initiation of petitions;
21. Evidence;
22. Facts available;
23. De Minimis (address separately for AD and CVD);
24. Reviews, other than five-year reviews (if specific to AD or
CVD, please specify);
25. Five-year reviews and revocation;
26. Repeal of Section 303;
27. Regional industries;
28. Critical circumstances;
29. Simplification;
30. Business proprietary information and administrative protective
orders;
31. Ministerial errors;
32. Procedural issues other than those outlined above;
33. Other issues.
Explanation of the Proposed Rules
General Background
Consolidation of Antidumping and Countervailing Duty Regulations
As discussed above, in response to the President's Regulatory
Reform Initiative, to reduce the amount of duplicative material in the
regulations, the Department has consolidated the antidumping and
countervailing duty regulations into a new Part 351, and is removing
Parts 353 and 355.
The structure of Part 351 is as follows. Subpart A (Scope and
Definitions) is based on existing subpart A of Parts 353 and 355. Among
other things, the regulations contained in subpart A deal with general
definitions applicable to antidumping and countervailing duty
proceedings, the record for such proceedings, and de minimis standards
for countervailable subsidies and dumping margins.
Subpart B (Antidumping and Countervailing Duty Procedures) is based
on existing subpart B of Parts 353 and 355. As suggested by the title,
subpart B deals with the procedural aspects of antidumping and
countervailing duty proceedings. Where the procedures for antidumping
and countervailing duty proceedings are different, the regulations in
subpart B so specify.
Subpart C (Information and Argument) is based on existing subpart C
of Parts 353 and 355. Subpart C establishes rules for antidumping and
countervailing proceedings regarding such matters as the submission of
information, the treatment of proprietary information, the verification
of information, and determinations based on the facts available. As
noted, certain portions of Subpart C were contained in the APO Notice.
Subpart D (Calculation of Export Price, Constructed Export Price,
Fair Value, and Normal Value) is based on existing subpart D of Part
353. Subpart D essentially deals with methodologies for identifying and
measure dumping.
Subpart E is designated ``[Reserved],'' but, as explained above,
eventually will include rules dealing with countervailing duty
methodology. Subpart E does not have a counterpart in existing Part
355, although proposed methodological regulations were published in
1989. 54 FR 23366 (1989).
Subpart F (Cheese Subject to In-Quota Rate of Duty) is based on
subpart D of existing Part 355, and implements section 702 of the Trade
Agreements Act of 1979, as amended by the URAA.
Explanation of Particular Provisions
Part 351, Subpart A--Scope and Definitions
Subpart A of Part 351 sets forth the scope of Part 351,
definitions, and other general matters applicable to antidumping and
countervailing duty proceedings.
Section 351.101
Section 351.101 deals with the scope of Part 351, countervailing
duty investigations involving imports from a country that is not a
Subsidies Agreement country, and the application of antidumping and
countervailing duties to importations by the United States Government.
Section 351.102
Section 351.102 sets forth the definition of terms that are used in
antidumping and countervailing duty proceedings, but that are not
defined in the statute or that warrant clarification. A few definitions
merit comment.
Affiliated persons (and affiliated parties) is a new term that
replaces prior definitions of ``related persons'' or ``related
parties'' (the latter term continues to be governed by section
771(4)(B)). Because the statute unintentionally uses inconsistent
terminology, the regulation makes clear that the terms ``affiliated
person'' and ``affiliated parties'' have the same meaning. The first
sentence of the definition merely refers to the definition of
``affiliated persons'' in section 771(33) of the Act. The second
sentence elaborates on the meaning of ``control,'' a key term in the
definition of ``affiliated persons'' under section 771(33). It reflects
the statements in the SAA, at 838, that one person may be in a position
to exercise restraint or direction over another person, and thus have
``control'' over that person, by such means as corporate or family
groupings, franchises or joint venture agreements, debt financing, or
close supplier relationships. The definition of affiliation will also
be applied for purposes of ``collapsing'' firms under section
351.401(f).
Several commentators suggested that the Department should specify
precise thresholds for these indicia of control in order to provide a
greater degree of predictability in the administration of the
antidumping law. The Department appreciates the parties' desire for
greater guidance concerning the definition of ``control.'' However, the
Department does not believe that it is now in a position to establish
such thresholds, but instead must develop thresholds, where
appropriate, as it gains experience in applying the concept of control.
``Affiliated persons'' is a new statutory term embodying new concepts,
and the complexity of the relationships potentially covered by this
term mitigate against the issuance of detailed regulations at this
time. Moreover, some indicia of the ability to exercise restraint or
direction over another party's pricing, cost, or production decisions
may not lend themselves to the use of simple, black-and-white
thresholds. Therefore, the Department intends to apply this new
definition on a case-by-case basis, considering all relevant factors,
including the indicia included in the regulatory definition. Mere
identification of the presence of one or more of these or other indicia
of control does not end our task. We will examine these indicia, in
light of business and economic reality, to determine whether they are,
in fact, evidence of control. Business and economic reality suggest
that these relationships must be significant and not easily replaced.
In addition, temporary market power, created by variations in supply
and demand conditions, would not suffice.
In addition, some commentators suggested that the Department should
define ``control'' as existing only where
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there is evidence that control previously had been exercised. We have
not adopted this suggestion because the statute, by its use of the
phrase ``in a position to exercise restraint or direction,'' defines
``control'' in terms of the ability to exercise restraint and
direction. The actual exercise of restraint or direction would
constitute evidence as to the existence of such ability.
Finally, some commentators suggested that the Department establish
in the regulations that if one or more of the factors listed in section
771(33) is present, the Department should presume that the parties are
affiliated. Other commentators suggested, conversely, that if certain
factors are not present, the Department should presume that the parties
are not affiliated. With regard to the former suggestion, the statute
provides that if any one of the factors in section 771(33) is present,
the Department is required to find that persons are affiliated, not
merely presume that they are affiliated. With regard to the latter
suggestion, the Department is required to consider evidence of any one
of the factors. The only factor for which a presumption could be
developed is the factor of control. However, as explained above, the
Department is not yet in a position to develop such presumptions in
these regulations.
Domestic interested party is a new term intended to serve as a
convenient, shorthand substitute for the more lengthy phrase used in
the statute (``an interested party described in paragraph (C), (D),
(E), (F), or (G) of section 771(9) of the Act'') and its existing
regulatory counterpart (e.g., ``an interested party, as defined in
paragraph (k)(3), (k)(4), (k)(5), or (k)(6) of Sec. 353.2''). In
addition, the definition of ``domestic interested party'' reflects the
creation of a new category of interested party relating to processed
agricultural products. Omnibus Trade and Competitiveness Act of 1988,
Public Law 100-418, section 1326(c).
The definition of fair value is based on existing section
353.42(a). The courts have long recognized that the Secretary possesses
additional methodological flexibility in an antidumping investigation,
see, e.g., Southwest Fla. Winter Veg. Growers Ass'n v. United States,
584 F. Supp. 10, 17 (Ct. Int'l Trade 1984), and the definition of fair
value is intended to reflect this fact.
With respect to the definition of ordinary course of trade,
generally, in calculating normal value, the Department must rely on
sales and transactions that are in the ordinary course of trade. The
first sentence of the definition refers to section 771(15) of the Act.
The second sentence draws on the SAA, at 834, to elaborate on this
definition, and contains examples of the types of sales or transactions
that might be considered as outside the ordinary course of trade.
Some commentators urged the Department to refrain from specifying
criteria to be used in determining whether sales or transactions are
outside the ordinary course of trade. We agree that it would be
inappropriate to include in regulations a detailed list of criteria
that the Department might consider, but we also believe that there
should be some guidance to the public as to how the Department will
analyze ``ordinary course of trade'' issues. Accordingly, as noted
above, we have incorporated the relevant language from the SAA, which
provides a general description of the standard to be applied.
One commentator suggested that the Department clarify that the
addition in the statute of two specific types of transactions deemed to
be outside the ordinary course of trade does not affect the criteria
the Department traditionally has used to determine whether other types
of transactions are outside the ordinary course of trade. The second
sentence of the regulatory definition addresses this concern.
Two commentators suggested that the Department identify examples of
the types of sales that would be considered as being outside the
ordinary course of trade, including sales at aberrational prices. The
second sentence of the regulatory definition responds to these
comments, although we emphasize that the second sentence is not an
exhaustive list of all of the possible types of sales or transactions
that might be considered as being outside the ordinary course of trade.
One commentator requested that the Department clarify that below-
cost sales and affiliated transactions are not always outside the
ordinary course of trade. Further clarification is not needed, because
section 771(15) of the Act is clear that not all sales below cost or
affiliated transactions will be deemed automatically to be outside the
ordinary course of trade. Instead, only sales or transactions that are
disregarded under the pertinent statutory and regulatory provisions
automatically will be deemed to be outside the ordinary course of
trade. Of course, the fact that such sales or transactions are not
automatically considered to be outside the ordinary course of trade
does not mean that they never could be considered to be outside the
ordinary course of trade. For example, in the case of a below-cost sale
of an ``off-spec'' product, even if the sale is not disregarded as a
below-cost sale under section 773(b) of the Act, it might be
disregarded as not in the ordinary course of trade due to the ``off-
spec'' nature of the product.
Rates is used in these regulations as a single shorthand expression
for the various terms used in the Act. In addition, the second sentence
of the definition clarifies that in an antidumping proceeding involving
imports from a nonmarket economy (``NME'') country, the Secretary may
calculate a single dumping margin applicable to all exporters and
producers. Because the government of an NME country may control export
activities, the Department currently presumes that a single rate will
apply, but allows individual exporters or producers to receive their
own separate rates if they can demonstrate independence from the NME
government. See, e.g., Silicon Carbide from the People's Republic of
China, 59 FR 22585 (1994).
We have decided not to codify the current presumption in favor of a
single rate or the so-called ``separate rates test,'' which outlines
the type of information that an exporter or producer must present to
obtain a separate rate. Because of the changing conditions in those NME
countries most frequently subject to antidumping proceedings, this test
(and the assumptions underlying the test) must be allowed to adjust to
such changes on a case-by-case basis.
The Department received comments proposing changes to the separate
rates test, as well as objections to the proposed changes. Because we
are codifying neither the single rate presumption nor the separate
rates test, we are not addressing these comments at this time. However,
we will take the comments into consideration as our policy in this area
evolves.
In addition, the Department is considering whether to promulgate
special rules regarding the rates that should be applied to exporters
that are not also producers, such as trading companies. In this
situation, one alternative would be to calculate a separate rate for
each exporter/producer combination, so that the rate to be applied to
an exporter would depend upon the producer of the particular
merchandise in question. However, before proceeding further, the
Department would like to receive additional public comment on this
issue.
Respondent interested party is a counterpart to, and is intended to
serve
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the same function as the term ``domestic interested party.'' A
respondent interested party is an interested party described in
paragraph (A) or (B) of section 771(9) of the Act.
The term segment of the proceeding refers to discrete portions of
the proceeding which are separately reviewable under section 516A of
the Act. Thus, for example, an investigation and an administrative
review are separate segments of a proceeding.
The term third country applies in antidumping proceedings, and is
intended to be a shorthand expression for the more lengthy statutory
phrase ``a country other than the exporting country or the United
States.''
Section 351.103
Section 351.103
Section 351.103 describes the location and function of Import
Administration's Central Records Unit, provides that documents must be
filed with the Central Records Unit, and indicates that the Central
Records Unit is responsible for maintaining the service list for each
antidumping and countervailing duty proceeding.
Section 351.104
Section 351.104 defines what constitutes the official and public
records of an antidumping or countervailing duty proceeding, and
prohibits the removal of a record or any portion thereof unless ordered
by the Secretary or required by law.
One change warranting discussion is the treatment of material
returned by the Department to the submitter. The existing regulations
provide that material which is not timely filed or which is returned to
the submitter for some other reason shall not be retained in the
official record. However, because parties have a right to seek judicial
or binational panel review of a decision to reject a submission, as a
matter of practice the Department has found it necessary to retain a
copy of the returned materials in order to be able to document for the
court or binational panel the reasons for the Department's decision to
reject the submission. Therefore, paragraph (a)(2) conforms to current
practice. Under paragraph (a)(2), the Department will include in the
official record material that has been returned to the submitter for
reasons other than untimeliness, but the Department will not use such
material in its determinations. In the case of a submission rejected as
untimely, it is unnecessary to retain a copy of the submission in the
official record, because the timeliness/untimeliness of the submission
can be documented by means other than retention of the submission.
Section 351.105
Section 351.105 defines the four categories of information
applicable to antidumping and countervailing duty proceedings: public,
business proprietary, privileged, and classified. One change from the
existing regulations is that paragraph (c)(10) provides that the
position of domestic producers or workers regarding a petition may be
treated as business proprietary information. The new statute requires
that the Department make an affirmative determination of domestic
industry support for a petition before initiating an antidumping or
countervailing duty investigation. Some domestic producers or workers
might be reluctant to communicate their positions regarding a petition
for fear that their positions might become public information, thereby
potentially subjecting them to commercial retaliation. Accordingly, it
is essential that domestic producers and workers have the option of
communicating their positions to the Department on a confidential
basis.
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. The Department has
long applied a de minimis standard under which it treated net
countervailable subsidies and weighted-average dumping margins that
were less than 0.5 percent ad valorem (or the equivalent specific rate)
as zero. The URAA incorporated the de minimis standards of the AD
Agreement and the SCM Agreement into the statute, thereby modifying the
prior Department standard in antidumping and countervailing duty
investigations.
Consistent with the statute and the SAA, paragraph (b)(1) provides
that the de minimis standards set forth in section 703(b)(4) and
section 733(b)(3) of the Act will apply to the investigatory segment of
an antidumping or countervailing duty proceeding. Although not restated
in paragraph (b)(1), these statutory standards are 2 percent ad valorem
(or the equivalent specific rate) for antidumping duty investigations,
and normally 1 percent ad valorem (or the equivalent specific rate) for
countervailing duty investigations. However, the de minimis standard in
a countervailing duty investigation may be 2 percent if the
investigated merchandise is from a developing country, or 3 percent if
the investigated merchandise is from a ``least developed country'' or
from a country which has phased out its export subsidies prior to the
deadline established in the SCM Agreement.
Paragraph (b)(2) provides a transition rule for investigations that
were initiated under pre-URAA law, suspended, and then later resumed
due to a cancellation of the suspension agreement. Paragraph (b)(2)
provides that in making a final determination in this situation, the
Department will apply the de minimis standard which it would have used
if the investigation never had been suspended (i.e., the old law
standard for investigations of 0.5 percent). However, paragraph (b)(2)
has no effect on the standard which the Department may apply in
determining that a suspension agreement has been violated or that a
violation is ``inadvertent or inconsequential'' within the meaning of
section 351.209.
The de minimis standards set forth in paragraph (b)(1) will apply
only in antidumping or countervailing duty investigations. Paragraph
(c)(1) provides that for all other antidumping or countervailing duty
determinations, the de minimis standard will be 0.5 percent ad valorem,
the standard set forth in existing sections 353.6 and 355.7. Several
commentators suggested that the new de minimis standards set forth in
paragraph (b)(1) should not be limited to the investigatory segment.
The Department has not adopted these suggestions, because, as a matter
of domestic law, the statute and the SAA are very clear that the new
standards apply only to investigations. Moreover, as a matter of
international law, neither the AD Agreement nor the SCM Agreement
require that the new standards be applied outside of the investigatory
segment.
In this regard, several commentators suggested that the Department
should abandon its practice of assessing antidumping duties even when
the weighted-average dumping margin was de minimis, arguing that (1)
this practice is in conflict with the statement in the SAA, at 844,
that ``de minimis margins are regarded as zero margins,'' and (2) a
failure to apply the de minimis standard to assessment effectively
would negate that standard. The Department agrees that the language of
the SAA suggests that the de minimis standard should not be applied
solely to cash deposits, but to assessment of duties as well. The 0.5
percent de minimis standard will apply to the assessment of both
antidumping and countervailing duties, but, in the case of antidumping
duties, the Department will apply this standard to the
[[Page 7313]]
``assessment rate'' calculated under new section 351.212(b)(1). As
discussed in more detail below, the Department will calculate the
assessment rate on an importer-by-importer basis. In situations where
an exporter sells to one importer at dumped prices and to another
importer at non-dumped prices, the application of the de minimis
standard to these importer-specific assessment rates will prevent the
dumped transactions from escaping the assessment of duties. With
respect to the assessment of countervailing duties, the Department will
continue to refrain from assessing duties where the countervailable
subsidy rate (or the all-others or country-wide subsidy rate) is de
minimis.
Subpart B--Antidumping Duty and Countervailing Duty Procedures
Subpart B deals with antidumping duty and countervailing duty
procedures and is based on subpart B of Part 353 and Part 355 of the
Department's existing regulations.
Section 351.201
Section 351.201 deals with the self-initiation of investigations by
the Department, and is based on existing sections 353.11 and 355.11.
Section 351.202
Section 351.202 deals with the contents of, and filing requirements
for, antidumping and countervailing duty petitions, and is based on
existing sections 353.12 and 355.12.
Paragraph (b) is based on existing sections 353.12(b) and
355.12(b), and retains the standard that a petition need only contain
information that is reasonably available to the petitioner. The
following changes in paragraph (b) merit comment.
Paragraph (b)(3) is new and reflects the requirement that, before
initiating an investigation, the Department must make an affirmative
determination that the domestic industry supports the petition.
Paragraph (b)(3) does not prescribe a single method by which a
petitioner may seek to establish industry support, because the type of
information establishing industry support may vary from industry to
industry. However, as provided in the SAA, at 861, the petitioner must
provide the volume and value of its own production of the domestic like
product, as well as the production of that product by each member of
the industry, to the extent that such information is reasonably
available to the petitioner. In addition, the petitioner must provide
information on the total volume and value of U.S. production of the
domestic like product, to the extent that such information is
reasonably available to the petitioner.
In paragraph (b)(7)(ii)(C)(1), which deals with upstream subsidy
allegations, the phrase ``Countervailable subsidies, other than an
export subsidy'' replaces the phrase in existing Sec. 355.12(b)(8)(i),
``Domestic subsidies described in section 771(5). * * *'' This change
reflects the URAA amendment to section 771A of the Act, which, in turn,
was due to the URAA's creation of a third category of subsidies, so-
called ``import substitution subsidies,'' in section 771(5)(C) of the
Act.
In paragraph (b)(10), the phrase ``and causation'' has been added.
Petitioners always have been required to submit information indicating
that dumped or subsidized imports cause, or threaten to cause, material
injury to a domestic industry. The addition of this phrase is intended
simply to document this requirement.
Paragraph (b)(11), which deals with critical circumstances
allegations, has been revised from existing Sec. 353.12(b)(12) to
reflect the statutory amendments regarding the elements necessary for a
finding of critical circumstances.
Paragraph (e) deals with amendments to petitions, and is based on
existing Secs. 353.12(e) and 355.12(e). In the first sentence, ``may''
has been substituted for ``will'' in order to more accurately reflect
the discretion that the statute confers on the Department regarding the
acceptance of amendments to petitions.
Paragraph (i) is based on existing Secs. 353.12(i) and 355.12(j),
but has been revised to reference sections 702(b)(4)(B) and
733(b)(3)(B) of the Act, which now deal expressly with the issue of
pre-initiation communications between the Department and outside
parties. The last sentence of paragraph (i)(1) clarifies that the
Department will not consider the filing of a notice of appearance in an
antidumping or countervailing duty proceeding to constitute a
communication. However, if any communication is appended to a notice of
appearance on any subject other than industry support, the Department
will consider the entire document to be prematurely filed. In addition,
paragraph (i)(2) provides that, in a countervailing duty proceeding,
the Department will take the initiative and ``invite'' the government
of the exporting country involved for consultations, instead of taking
a more passive approach and merely providing an opportunity for
consultations.
Several commentators suggested that the Department should solicit
comments regarding the petition, such as comments concerning the
accuracy of the information contained in the petition. However, the
SAA, at 863-64, states that ``the pre-initiation right to comment will
be limited solely to the issue of industry support for the petition.''
Thus, the legislative intent was to prohibit the type of communication
contemplated by these commentators, and it would contravene this intent
if the Department were to allow parties to submit such information by
``requesting'' parties to provide it.
Section 351.203
Section 351.203 deals with determinations regarding the sufficiency
of a petition, and implements sections 702(c) and 732(c) of the Act.
While based on existing Secs. 353.13 and 355.13, Sec. 351.203 contains
several changes that reflect amendments to the statute.
Paragraph (b)(1) provides that the Department normally will make
the determination regarding the sufficiency of a petition within 20
days of the date on which the petition is filed. In this regard,
paragraph (b)(1) repeats the language of the statute with respect to
the determination concerning the ``accuracy and adequacy'' of a
petition. The Department does not believe that the new statutory
standard constitutes a significant departure from past Department
practice.
Paragraph (b)(1) reflects the new statutory requirement that the
Department examine sources readily available to it in determining the
sufficiency of a petition. In the past, it was the Department's
practice, in reviewing a petition, to note information that lacked
sufficient support or that appeared aberrational, and to ask the
petitioner to provide additional information. This practice is
consistent with the type of review contemplated by the new statute.
Under paragraph (b)(1), the Department will seek information from
sources other than the petitioner where: (1) Support for a particular
allegation is weak, but better information is unavailable to the
petitioner, particularly where the allegation is central to the
adequacy of the petition or has a significant impact on the alleged
rates, or (2) the information, although supported, appears aberrational
and is central to the adequacy of the petition or has a significant
impact on the alleged rates. The Department will give the petitioner an
opportunity to comment on any such information acquired by the
Department.
In this regard, the use of information ``readily available'' is
intended to mean information that does not require extensive research
by the Department to
[[Page 7314]]
obtain. An example of such information would be the replacement of a
significant factor of production value in a nonmarket economy
antidumping petition with non-proprietary information used in a
recently completed investigation or review.
With respect to injury and causation, given the bifurcated
responsibilities of the Department and the Commission under the Act,
the Department will continue to work in cooperation with Commission
staff in evaluating a petition.
Paragraph (b)(2) deals with situations in which the Department
extends the period for determining the sufficiency of a petition in
order to poll or otherwise determine industry support for a petition.
Under paragraph (b)(2), the Department will extend the period only by
the amount of time required to gather and analyze information relevant
to the question of industry support, and in no case will the Department
exceed the maximum period of 40 days authorized by the statute.
Paragraph (c)(2) is new and incorporates the requirements of the
SAA, at 867, regarding the distribution of a public version of a
petition once the Department has made a determination to initiate an
investigation. Normally, the Department will provide a public version
of the petition to all known exporters. However, in accordance with the
SAA, at 867, where the number of exporters is very large, the
Department may provide a copy of the petition to a trade association,
with instructions to provide copies to all exporters. Alternatively,
the Department may consider this obligation 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). In the latter case, the
Department will notify the government in question that its obligation
has been met through such delivery. In addition, to conserve resources,
the Department is looking into the feasibility of making the petition
available on computer diskette.
Paragraph (e) is new and deals with the new statutory requirements
regarding determinations of industry support for a petition. Paragraph
(e)(1) deals with the measurement of domestic production, an important
issue in light of the fact that expressions of support or opposition
for a petition are weighted according to production. Consistent with
the SAA, at 862, paragraph (e)(1) provides that the Department may
measure production on the basis of volume or value. In addition, in
order to provide a degree of predictability, paragraph (e)(1) also
provides that the Department normally will measure production over a
twelve-month period. Because in certain cases some period other than
twelve months may be more appropriate, the Secretary retains the
discretion to prescribe the precise period on a case-by-case basis.
However, normally the Secretary will use the most recent twelve-month
period for which data are available.
The second sentence of paragraph (e)(1) provides that where the
Department is satisfied that actual production data for the relevant
period is not available, production levels may be established on the
basis of alternative data that the Department determines to be
indicative of production levels. For example, for some industries or
firms, shipment data may correspond directly with production data, and,
thus, be a reliable alternative. However, because of the vast array of
industries that appear before it, the Department has not attempted to
specify data that would be an acceptable surrogate in all cases for
production data.
Paragraph (e)(2) provides that the expression of a position
regarding a petition may be treated as business proprietary information
under Sec. 351.105(c)(10), discussed above. Several commentators
expressed concern that, if parties were required to state publicly
their position regarding a petition, they could face commercial
retaliation. Therefore, business proprietary treatment may be necessary
in order to encourage domestic producers and workers to present their
candid views regarding a petition.
Paragraph (e)(3) sets forth rules regarding the weight accorded to
the positions of workers and management regarding a petition.
Consistent with the SAA, at 862, an opinion expressed by workers will
be considered to be of equal weight to an opinion expressed by
management. Thus, for example, if a union expressed support for a
petition, the Department would consider that support to be equal to the
production of all of the firms that employ workers belonging to the
union. On the other hand, if management and workers at a particular
firm expressed opposite views with respect to a petition, the
production of that firm would be treated as representing neither
support for, nor opposition to, the petition.
Paragraph (e)(4) reflects sections 702(c)(4)(B) and 734(c)(4)(B) of
the Act and the SAA, at 858-859, which allow the Department to
disregard, in certain situations, opposition to a petition by certain
domestic producers. Paragraph (e)(4)(i) clarifies that a ``related''
domestic producer includes a domestic producer related to a foreign
exporter, as well as a domestic producer related to a foreign producer.
In this regard, the Department believes that the statutory requirement
that the Department ``shall'' ignore the opposition of related domestic
producers ``unless such domestic producers demonstrate that their
interests as domestic producers would be adversely affected'' puts the
burden of demonstrating such an effect on those producers. Paragraph
(e)(4)(ii) clarifies that the Department may disregard the views of
domestic producers who are also importers of the subject merchandise
and domestic producers who are related to such importers within the
meaning of section 771(4)(B)(ii) of the Act. In evaluating whether to
disregard such producers, the Department may consider the import levels
and percentage of ownership common to other members of the domestic
industry.
Paragraph (e)(5) deals with the question of industry support where
the petition alleges the existence of a regional industry under section
771(4)(C) of the Act. The SAA, at 863, states that industry support
shall be assessed ``on the basis of production in the alleged region.''
Consistent with this statement, paragraph (e)(5) provides that, for
purposes of assessing industry support, the applicable region will be
the region specified in the petition.
Paragraph (e)(6) deals with situations in which the Department may
have to poll the industry in order to determine whether the industry
supports a petition. Paragraph (e)(6) clarifies that in conducting such
a poll, the Department will include in the poll unions, groups of
workers, and trade and business associations.
Paragraph (f) interprets sections 702(c)(1)(C) and 732(c)(1)(C) of
the Act, which provide for expeditious investigations involving subject
merchandise that previously was covered by an order that was revoked or
a suspended investigation that was terminated. Paragraph (f) clarifies
that these provisions of the Act apply if the revocation or termination
occurred under a pre-URAA version of the statute.
Section 351.204
Section 351.204 deals with issues relating to the transactions and
persons to be examined in an investigation, voluntary respondents and
exclusions. Paragraph (b) deals with the period of time covered by an
investigation (``POI''). In a departure from existing Sec. 353.42(b),
paragraph (b)(1) provides that the POI in an antidumping investigation
normally will be the four most recently completed fiscal quarters (or,
in a case involving a nonmarket
[[Page 7315]]
economy, the two most recently completed fiscal quarters) as of the
month preceding the month in which a petition is filed or in which the
Department self-initiated an investigation. The use of fiscal quarters
is intended to ease reporting requirements and permit more efficient
verification of submitted information. However, paragraph (b)(1) would
permit the Department to use an additional or alternative period in
appropriate circumstances. Paragraph (b)(2) codifies existing practice
regarding the POI in countervailing duty investigations.
Paragraph (c) deals with the selection of the exporters and
producers to be examined. In light of section 777A(c) of the Act,
paragraph (c) does not retain the 60 and 85 percent thresholds of
existing Sec. 353.42(b). Additionally, paragraph (c) permits the
Department to decline to examine a particular exporter or producer
where all parties agree. Such exporter or producer will be subject to
the all-others rate, where such a rate is calculated.
Paragraph (d) deals with the treatment of voluntary respondents
under section 782(a) of the Act. Through its reference to section
777A(e)(2)(A) of the Act, paragraph (d)(1) provides that the Department
will not consider voluntary respondents in investigations conducted on
an aggregate basis under section 777A(e)(2)(B) of the Act. As discussed
below, however, in so-called ``aggregate cases,'' the Department will
consider requests for exclusion under paragraph (e)(3) by individual
exporters or producers. Paragraph (d)(2) provides that if the
Department accepts a voluntary response, the voluntary respondent will
be subject to the same requirements as those firms initially selected
by the Department for individual examination, including, where
applicable, the use of the facts available. The purpose of this
provision is to ensure that the Department is not burdened with
frivolous voluntary responses from parties that wish to see the
preliminary all-others rate before deciding whether to withdraw their
request to be investigated. Finally, paragraph (d)(3) provides for the
exclusion of voluntary respondents from the calculation of the all-
others rate. The purpose of this provision is to prevent manipulation
and to maintain the integrity of the all-others rate.
Paragraph (e) deals with exclusions and constitutes a significant
change from prior practice, as reflected in Secs. 353.14 and 355.14.
With the exception of countervailing duty investigations conducted on
an aggregate basis, paragraph (e)(1) eliminates the various
certification requirements of the prior regulations and, instead,
provides that any exporter or producer that is individually examined
and that receives an individual weighted-average dumping margin or
countervailable subsidy rate of zero or de minimis will be excluded
from an order.
In this regard, the Department is considering whether there should
be separate exclusion rules for firms, such as trading companies, that
sell, but do not produce, subject merchandise. For example, one
alternative would be to limit the exclusion of a non-producing exporter
to subject merchandise produced by those producers that supplied the
exporter during the period of investigation. However, before issuing
final rules, the Department is interested in receiving additional
public comments regarding this issue.
Paragraph (e)(2) clarifies that, while no exporter will be excluded
from an investigation as a result of a preliminary determination, those
found to have zero or de minimis rates will not be subject to
provisional measures.
Paragraph (e)(3) explains that, where a countervailing duty
investigation is conducted on an aggregate basis under section
777A(e)(2)(B) of the Act, individual responses will be accepted for
purposes of establishing exclusion. However, consistent with section
782(a)(2) of the Act, the number of such responses must not be so large
that individual examination of such exporters or producers would be
unduly burdensome and inhibit the timely completion of the
investigation. Responses submitted in support of a request for
exclusion must include a certification that the party received zero or
de minimis net countervailable subsidies and a calculation
demonstrating the basis for that conclusion. Additionally, because the
countervailable subsidy rate for a reseller normally is based on the
producer's rate, an exporter that is not the producer of subject
merchandise must provide a certification from the suppliers or
producers of the merchandise that the exporter sold during the period
of investigation, stating that those persons also received zero or de
minimis net countervailable subsidies. Finally, an exporter or producer
seeking exclusion also must submit a certification from the government
that the government did not provide the firm with net countervailable
subsidies above de minimis. An exporter or producer requesting
exclusion may be required to provide more detailed information
regarding the nature and amount of any countervailable subsidies
received. If the Department determines that an exporter or producer
seeking exclusion has received net countervailable subsidies above de
minimis, that firm will not be excluded from a countervailing duty
order and will be subject to the country-wide subsidy rate.
Section 351.205
Section 351.205 deals with preliminary antidumping and
countervailing duty determinations, and is based on existing sections
353.15 and 355.15.
Section 351.206
Section 351.206 deals with critical circumstances findings, and is
little changed from existing Secs. 353.16 and 355.15. However, the
reader should note that the statutory prerequisites for a finding of
critical circumstances have changed. See sections 705(a)(2) and
735(a)(3) of the Act.
Section 351.207
Section 351.207 deals with the termination of investigations,
something that typically occurs through a withdrawal of the petition.
Section 351.207 is based on existing Secs. 353.17 and 355.17, and the
principal changes are: (1) the last sentence of paragraph (b)(1)
contains a cross-reference to the statutory and regulatory provisions
that deal with the treatment in a subsequent investigation of records
compiled in an investigation in which the petition is withdrawn; and
(2) paragraph (c) references the Department's authority, pursuant to
section 782(h)(1) of the Act, to terminate an investigation due to lack
of interest. As the SAA, at 864, makes clear, the Department's
authority to carry out a no-interest termination is unaffected by those
provisions of the statute prohibiting the post-initiation
reconsideration of industry support for a petition.
Section 351.208
Section 351.208 deals with suspension agreements and suspended
investigations, and is based on existing Secs. 353.18 and 355.18. The
most significant changes reflected in Sec. 351.208 relate to the new
statutory provisions regarding suspension agreements in regional
industry cases (paragraphs (f)(1)(ii), (f)(2)(ii), and (f)(3)). In this
regard, paragraphs (f)(1)(ii) and (f)(2)(ii) address situations in
which the Commission finds a regional industry in its final
determination, but not in its preliminary determination. If the
Commission finds a regional industry in its preliminary determination,
the Secretary still could accept a regional industry suspension
[[Page 7316]]
agreement under section 704(l) and section 734(m) of the Act, but the
procedures and deadlines in paragraphs (f)(1)(i) and (f)(2)(i) would
apply. In addition, it should be noted that paragraph (f)(2) lists
some, but not all, of the procedural steps required by the Act with
respect to the suspension of an investigation.
In addition, the deadlines for initialling and signing suspension
agreements have been advanced. Under current practice, consideration of
a suspension agreement and briefing and drafting of comments in
preparation for a final determination occur simultaneously, thereby
creating an enormous burden on parties and on the Department. The
proposed rule allows parties to propose a suspension agreement within
15 days of a preliminary antidumping determination, or within 5 days of
a preliminary countervailing duty determination. In an antidumping
investigation, parties may also request an extension of the final
determination. An extension will not affect the time allotted for
consideration of a suspension agreement, only the time allotted for
preparation of the final determination. In a countervailing duty
investigation, the period for consideration of a suspension agreement
would be expedited because no extension of the final determination is
possible, unless the investigation is aligned with a companion
antidumping investigation or an upstream investigation is initiated.
While the suspension agreement is under consideration, the briefing and
hearing schedule would be postponed. The proposed timeline will reduce
burdens on all parties by eliminating the need to file case briefs,
rebuttal briefs, and to participate in a hearing, if a suspension
agreement is accepted.
Section 351.209
Section 351.209 deals with the violation of suspension agreements.
Although Sec. 351.209 is largely identical to existing Secs. 353.19 and
355.19, there are a few changes worth noting. First, in several places,
the term ``a signatory'' has been substituted for ``exporters.'' This
change from the plural to the singular is intended to clarify that the
actions of a single signatory can constitute a violation of a
suspension agreement.
Second, paragraph (b)(2) provides that if, as a result of a
violation, the Department resumes a suspended investigation that had
not been completed under sections 704(g) or 734(g) of the Act, the
Department may update previously submitted information, where
appropriate, for purposes of making a final determination. For example,
if a considerable amount of time has passed since the POI of the
original investigation or if there have been significant changes in
market circumstances, it might be inappropriate to make a final
determination on the basis of dated information. This issue has arisen
in prior cases, and paragraph (b)(2) is intended to clarify the
Department's authority to seek updated information in these types of
situations.
Section 351.210
Section 351.210 deals with final determinations in investigations,
and is little changed from existing Secs. 353.20 and 355.20. One change
worth noting is that because the URAA eliminated the preference for a
country-wide rate in countervailing duty investigations, Sec. 351.210
lacks a provision comparable to existing Sec. 355.20(d).
Section 351.211
Section 351.211 deals with the issuance of antidumping duty and
countervailing duty orders, and is based on existing Secs. 353.21 and
355.21. The most significant new provision is paragraph (c), which
implements sections 706(c) and 736(d) of the Act regarding the coverage
of orders issued in investigations where the Commission has identified
a regional industry. Paragraph (c) establishes procedures by which an
exporter or producer that did not supply the region during the POI may
be excepted from the assessment of duties.
Section 351.212
Section 351.212 is new, and deals with matters related to the
assessment of antidumping and countervailing duties. Although portions
of Sec. 351.212 are based on provisions of the Department's current
regulations, other portions are entirely new.
Paragraph (b) deals with the assessment of duties as the result of
a review. Paragraph (b)(1) establishes rules regarding the assessment
of antidumping duties. By way of background, when the Department
assumed responsibility for the administration of the antidumping law in
1980, it inherited from its predecessor, the U.S. Customs Service, the
practice of issuing assessment instructions in the form of so-called
``master lists.'' Typically, a master list would list each entry (or
each shipment). Over time, the Department encountered numerous problems
in creating master lists. For example, because dumping margins are
calculated on the basis of sales, the creation of a master list
requires the ability to link each U.S. sale to a corresponding customs
entry. Frequently, this is an impractical task for both the Department
and exporters and importers. For example, if sales are made after
importation, the U.S. affiliate (or consignee) of the foreign exporter
usually will not maintain records that link each sale to an
unaffiliated customer to a corresponding customs entry. Similarly, when
the Department examines sales by a foreign producer to intermediaries
outside the United States, such as foreign trading companies, the
producer normally does not have the information that would allow the
Department to identify the specific customs entries that correspond to
specific sales to the intermediaries.
This inability to link sales to entries also has prevented the
Department from conducting reviews on the basis of merchandise entered
during a particular review period. Where this type of problem exists,
the Department has been forced to define review periods on the basis of
shipments or sales during the period.
One method of dealing with this problem would be to require
respondents to maintain records in such a way that sales can be linked
to entries. However, such a requirement would impose a burden on
respondents that would be disproportionate to the minor gains in the
precision of duty assessments, and simply would render an already
complex process even more complex. Therefore, commercial reality and
the need to streamline the administration of the antidumping law have
caused the Department to rely on the use of duty assessment rates
instead of entry-by-entry master lists. In the interests of clarity and
predictability, we believe that this practice should be codified in the
regulations.
With respect to the use of duty assessment rates, the Department
believes that, except in unusual situations, we should assess duties on
subject merchandise entered during each review period. Therefore,
paragraph (b)(1) provides that the Department normally will calculate a
duty assessment rate based on sales reviewed, and will apply those
rates to entries made during the review period. In all cases, this will
result in the assessment of duties on merchandise entered during the
review period. To the extent possible, these assessment rates will be
specific to each importer, because the amount of duties assessed should
correspond to the degree of dumping reflected in the price paid by each
importer. Where possible, we will
[[Page 7317]]
base assessment rates on the entered value of the sales examined in the
review. If entered values are not available, it may be necessary to use
unit rates.
For example, assume that a U.S. importer (affiliated with the
foreign exporter) sells after importation two different products, A and
B, both of which are subject to an antidumping order. The Department
reviews sales totalling 100 tons of product A and 200 tons of product
B. The entered value of the merchandise during the review period was
$40 per ton for product A and $30 per ton for product B. The absolute
dumping margin found for all of the sales was $100. In this example,
the assessment rate would be 10 percent [($100/($40x100 + $30x100) = 10
percent]. Put differently, it is the rate of dumping reflected in these
sales relative to the entered value of the merchandise. We would
collect antidumping duties on merchandise entered during the review
period by applying this 10 percent rate to the entered value of each of
those entries.
The Department believes that, except in unusual situations, it
should not abandon the objective of assessing duties on the basis of
entries, even when it is not possible to precisely link sales to
entries. In most antidumping proceedings, it is necessary to assess
duties on the basis of entries in order to maintain continuity with
periods of no review and to avoid the over- or undercollection of
duties. Moreover, because we typically cannot link sales to entries, we
currently have no means of collecting precisely an amount of duties
equal to the total absolute dumping margin calculated for the sale
reviewed. This would require exact knowledge, for each importer, as to
the total quantity or value of unliquidated entries during the review
period, information that often is difficult or impossible to obtain.
The Department intends to continue to use master lists in
situations where there are few shipments, and to assess duties on the
basis of merchandise sold or shipped if warranted by the pattern of
imports and sales. We also will evaluate the effect of reconciliation
entries, which are authorized by the Customs Modernization Act, on the
duty assessment process, and we may collect duties on the basis of
merchandise sold or shipped if a reconciliation entry is used.
Paragraph (b)(2) deals with the assessment of countervailing
duties, and is consistent with current practice.
Paragraph (c) deals with the automatic assessment of duties in
situations where an administrative review of an order under
Sec. 351.213 is not requested, and is based on existing Secs. 353.22(e)
and 355.22(g). Paragraph (c)(3) is new, and provides that automatic
assessment will not occur, even though an administrative review is not
requested, if the merchandise in question is subject to a new shipper
review under Sec. 351.214 or an expedited antidumping review under
Sec. 351.215.
Paragraph (d) deals with the provisional measures deposit cap, and
is based on existing Secs. 353.23 and 355.23. The language of paragraph
(d) has been revised to reflect the new concept of assessment rates in
paragraph (b). Finally, paragraph (e) deals with interest on over- and
underpayments of estimated duties, and is little changed from existing
Secs. 353.24 and 355.24.
Section 351.213
Section 351.213 deals with administrative reviews under section
751(a)(1) of the Act. Section 351.213 is based largely on existing
Secs. 353.22 and 355.22, but certain changes are worth noting.
Paragraph (c) establishes a new procedure by which the Secretary,
upon request, may defer the initiation of an administrative review for
one year. The purpose of this provision is to simplify the review
process and reduce the burden on all concerned by allowing the
Department, in effect, to cover two review periods in a single review.
However, the Secretary will not defer an administrative review if one
of the parties identified in the regulation objects to deferral.
Paragraph (d) deals with the rescission (previously referred to as
``termination'') of administrative reviews, and clarifies that the
Department may rescind a review that the Secretary self-initiated or in
which there are no entries, exports, or sales to be reviewed.
Paragraph (e)(2) codifies existing practice regarding the period of
review for countervailing duty administrative reviews, and is similar,
but not identical, to the period covered by investigations under
Sec. 351.204(b)(2).
Paragraph (f) deals with the treatment of voluntary respondents in
administrative reviews, and provides that voluntary respondents will be
treated in the same manner as in an investigation.
Paragraph (g) cross-references new Sec. 351.221, a new provision
which consolidates in one place the procedures to be applied in the
different types of reviews provided for by the Act.
Paragraph (h) sets forth deadlines for issuing preliminary and
final results of administrative reviews, and also provides for
extensions to those deadlines.
Paragraph (j) establishes procedures for the analysis of the
absorption of antidumping duties under section 751(a)(4) of the Act.
The Department will make a determination regarding duty absorption in
administrative reviews initiated in the second and fourth years after
the issuance of an antidumping order. In addition, if an order remains
in existence following a sunset review under section 751(c) of the Act,
the Department will make a duty absorption determination in the second
and fourth years following the Department's determination in the sunset
review. However, the Department will make a determination regarding
duty absorption only if a request for such a determination is made
within 30 days of the initiation of the administrative review. For
transition orders, reviews initiated in 1996 will be considered
initiated in the second year and reviews initiated in 1998 will be
considered initiated in the fourth year.
Paragraph (k) deals with administrative reviews of countervailing
duty orders that are conducted on an aggregate basis. Paragraph (k)(1)
establishes a procedure under which an individual exporter or producer
may seek a zero rate. This procedure is modeled on Sec. 351.204(e)(3),
discussed above, which deals with requests for exclusion in
countervailing duty investigations conducted on an aggregate basis. As
with requests for exclusion, the Secretary will consider requests for
zero rates to the extent practicable. Paragraph (k)(2) provides that,
where an administrative review of a countervailing duty order is
conducted on an aggregate basis, the country-wide rate calculated in
such a review, if any, will supersede, for cash-deposit purposes, rates
calculated in a prior segment of the proceeding, with the exception of
zero rates determined under paragraph (k)(1).
Section 351.214
Section 351.214 sets forth the procedures for conducting new
shipper reviews, a new procedure contained in section 751(a)(2) of the
Act. This section also establishes a procedure for conducting an
expedited review of exporters that are not individually examined in
countervailing duty investigations. Certain features of Sec. 351.214
merit discussion.
Paragraph (b) sets forth the procedures for requesting a new
shipper review. Under paragraphs (b)(1), (b)(2), and (b)(3), the
requester must provide certifications demonstrating that the
[[Page 7318]]
party is a bona fide new shipper. The purpose of these certifications
is to ensure that new shipper status is not achieved through mere
restructuring of corporate organizations or channels of distribution.
In accordance with the SAA, at 875, this provision also makes clear
that parties will not be granted new shipper status merely because they
were not individually examined during the investigation.
Paragraph (b)(4) requires the requesting party to document the
entry date of the shipment which establishes the basis for the new
shipper review, as well as the date of the first sale to an
unaffiliated customer in the United States. If the requesting party
cannot provide such information it may, in the alternative, provide
documentation establishing the date on which the merchandise was
shipped. The date of first entry (or the date of shipment) will be used
to establish the timeliness of the request for a new shipper review
under Sec. 351.214(c).
In the case of a countervailing duty order, paragraph (b)(5)
requires the requesting party to certify that it has informed the
government of the exporting country that the government will be
required to provide a full questionnaire response. This requirement is
intended to put parties on notice that, in a review of a countervailing
duty order, the party will have to have the cooperation of the
government. By requiring at the outset a certification that the
government has been put on notice of the review, the Department hopes
to minimize situations in which it will be forced to rely upon the
facts available.
Paragraph (c) clarifies that a request for a new shipper review
must be submitted no later than one year after the date of the first
shipment to the United States. By setting this deadline, the Department
clarifies that the statute is intended to provide a new shipper an
opportunity to obtain its own rate on an expedited basis, and not to
permit shippers to request expedited reviews long after the first
shipment has taken place.
Paragraph (d) deals with the time for initiating new shipper
reviews, and provides an illustrative example. Paragraph (f) permits
the Secretary to rescind a new shipper review upon the request of the
new shipper made within 60 days of the initiation of the review. In
addition, the Secretary may rescind a new shipper review if the
Secretary concludes that: (i) There were no entries, exports, or sales
(as appropriate) during the standard period of review for a new shipper
review, and (ii) an expansion of the standard period to include
entries, exports, or sales would prevent the timely completion of the
new shipper review. This might occur, for example, in an antidumping
proceeding where a new shipper exports merchandise to an affiliated
U.S. importer, but the importer does not resell the merchandise to an
unaffiliated U.S. purchaser within the standard period of review.
Although the Secretary would have the discretion to expand the period
of review to cover a subsequent resale, if the merchandise has not been
resold within a reasonable period of time following the end of the
standard review period, the Secretary could rescind the new shipper
review. The new shipper still would have the option of requesting a new
shipper review if and when the merchandise was resold.
Paragraph (g) deals with the period of review. New shipper reviews
in antidumping proceedings normally will cover a period of six months
or one year, depending on whether the review was initiated following
the anniversary month or the semiannual anniversary month. In a
countervailing duty proceeding, the period of review will be the same
as in an administrative review. However, because of the novelty of the
new shipper review procedure, the period of review may change as the
Department gains experience in this area. It is the Department's intent
to apply paragraph (g) in a flexible manner so that the Department may
expand the standard period of review to cover the first exportation of
a new shipper, provided that any such expansion of the period of review
does not prevent the completion of the review within the statutory time
limits.
Because new shipper reviews may be requested at any time, but are
initiated only at six-month intervals, the Department may find that the
Customs Service has liquidated the relevant entries based upon
instructions issued under the automatic assessment provisions of
Sec. 351.212(c). Although the Department may be forced to review
entries that already have been liquidated, this should not be
interpreted as a change in the Department's general policy of refusing
to conduct administrative reviews of liquidated entries.
Paragraph (h) cross-references section 351.221, which, as discussed
above, contains procedural rules for the various types of reviews
conducted by the Department. Here, we should note that under
Sec. 351.221(b)(6), the results of review will form the basis for the
assessment of duties on unliquidated entries. Some commentators have
argued that the Department should exclude a new shipper from an order
if the Department determines in a new shipper review a zero or de
minimis rate. The Department has not adopted this suggestion for the
following reasons. Section 751(a)(2) implements obligations arising
under both the AD Agreement and the SCM Agreement, but during the
Uruguay Round negotiations, the subject of new shippers was negotiated
primarily in connection with the AD Agreement. The negotiating history
of the AD Agreement indicates that while a proposal was made regarding
the exclusion from an order of new shippers found to be selling at non-
dumped prices, this proposal was not included in the final AD
Agreement. Thus, the purpose of the new shipper review procedure merely
was to provide an expedited review of imports already considered to be
subject to an order. We note that we invite comment on our proposal to
change the rules governing revocation, Sec. 351.222, and that these
rules apply to new shippers.
Finally, paragraph (j) addresses situations in which a new shipper
may be subject to more than one review or more than one request for
review. For example, a new shipper might request a new shipper review
notwithstanding the fact that the new shipper is already subject to an
administrative review under Sec. 351.213. To minimize the potential for
confusion and to conserve administrative resources, paragraph (j)
permits the Department to terminate a review, in whole or in part,
including a new shipper review. Paragraph (j) also would permit the
Department to conduct an administrative review under Sec. 351.213 of
less than the normal one year review period. Paragraph (j) also permits
the Department to conduct a new shipper review concurrently with an
administrative review under section 351.213, if the new shipper is
willing to waive the time limits for a new shipper review set forth in
paragraph (i). If a new shipper waives the time limits, all other
provisions of Sec. 351.214, including the bonding provision of
paragraph (e), will continue to apply for the duration of the new
shipper review.
To implement Article 19.3 of the SCM Agreement, paragraph (k)
expands the new shipper review procedure to cover exporters that were
not individually examined in a countervailing duty investigation where
the Secretary limited the investigation under section 777A(e)(2)(A) of
the Act. There are a few important differences between this procedure
and the procedure for a regular new shipper review. First, to allow the
Department to manage its limited resources efficiently, a
noninvestigated exporter desiring an
[[Page 7319]]
expedited review must file a request within 30 days of the publication
of a countervailing duty order. This is a reasonable time limit,
because a noninvestigated exporter will be aware of its status long
before an order is published. Second, because the noninvestigated
exporter does not qualify as a new shipper, the Secretary will not
permit a bond to be substituted for a cash deposit of estimated duties.
Section 351.215
Section 351.215 deals with expedited antidumping reviews under
section 736(c) of the Act. But for stylistic and formatting changes,
section 351.215 is unchanged from existing Sec. 353.22(g).
Section 351.216
Section 351.216 deals with changed circumstances reviews under
section 751(b) of the Act. Again, except for stylistic and formatting
changes, this provision is unchanged from existing Secs. 353.22(f) and
355.22(h).
Section 351.217
Section 351.217 deals with reviews under section 751(g) of the Act.
Section 751(g) establishes a mechanism for reviewing a countervailing
duty order to take account of the outcome of a subsidies-related WTO
dispute.
Section 351.218
Section 351.218 deals with sunset reviews under section 751(c) of
the Act. In accordance with section 751(c), paragraph (c) provides that
the Department will publish a notice of initiation no later than 30
days before the fifth anniversary date of an order or suspended
investigation. As described in the SAA, at 882, the Department may
initiate a sunset review at an earlier date, at the request of a
domestic interested party. The purpose of this provision is to enable
the Commission to conduct a cumulative injury analysis. However, if the
Department determines that the party requesting an early sunset review
is related to a foreign exporter or producer or is an importer (or is
related to an importer) within the meaning of section 771(4)(B) of the
Act and Sec. 351.203(e)(4), the Department may decline such a request.
With respect to sunset reviews, the Department would like to remind
parties that section 751(c)(3)(A) of the Act requires the Department to
make a final sunset determination within 90 days of the notice of
initiation if no domestic interested party responds to the notice of
initiation. Therefore, once the Department publishes a notice of
initiation of a sunset review, parties will receive no further notice
of the review unless and until they provide such information.
Section 351.219
Section 351.219 deals with section 753 of the Act. In general,
section 753 of the Act provides a mechanism for providing an injury
test in the case of countervailing duty orders that (i) pertain to a
Subsidies Agreement country, and (ii) were issued under section 303 of
the Act without an injury test. Under section 753, upon request, the
Commission will conduct an investigation to determine if a U.S.
industry is likely to be materially injured if a countervailing duty
order is revoked. If the Commission's determination is negative, or if
no request for an investigation is received, the Department will revoke
the order.
Section 351.219 differs from Sec. 355.40, which the Department
issued as an interim-final rule on May 11, 1995 (60 FR 25130, 25139).
The principal change is that we have eliminated provisions that merely
repeated the language of section 753. However, consistent with the SAA,
at 942-943, paragraph (b) continues to provide that the Secretary will
notify domestic interested parties as soon as possible after the
opportunity for requesting a section 753 investigation arises.
Section 351.220
Section 351.220 deals with reviews conducted at the request of the
President under section 762 of the Act. But for stylistic and
formatting changes, Sec. 351.220 is unchanged from existing
Sec. 355.22(i).
Section 351.221
Section 351.221 consolidates in one section the procedural actions
that the Department will take with respect to the various types of
reviews provided for under the Act. Paragraph (b) is in the nature of a
generic provision, and is based on existing Secs. 353.22(c) and
355.22(c). Paragraph (c) contains special rules for particular types of
reviews.
Section 351.222
Section 351.222 deals with the revocation of orders and termination
of suspended investigations.
Paragraph (b), which deals with revocation or termination based on
the absence of dumping, is substantively unchanged from existing
Sec. 353.25(a). Paragraph (c) retains the current requirements (found
in Sec. 355.25(a)) for revocation or termination based on the absence
of countervailable subsidies. As provided in Sec. 351.213(e) and
Sec. 351.204(d), the Department generally will not consider voluntary
respondents in an administrative review of a countervailing duty order
that is conducted on an aggregate basis under section 777A(e)(2)(B) of
the Act. However, the requirements for a company-specific revocation
set forth in paragraph (c)(3) may be satisfied in a proceeding
conducted on an aggregate basis by the submission of certifications
that the company received zero or de minimis countervailable subsidies.
See Sec. 351.222(e)(2)(iii). As in the case of exclusions, the
Department is considering whether there should be separate revocation
rules for firms, such as trading companies, that sell, but do not
produce, subject merchandise. One alternative would be to limit the
revocation of a non-producing exporter to subject merchandise produced
by those producers that supplied the exporter prior to revocation.
However, before issuing final rules, the Department is interested in
receiving additional public comments regarding this issue.
Under the current regulations, a company must have been the subject
of three (or, in a countervailing duty proceeding, five) consecutive
administrative reviews in order to qualify for a company-specific
revocation. One consequence of this policy is that it forces companies
to request administrative reviews that they might not otherwise
request, thereby needlessly adding to the Department's workload.
In an attempt to reduce the administrative burden on parties and
Department personnel, while at the same time maintaining our current
policy that there must be a consistent pattern of no dumping or
subsidization before we will consider revocation, paragraph (d)
eliminates the requirement that the Department actually conduct a
review in each of the three (or five) years before revocation. Instead,
the Department will require that reviews of the first and last years of
the three- or five-year period demonstrate an absence of dumping or
subsidization. In other words, the Department would be able to revoke
an order (or terminate a suspended investigation), despite the fact
that an administrative review may not have been conducted for one or
more of the intervening years, as long as the cash deposit rate in the
end review years was zero. The Department reasons that if a review of
the first year establishes an absence of dumping or countervailable
subsidies, the lack of a request for reviews of subsequent years by
domestic interested parties is sufficient to establish the continued
absence of dumping or countervailable subsidies
[[Page 7320]]
during those years. However, to ensure that the lack of requests for
reviews is not simply due to the absence of imports in commercial
quantities, the Department will require a certification from a company
seeking revocation (or each signatory in the case of a suspended
investigation) that it sold subject merchandise to the United States in
commercial quantities in each of the three (or five) years, including
any unreviewed intervening years. The Department will establish whether
sales were made in commercial quantities based upon examination of the
normal sizes of sales by the producer/exporter and other producers of
subject merchandise. In deciding commercial quantities, the Department
will consider natural disasters and other unusual occurrences which
might affect the potential for production or exportation.
Paragraph (e) retains the procedures currently found in
Secs. 353.25(b) and 355.25(b) regarding requests for revocation and
termination based on the results of administrative reviews. One change
is that in a countervailing duty proceeding, paragraph (e)(2)(iii)
requires that, along with the certification that the person has
received no net countervailable subsidy for five consecutive years, the
person must submit a calculation demonstrating the basis for the
conclusion that the person received no net countervailable subsidy in
the fifth year. This calculation should be based on methodologies used
by the Department in the most recently completed segment of a
proceeding. The Department will review this calculation, and will
notify the person if the Department identifies a methodological or
other error, the correction of which may reveal a net countervailable
subsidy that is above de minimis for that year. In addition, to conform
to the changes in paragraph (d) regarding unreviewed intervening years,
the requester must provide certifications regarding sales to the United
States in commercial quantities.
Paragraph (g) deals with revocations and terminations based on
changed circumstances reviews, and is almost identical to prior
sections 353.25(d) and 355.25(d). The one substantive change is that,
in light of the new sunset review procedure under section 751(c) of the
Act, we have eliminated the prior ``sunset revocation'' procedure based
on the absence of requests for administrative reviews.
Paragraphs (h) through (i) deal with revocations and terminations
based on other review procedures, such as changed circumstances reviews
by the Commission and sunset reviews by the Department and the
Commission.
Paragraph (m) is a transition rule designed to account for the fact
that the URAA altered the substantive rules for determining when
merchandise is fairly traded under the Act. Essentially, for purposes
of satisfying the three- and five-year requirements for revocation or
termination, paragraph (m) gives a company or foreign government credit
for the absence of dumping or countervailable subsidies during years to
which the pre-URAA version of the Act applies. For example, in the case
of a particular company, if, under the transition rules of section
291(a)(2) of the URAA, there were two administrative reviews showing
two years of no sales at less than foreign market value (under the pre-
URAA version of the Act) and one year of no sales at less than normal
value (under the Act as amended by the URAA), the company would be
deemed to have satisfied the three-year requirement for revocation.
Section 351.223
Section 351.223 deals with the procedures for requesting and
initiating a downstream product monitoring program under section 780 of
the Act. There are no substantive changes from existing Sec. 353.27.
Section 351.224
Section 351.224 deals with the disclosure of calculations and
procedures for the correction of ministerial errors. Section 351.224 is
based on existing Secs. 353.20(e), 355.20(h), 353.28, and 355.28, and
on proposed regulations concerning the correction of significant
ministerial errors in preliminary determinations in antidumping and
countervailing duty investigations (see Notice of Proposed Rulemaking
and Request for Public Comments, 57 FR 1131 (January 10, 1992)
(Proposed Regulations)). However, section 351.224 contains numerous
changes intended to streamline the disclosure and ministerial error
correction process.
The principal goal of these changes is to provide for the issuance
of a correction notice normally within 30 days after the date of public
announcement of the preliminary or final determination or final results
of review. The date of public announcement is the date on which the
signed determination or results of review is first made available to
interested parties. This goal is consistent with the proposal from a
number of commentators that the Department should respond to
ministerial error allegations prior to the date when a summons must be
filed with the Court of International Trade or when a notice of intent
to commence panel review must be filed with the NAFTA Secretariat. This
30-day framework is intended to avert needless litigation by allowing
parties sufficient time to review the correction notice before the
litigation deadline arrives.
Paragraph (b), which deals with disclosure, has been revised from
the existing and proposed regulations to eliminate the requirement that
a party to the proceeding request disclosure. Instead, paragraph (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. In this context, disclosure refers both to
the release of disclosure documents and to the holding of a disclosure
meeting. In this regard, because paragraph (c)(1) provides that
comments concerning ministerial errors must be filed within five days
after the earlier of the date of the release of the disclosure
documents or the date of the disclosure meeting, parties are advised to
schedule disclosure meetings as early as possible. One commentator
proposed that there be at least five days between the release of
disclosure materials and the disclosure meeting. Due to the time
constraints of the 30-day framework, however, the Department normally
will not be able to extend the disclosure and comment process.
Paragraph (b) also provides for disclosure normally within 10 days
after the date of public announcement of the preliminary results of
review. Although, as discussed below, the Department will not amend a
preliminary results of review to correct a ministerial error, the
Department believes that prompt disclosure will assist parties in the
preparation of any case brief and in determining whether to request a
hearing. In either an investigation or a review, parties that do not
want to receive disclosure materials or to have a disclosure meeting
should inform the Department promptly.
A number of commentators proposed that as part of disclosure, the
Department provide the computer program on diskette. The Department
intends to accommodate this proposal, where practicable, upon request
from a party. The Department may charge a nominal fee for providing a
copy of the computer program on diskette.
We also should note that paragraph (b) provides for disclosure only
if the Secretary has performed calculations. For example, in certain
types of reviews, such as a sunset review or an Article 4/Article 7
review, the Department may not calculate dumping margins or
[[Page 7321]]
countervailable subsidy rates, but instead might only make a judgment
as to whether an order should remain in effect. In such instances, the
final results of review would contain a full statement of the
Department's legal and factual conclusions, and there would be nothing
further to ``disclose.''
Paragraph (c)(2) establishes the time limits for filing comments
concerning ministerial errors. Specifically, a party to the proceeding
must file comments not later than five days after the earlier of (i)
the date of release of disclosure documents to that party, or (ii) the
date of the disclosure meeting with that party. With respect to a
preliminary determination in an investigation, a party may submit only
comments concerning a significant ministerial error as defined in
paragraph (g). With respect to a final determination in an
investigation or a final results of review, a party may submit comments
concerning any ministerial error as defined in paragraph (f). One
commentator proposed that the Department establish regulations for the
correction of ministerial errors made in a preliminary results of
review. The Department does not believe that such regulations would be
appropriate. 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 consequence. 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. See Proposed Regulations at
1132.
Paragraph (c)(3) establishes the time limits for filing replies to
comments. Specifically, replies to comments must be filed not later
than five days after the date on which such comments are made. One
commentator suggested eliminating replies to comments because alleged
ministerial errors should be indisputable. While it is often the case
that a ministerial error is obvious, there are instances where the
``ministerial'' nature of an error or the impact of an error is in
dispute. In these instances, parties' replies aid the Department in
analyzing the allegation. There is an exception for replies to comments
in connection with a significant ministerial error in a preliminary
determination. 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. Any reply
that a party wishes to make should be included in that party's case
brief so that the Department may address the reply in its final
determination.
Paragraph (c)(4) deals with the extension of the time limit for
filing comments concerning a ministerial error in a final determination
or a final results of review. A party may file a written request
showing good cause for extension within three days after the date of
the public announcement of a final determination or a final results of
review. The Department will not grant an extension of the time limit
for filing comments on a significant ministerial error in a preliminary
determination. Although the Department normally has 30 days in which to
announce the issuance of a correction notice, the time frame for
analyzing significant ministerial errors allegations in a preliminary
determination is, as explained above, more constrained. As noted
previously, a party has the opportunity to raise a ministerial error
allegation in its case brief for consideration in the final
determination or final results of review.
Some commentators suggested that domestic interested parties be
allowed more time to file comments on ministerial errors because these
parties have more material to review than respondents. The Department
does not believe that it is appropriate to distinguish between domestic
interested parties and respondents in this fashion. However, the fact
that a domestic interested party intends to file ministerial error
comments on a large number of respondents may provide good cause for an
extension of the time to file comments. The Department will make such
extension decisions on a case-by-case basis, taking into consideration
the intended 30-day framework for addressing ministerial error
allegations.
Paragraph (d) deals with the contents of comments and replies. In
order for the Department to complete its analysis of alleged
ministerial errors within the 30-day framework, comments must reference
specific evidence in the official record to explain the alleged
ministerial error and must present the appropriate correction. In
addition, comments concerning an alleged significant ministerial error
in a preliminary determination must demonstrate how the alleged
ministerial error is significant by illustrating the effect of the
error on the weighted-average dumping margin or countervailable subsidy
rate. One commentator proposed that parties be allowed to submit
factual information past the appropriate time limits if the information
is needed to show or deny the existence of ministerial errors. The
Department has not adopted this proposal. Based on the definition of
ministerial error as set forth in paragraph (f), whether something
qualifies as a ministerial error should be discernable from evidence
already on the official record. Paragraph (d) also requires that
replies to any comments be limited to issues raised in such comments.
Paragraph (e) deals with 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). As discussed above, the 30-day framework is intended to avoid
needless litigation by providing for resolution of ministerial error
allegations before the litigation deadline expires.
Paragraph (f) defines ministerial error and is largely unchanged
from existing Secs. 353.28(d) and 355.28(d).
Paragraph (g) defines significant ministerial error and essentially
is unchanged from proposed Secs. 353.15(g)(4) and 355.15(h)(4). See
Proposed Regulations at 1133-34. A number of commentators proposed
setting a flat rate as a benchmark for ``significant.'' These proposed
rates were lower than the standard for ``significant'' originally set
out in the Proposed Regulations and incorporated herein. The Department
believes that it would not be appropriate to lower the significant
ministerial error standard. In establishing this standard, which, as a
matter of administrative practice, the Department has applied
successfully for several years, the Department had to balance the
competing interests of accurate preliminary determinations and the need
to complete the investigation in a timely manner. The Department has
determined that the current standard allows it to correct the most
serious errors promptly, while also permitting it to complete
verification and issue a timely final determination. Moreover, the
Department encourages parties, in their case briefs, to comment on all
ministerial errors, including those not meeting the ``significant''
standard; all such errors will be addressed in the final determination.
Section 351.225
Section 351.225 deals with scope rulings, including rulings
involving circumvention. With a few exceptions, section 351.225 is
substantively unchanged from existing Secs. 353.29 and 355.29, but
paragraphs (b) through (f) do
[[Page 7322]]
contain some clarifications regarding procedures. Among other things,
these clarifications are intended to make clear that the Department
may, if appropriate, make a scope ruling based solely upon the
application and prior determinations. Only if the Department determines
that further inquiry is warranted will it formally initiate a scope
inquiry. One other change worth noting is that paragraph (f)(5)
establishes a 300-day deadline for scope rulings to which the
Department will adhere to the extent practicable.
Paragraphs (g) and (h) incorporate by reference sections 781(a) and
(b) of the Act. Several commentators argued that the standard for
determining whether the process of assembly or completion under these
sections of the Act was minor or insignificant had not changed from
prior law. However, as observed by other commentators, the Senate
Report states that, ``section 230 [of the URAA] amends section 781(a)
and (b) to shift the focus of the circumvention inquiry away from a
test of the difference in value between the subject merchandise and the
imported parts or components toward the nature of the process performed
in the United States or third country.'' S. Rep. 103-412, 103d Cong, 2d
Sess., at 81.
Paragraphs (g) and (h) require the Department, in determining the
value of parts or components purchased from affiliated parties, to
apply the major input rule of section 773(f)(3) of the Act. Several
commentators argued that such a provision is necessary to avoid the use
of distorted values between affiliated parties. The Department agrees
that such a provision is consistent with the Department's policy of
avoiding the use of distortive prices paid to affiliated parties in its
calculations.
Several commentators also argued that the Department should
establish numeric guidelines for determining whether the value of
imported parts or components constitutes a ``significant portion of the
total value of the merchandise'' within the meaning of sections
781(a)(1)(D) and (b)(1)(D) of the Act. We have not adopted this
suggestion, because the SAA recognizes that no single standard would be
appropriate for every product examined by the Department. The SAA, at
894, states, ``[t]hese provisions do not establish rigid numerical
standards for determining the significance of the assembly (or
completion) activities in the United States or for determining the
significance of the value of the imported parts or components.''
One commentator argued that the term ``class or kind'' as used in
section 781(a) and (b) of the Act should be construed to encompass more
than merely the category of merchandise covered by an order.
Specifically, this commentator argued that, for purposes of
circumvention inquiries, the term ``class or kind'' should always
include components or parts. The Department agrees with other
commentators, however, who argued that 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.
Paragraph (k) adds advertisement or display to the criteria that
the Department uses to determine whether a product is within the scope
of an antidumping duty or countervailing duty order. Although this
criterion was not previously specified in the regulations, the courts
have recognized that it is a factor that should be considered. See
Kyowa Gas Chem. Indus. v. United States, 582 F. Supp. 887, 889 (CIT
1984). One commentator urged the Department to add ``substitutability''
to the criteria. However, the Department believes that such a criterion
would add significant uncertainty to the Department's orders, because
it implies that an order could be expanded to include many products not
contemplated in the petition (for example ``substitutability'' could be
cited to expand an order covering honey to include sugar, corn syrup
and molasses).
Paragraph (l) sets forth the procedures for suspension of
liquidation. One party argued that the Department should order the
suspension of liquidation as soon as a circumvention inquiry is
initiated and impose cash deposits retroactively if the final
circumvention determination is affirmative. While the Department
recognizes that parties may have a ``free ride'' by circumventing until
caught, the proposal would punish unfairly parties who unknowingly
circumvent an order. The statute does not require a finding of intent
in order to make an affirmative circumvention determination. Moreover,
the Department agrees with commentators who argued that this proposal
would create tremendous business uncertainty and impose a heavy burden
on the Department and on Customs.
Paragraph (l)(4) provides that, when a final scope ruling is made
within 90 days of the initiation of a review, products covered by that
decision will be included in the calculation of any dumping margin or
countervailing duty rate in that review, where practicable. If the
ruling is made after that date, entries of the product will be subject
to the final results of review, but, because collection of information
is not practicable after this date, the Department will rely on non-
adverse facts available.
New paragraph (m) provides that if different orders relate to the
same product, the Department may, under appropriate circumstances,
conduct a single scope inquiry covering all such orders. Thus, for
example, if there is an antidumping duty order on widgets from Germany,
and a countervailing duty order on widgets from France, the Department
may conduct a single inquiry under paragraph (i) (minor alterations),
(l) (later developed products) or (k) (other scope determinations). Any
final ruling resulting from the inquiry would apply to both orders. In
this way the Department will avoid both the burden of redundant
inquiries and the danger of inconsistent determinations.
Finally, paragraph (n) deals with the service requirements for
scope inquiries. Paragraph (n) defines the term ``scope service list''
as used throughout section 351.225 to include all parties who have
participated in any segment of the proceeding. This broad service list
is necessary because scope rulings are not often limited to the
specific parties raising the issue, but rather affect all domestic and
respondent interested parties.
Two commentators argued that the Department should look to Customs
rulings in determining the country of origin of merchandise. The
Department agrees that a Customs ruling may provide useful guidance;
however, as recognized by the CIT, the Department is not required to
follow Customs rulings in making its own scope rulings. Diversified
Products v. United States, 572 F. Supp. 883, 887-88 (1983).
Other Issues
One commentator suggested that the Department publish in the
Federal Register its ``remand determinations''; i.e., the
determinations the Department makes in response to a remand order from
a court or a NAFTA binational panel. We have not adopted this
suggestion at this time, because it is expensive to publish documents
in the Federal Register and because the Department's current practice
is to make remand determinations available to the public on request
(with business proprietary information deleted, of course). However, to
the extent that parties experience difficulties in obtaining copies of
remand determinations, the Department will consider this suggestion as
well as other alternatives, such as making these and other documents
available on the Internet.
[[Page 7323]]
Some commentators have expressed the view that industrial users of
products under antidumping or countervailing duty orders should have an
opportunity to demonstrate that certain products are not available
domestically, that continued inclusion of such products within an order
does not serve the purpose of the law, and that, if the petitioners
fail to show that the material is available domestically, the order
should be revoked or narrowed with respect to those certain products.
We are not proposing changes to the rules in this area because the
existing practices have been adequate to address valid concerns. The
clarification of investigations in their early stages to avoid later
supply problems, and the narrowing of existing orders through changed
circumstances proceedings has resulted in exclusion of a number of
products not made in the United States, in direct response to supply
concerns expressed by industrial users. Suggestions as to the use of
existing authority for this purpose would be appropriate.
Subpart C--Information and Argument
Subpart C deals with collection of information and presentation of
arguments to the Department, and is based on subpart C of Parts 353 and
355 of the Department's existing regulations. In addition to the
regulatory changes noted in this section, the Department is also in the
process of introducing other procedural reforms to streamline and
simplify antidumping and countervailing duty proceedings. Where these
reforms require regulatory change or are appropriately contained in
regulations, they are included here. Other non-regulatory
simplification measures will be introduced in Policy Bulletins and
through Department procedures. Non-regulatory changes include (1)
providing greater consistency in the handling of draft and newly-filed
petitions by having, to the extent practicable, the same Department
personnel initiate and conduct the investigation that reviewed the
original petition; and (2) making available on the Internet all
Department determinations under the URAA, as well as the URAA itself,
the Statement of Administrative Action, and these regulations. The
process of simplification is ongoing and one in which the Department
continues to invite suggestions.
Section 351.301
Section 351.301 sets forth the time limits for submission of
factual information in investigations and reviews.
Paragraph (b) is based on existing Secs. 353.31(a)(1) and
355.31(a)(1), and sets forth the time limits in general for submission
of factual information. Several commentators suggested that the
Department adopt regulations establishing a final deadline of seven
days prior to verification for the submission of information, whether
solicited or unsolicited. Another commentator suggested a deadline of
14 days prior to verification. The Department believes that the seven-
day deadline appropriately balances the needs of the Department to
prepare for verification with the goal of easing the burdens on parties
appearing before the Department. Therefore, paragraph (b)(1) provides
that, with respect to investigations, submission of factual information
is due no later than seven days before the date on which verification
of any person is scheduled to commence. The timing of submission of
factual information under existing Secs. 353.31(a)(1)(i) and
355.31(a)(1)(i) also is tied to verification. However, there has been
some confusion over the deadline as parties variously interpreted
``verification'' to mean a company-specific verification or
verification for any company (or, in a CVD proceeding, verification of
the government). In furtherance of the goal of simplifying the
Department's procedures, these regulations clarify that the deadline
for submission of factual information is identical for all parties,
i.e., seven days before the date on which verification of any person is
scheduled to commence. (In contrast, the deadline for submission of
factual information after verification, for reasons discussed below, is
company- or government-specific.)
With respect to administrative reviews, paragraph (b)(2) provides
that submission of factual information is due no later than 140 days
after the last day of the anniversary month. With respect to changed
circumstances, sunset, and section 762 (quantitative restriction
agreements) reviews, paragraph (b)(3) provides that submission of
factual information is due no later than 140 days after the publication
of notice of initiation of the review. With respect to new shipper
reviews, new paragraph (b)(4) provides that submission of factual
information is due no later than 100 days after the publication of
notice of initiation of the review. With respect to the remaining types
of reviews, paragraph (b)(5) provides for submission of factual
information by a date specified by the Department.
One commentator proposed that, once the deadline for submissions
prior to verification has passed, the Department should not allow for
submission of any corrections at verification. The Department has not
adopted this proposal. The Department's current practice allows
respondents to submit information at the beginning of verification to
correct errors found during the course of preparing for verification.
This policy balances the requirement that respondents present accurate
and timely responses, with the goal of accurate determinations. Cf.
Murata Mfg. Co. v. United States, 820 F. Supp. 603, 607 (CIT 1993) with
NSK Ltd. v. United States, 798 F. Supp. 721 (CIT 1992), aff'd, 996 F.2d
1236 (Fed. Cir. 1993). The regulations make clear that the Department
will continue this practice, as well as the practice of allowing
respondents to submit information after verification where the
Department has requested such information. Specifically, paragraphs
(b)(1)-(4) provide 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 completed. This practice promotes accuracy and completeness
in the calculation of margins (rates), both of which are underlying
objectives of the new facts available methodology. Furthermore, the
SAA, at 868, notes that the Department is not precluded from requesting
information, in addition to that set forth in the verification outline,
during a verification.
New paragraph (c) sets for 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 cases.
Paragraph (c)(1) is based on existing Secs. 353.31(a)(2) and
355.31(a)(2), and provides the time limits for when an interested party
may submit factual information to rebut, clarify, or correct factual
information submitted by any other interested party. The existing
regulations allow only domestic interested parties to rebut, clarify,
or correct factual information submitted by respondent interested
parties. The regulation was drafted this way to allow domestic
interested parties time to comment on respondents' information,
particularly where such information may have been submitted on or after
the applicable deadline. Upon further consideration, the Department has
determined that the goal of accurate determinations is enhanced by
allowing any interested party time to comment on submissions of factual
information. As a result, paragraph (c)(1) provides that
[[Page 7324]]
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 factual
information. If factual information is submitted (with the Department's
permission) after the applicable deadline, interested parties have 10
days to comment on such information. This 10-day period, however, does
not allow interested parties to continue to comment indefinitely on an
alternating 10-day cycle. Rather, if the applicable deadline for
submission of factual information has passed, interested parties would
have one opportunity to comment on each such submission.
Paragraph (c)(2) deals with questionnaire responses and other
submissions on request, and is based on existing Secs. 353.31(b) and
355.31(b). Paragraph (c)(2)(i) provides that the Department may request
any person to submit factual information at any time during a
proceeding. Paragraph (c)(2)(ii) is new, and incorporates the
requirements of the SAA, at 869, that the Department give notice of
certain requirements to each interested party from whom the Department
requests information.
Paragraph (c)(2)(iii) is new, and incorporates the requirements of
the SAA, at 866, that interested parties shall 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. In particular, the Department anticipates that the
response to Section A of a 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. Consistent with
the SAA, at 866, paragraph (c)(2)(iii) also provides that the ``date of
receipt'' will be seven days from the date on which the initial
questionnaire was transmitted.
Paragraph (c)(2)(iv) is new, and 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. The
statute also 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. One commentator suggested that petitioners be
allowed to comment formally on requests by respondents that the
Department modify information requests. Parties do have the right
generally to submit comments on any relevant issue, and, as such, the
Department does not believe that a special regulation addressing this
issue is necessary. Another commentator proposed defining ``small
companies'' to whom the Department would provide assistance using an
objective criterion, such as a company's annual sales volume (e.g.,
small companies are those that earn less than $1 million in annual
gross revenue). The Department does not believe that it is in a
position to define ``small companies'' at this juncture. The Department
will make a determination of what is a small company on a case-by-case
basis.
Paragraph (c)(2)(v) is new, and, consistent with the SAA, at 866,
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.
Paragraph (c)(3) is new and extends the time limits for submission
of publicly available information to obtain values for factors in
nonmarket economy cases. Because publicly available valuation data is
not verified, the Department is able to accept such data after
verification. The extended time limits, therefore, permit parties to
submit publicly available information even after a preliminary
determination or a preliminary results of review, but still allow
parties ample opportunity to comment on such information in their case
briefs.
Paragraph (d) sets 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.
Paragraph (d)(2) is new, and sets 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.
The Department received a number of comments regarding the
``reasonable grounds'' threshold for initiation of COP investigations.
Some commentators argued for consideration of sales below cost
allegations on a country-wide basis. Other commentators suggested that
the Department's regulations provide that where sales below cost
allegations are not submitted until after respondents have provided
questionnaire data, the allegations must be based on information
specific to the exporter or producer.
The Department agrees with the latter commentators that where
company-specific information has been placed on the record, any
subsequent sales below cost allegation must take into consideration
such information. 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 antidumping investigation. The Department
interprets this to mean that a sales below cost allegation, like an
allegation of dumping, must be supported by information reasonably
available to petitioner, including information already on the record.
The Department also, however, agrees with the former commentators
that the SAA does provide for consideration of a sales below cost
allegation on a country-wide basis. The Department's practice under the
existing regulations only allows for company-specific allegations based
on company-specific data. (In some instances, petitioners have used
their own data where certain company-specific information was
unavailable.) In practice, this meant that petitioners did not file
sales below costs allegations until after companies filed their Section
B responses covering home market sales data. As a result, in many
instances the Department was unable to request and receive companies'
cost data in time to analyze it before the preliminary determination.
Pursuant to the SAA, at 833-34, however, the Department now has the
authority to consider sales below cost allegations on a country-wide
basis. In most instances, considering a country-wide allegation at the
outset of an investigation will allow the Department to include its
below-cost analysis in the preliminary determination, and, hence,
consistent with the SAA, at 833-34, will provide parties with a greater
opportunity to comment on the Department's analysis.
Therefore, with respect to country-wide allegations, paragraph
(d)(2)(i)(A) allows the petitioner to file such an allegation in an
investigation up until 20 days after the date on which the initial
questionnaire was transmitted. Consistent with the SAA, at 833, this
time frame will permit the Department to initiate below cost inquiries,
where appropriate, at the outset of the case. In addition, the 20-day
deadline--one day
[[Page 7325]]
before Section A responses normally are due--provides petitioners with
the maximum time available to make a country-wide allegation before
company-specific data is filed by respondent interested parties.
With respect to company-specific allegations, paragraph
(d)(2)(i)(B) provides for filing such allegations in an investigation
up to 20 days after a respondent interested party files a response to
the relevant section of the questionnaire; i.e., the Section B response
containing home market sales data. The time limit, under paragraph
(d)(2)(ii), for filing company-specific sales below cost allegations in
administrative reviews, new shipper reviews, and changed circumstances
reviews is identical. Paragraph (d)(2)(iii) provides the time limit for
filing company-specific sales below cost allegations in expedited
antidumping reviews.
A number of commentators also argued that the changes under section
773(b) of the Act in no way relaxed the ``reasonable grounds''
initiation standard for COP investigations, but, instead, were intended
simply to permit the Department to initiate such investigations at the
outset of a case. One commentator maintained that standards for below-
cost investigations continue to be more stringent than those of an
antidumping investigation. The Department believes that the statutory
changes do not change the ``reasonable grounds'' requirement for
initiation of a COP investigation. The Department will continue its
practice of assessing the sufficiency of a petitioner's below-cost
allegations on a case-by-case basis, and it will reject those
allegations that are clearly frivolous or that are otherwise not
supported by information reasonably available to petitioners.
The Department received one other comment of note concerning its
initiation standard for COP investigations. The commentator suggested
that as part of its initiation threshold, the Department take into
account ``aberrational sales'' by accepting only those below-cost
allegations that provide a ``reasonable ground'' for the existence of
more than 20 percent below cost sales (i.e., the substantial quantities
threshold under section 773(b)(2)(C)(i) of the Act). Several other
commentators urged the Department to reject this suggestion, stating
that there was no statutory basis for such a practice. The proposal for
a substantial quantities initiation threshold could apply only in those
instances where respondents already have submitted questionnaire data.
Therefore, the proposal undoubtedly conflicts with the Department's
authority to consider country-wide cost allegations at the outset of an
investigation. Moreover, even in the case of company-specific
allegations filed subsequent to respondents' submission of
questionnaire data, the proposal lacks merit, because the substantial
quantities threshold under section 773(b)(2)(C)(i) of the Act does not
relate to the existence of ``reasonable grounds'' to initiate a COP
investigation.
Paragraph (d)(3)(i) is based on existing section 355.31(c), and
sets forth the time limits for a countervailable subsidy allegation in
investigations and reviews. These time limits are unchanged from the
existing regulations. Paragraph (d)(3)(ii) is based on existing
Sec. 355.20(b), and sets forth the time limits for an upstream subsidy
allegation in an investigation. The 10-day time limit for an allegation
made prior to a preliminary determination is new. The 15-day time limit
for an allegation before a final determination is consistent with
existing regulations.
One commentator suggested that the Department's regulations clarify
that the determination of whether ``new'' evidence has been submitted
by the petitioner regarding a subsidy will be based on a consideration
of the public evidence already included in the record of the
proceeding. The public record would automatically include all public
verification reports from prior segments of the proceeding.
Furthermore, the commentator argued that upon receipt of new evidence
of a subsidy, the burden of proof should shift to the foreign
government, because it is in possession of the information necessary to
establish that the program is not countervailable. Finally, the
commentator suggested that the Department change its deadline for
receiving new subsidy allegations from 120 days after publication of
the notice of initiation of an administrative review to three weeks
before verification.
While the Department may place public reports from prior segments
of the proceeding on the record in an ongoing proceeding, it is not be
required to do so. Parties are free to do so themselves as long as the
information is submitted in a timely fashion. As for shifting the
burden of proof, the Department's practice currently is to
reinvestigate subsidy programs previously determined to be
noncountervailable only where new information or evidence of changed
circumstances is present. Similarly, the Department will not reexamine
the countervailability of a program previously determined to be
countervailable absent new information or evidence of changed
circumstances. In both of these instances, the burden is on the
domestic or respondent interested parties to provide new information or
evidence of changed circumstances that would warrant a reconsideration
of the subsidy program in question. With respect to extending the time
for filing new subsidy allegations, the Department believes that a
deadline of three weeks before verification does not provide sufficient
time for the Department to send out and receive a response to a
questionnaire concerning the alleged subsidy.
Paragraph (d)(4) is new, and sets forth the time limit for a
targeted dumping allegation in an antidumping investigation. One
commentator suggested that petitioners be given at least 90 days from
the date of receipt of a respondent's sales listings in which to
comment on possible targeted dumping. The Department appreciates the
fact that at the outset of an antidumping investigation, petitioners
normally will not have access to the type of data that goes into a
targeted dumping analysis, and that they will need time in which to
analyze questionnaire responses once they are received. However, the
Department believes that in most instances, a 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. If the timing of responses does
not permit adequate time for analysis, the Department may extend the
time as appropriate.
Section 351.302
Section 351.302 is new, and clarifies the Department's authority to
grant extensions of time limits and to reject untimely or unsolicited
submissions. Although portions of Sec. 351.302 are based on provisions
of the Department's current regulations, other portions are entirely
new.
Paragraph (b) provides 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 an
extension. Parties should not draw the 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. The deadlines that include the phrase ``unless
the Secretary alters this time limit'' generally are tied to
transmittal of, or response to, the initial questionnaire,
[[Page 7326]]
and, as such, are more likely to be extended than other deadlines tied
to, for example, the date of publication of the preliminary
determination (see, e.g., Sec. 351.301(d)(1) versus
Sec. 351.301(c)(3)).
Paragraph (c) sets forth the procedures for requesting an extension
of a time limit, and is based on existing Secs. 353.31(b)(3),
355.31(b)(3), 353.31(c)(3), and 355.31(c)(3). One commentator suggested
that extensions for submission of questionnaire responses should be
granted only in ``extraordinary circumstances,'' and that extensions
should be limited to a period of 10 days. The Department agrees that it
is important to collect information as early as possible in an
investigation or review to provide parties an adequate opportunity to
comment on the data and to provide the Department with adequate time to
conduct its analysis. However, 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 the particular proceeding. Another
commentator suggested that the regulations provide for issuance of only
one supplemental questionnaire. The Department has no intention of
requesting the same information time after time. However, a limitation
on the number of supplementals could interfere with the Department's
ability to obtain clarifications or further information necessary to
reach an informed decision.
Paragraph (d) provides that the Department will not consider
untimely submissions for which it has not granted an extension under
paragraph (b), and that it will return such materials to the submitter.
In addition, consistent with section 782(c) of the Act, to the extent
practicable rejected submissions will be accompanied by a written
explanation of the reasons for not accepting the material.
One commentator proposed that parties be allowed to file objections
to the Department's rejection of information, and that these objections
be included in the record for judicial review. As long as a party's
objection itself does not include a restatement of the rejected
information, parties are permitted under the regulations to file timely
comments on the Department's decision to reject information; e.g., as
part of its case brief. Therefore, no specific provision is necessary
to meet the commentator's objective.
Section 351.303
Section 351.303 is new, and contains the procedural rules regarding
filing, format, service, translation, and certification of documents.
The Department has attempted to simplify these requirements, and, in
all instances, has reduced the number of copies required for filing.
Section 351.303 applies to all persons submitting documents to the
Department. Although portions of Sec. 351.303 are based on existing
Secs. 353.31, 355.31, 353.38(e), and 355.38(e), other portions are
entirely new.
Paragraph (c) is new, and indicates the number of copies required
for filing documents with the Department. Paragraph (c)(1) provides
that, in general, six copies of any submission must be filed with the
Department. Paragraph (c)(2) describes the application of the one-day
lag rule under which filing requirements are altered slightly to allow
for corrections in the bracketing of business proprietary information.
The existing one-day lag rule filing requirements have been modified to
simplify and streamline the filing process. Specifically, paragraph
(c)(2)(i) indicates that only one copy of the business proprietary
version of a document must be filed with the Department within the
applicable time limit. (The service requirements of paragraph (f) also
apply.) Paragraph (c)(2)(ii) provides that on the next business day,
six copies of the complete, final business proprietary version (not
just the corrected pages) must be filed with the Department. With
respect to the final business proprietary version, the service
requirements of paragraph (f) may be satisfied by serving other persons
with just the corrected pages. The final business proprietary version
must be identical to the business proprietary version filed on the
previous business day, except for any bracketing corrections. Paragraph
(c)(2)(iii) provides for the filing of three copies of the public
version simultaneously with the filing of the final business
proprietary version. Paragraph (c)(2)(iv) describes the filing
requirements for information in double brackets (information which the
submitter does not agree to have disclosed under APO). Finally,
paragraph (c)(3) clarifies that all information on computer media must
be releasable under APO.
Paragraph (d) contains the formatting requirements for documents
filed with the Department. Paragraph (d)(2)(iv) is new, and requires
that documents indicate the Department office conducting the
proceeding.
Paragraph (e) requires that documents submitted in a foreign
language be accompanied by an English translation. This requires that
all non-English language documents be accompanied by an English
translation of pertinent portions. When parties are unable to comply
with this requirement, the Department will work with them on an
acceptable alternative.
Paragraph (f)(1) provides for service of copies on other persons.
Paragraph (f)(2) provides that each document filed with the Department
must be accompanied by a certificate of service. Paragraph (f)(3)(i)
provides for service of briefs. Paragraph (f)(3)(ii) is new, and
clarifies the requirements for service of requests for review.
Paragraph (g) clarifies that each submission containing factual
information must be accompanied by the appropriate certification
regarding the accuracy of the information.
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, and is
based on existing Secs. 353.36 and 355.36.
Paragraph (b)(1) is based on existing Secs. 353.36(a)(1) and
355.36(a)(1), and indicates when the Department will verify factual
information. One commentator suggested defining ``good cause for
verification,'' the standard applicable in determining whether to
verify in an administrative, new shipper, or changed circumstances
review, by including in the regulations a non-exhaustive list of
particular circumstances under which the Department normally would find
that good cause for verification exists; e.g., changes in a
respondent's accounting methodology, organization structure, or
ownership, or significant changes in the product-mix offered. While,
the Department agrees that these circumstances may, in some cases,
provide good cause for verification, it is more appropriate to
determine good cause on a case-by-case basis, weighing the specific
facts before the Department in any given review.
Paragraph (b)(1)(v) deals with requests for verification in an
administrative review, and is based on existing
Secs. 353.36(a)(1)(v)(A) and 355.36(a)(1)(iv)(A). The deadline for
domestic interested parties to request verification has been shortened
from 120 days to 100 days after publication of the notice of initiation
of review. This change is intended to give the Department a longer time
to prepare for
[[Page 7327]]
verification, thereby resulting in more efficient verifications.
Paragraph (b)(2) is new, and provides that the Department may
verify in any other segment of the proceeding not provided for in
paragraph (b)(1), if the Department determines that it is appropriate
to do so.
Paragraph (b)(3) is based on existing Secs. 353.36(a)(2) and
355.36(a)(2), and provides that the Department may select and verify a
sample of exporters or producers where it is impractical to verify
relevant factual information for each person due to the large number of
exporters or producers included in an investigation or administrative
review.
Paragraph (b)(4) is new, and, consistent with the SAA, at 868,
describes when the Department may conduct verification.
Paragraph (c) is based on existing Secs. 353.36(b) and 355.36(b),
and, consistent with the SAA, at 868, indicates that the Department
will issue a verification report.
Paragraph (d) is based on existing Secs. 353.36(c) and 355.36(c),
and, consistent with the SAA, at 868, describes certain procedures for
verification. Paragraph (d) (2), carried over from existing Sec. 353.36
(c), provides that the Department may request access to the records of
persons not affiliated with respondent exporters, producers, or
importers. This provision clarifies that the Department may use the
records of the unaffiliated party if needed to establish the accuracy
of data provided by the respondent. The last sentence of paragraph (d)
also is new, and, consistent with current practice, clarifies that as
part of verification in a countervailing duty proceeding, the
Department may request access to records of the government of the
affected country.
One commentator proposed that to ensure that parties have an
adequate opportunity to prepare for verification, the regulations
should include provisions requiring that the Department provide by a
particular date notice of its intent to verify, as well as detailed
information regarding the location of the verification and the exhibits
the Department will require. These proposals are consistent with
paragraph (d), and, to the extent practicable, the Department intends
to implement them in practice.
Another commentator suggested a number of ``improvements'' to the
verification process. These included allowing the presence of a neutral
third party at verification, copying all documentation relied upon in
verification, allowing all parties (not just respondents) to review
draft verification reports, including in the record both the draft
verification report and the final report, conducting verification in
Washington with books and records forwarded by courier or
electronically, and permitting domestic counsel and consultants to
participate at verifications. We agree with the commentator that there
are a number of ways to improve the verification process. For example,
we are modifying our questionnaire in order to collect documentation
that would link the reported sales information to the respondent's
general ledger. We also intend to require that, prior to verification,
respondents submit any computer programs used to identify the sales
subject to investigation or review. By collecting this information
prior to the commencement of verification, the Department will be able
to use the time available at the verification site more efficiently.
While we disagree with the suggestion that a neutral third party or
domestic counsel participate at verification, we invite other
suggestions on how to improve the verification process.
Finally, another commentator proposed that petitioners be given a
formal opportunity to comment on verification outlines. We agree that
petitioners should be given opportunity to comment. Because this is
part of the Department's standard practice, the Department believes
that it is not necessary to include a provision in the regulations.
Section 351.308
Section 351.308 is new, and deals with determinations on the basis
of the facts available.
Paragraph (b) provides that the Department will make determinations
on the basis of the facts available in accordance with section 776(a)
of the Act. Under the statute, the Department will use the facts
otherwise available if necessary information is not available on the
record, or if an interested party or any other person withholds
requested information, fails to provide such information by the
deadlines for submission of the information or in the form and manner
requested, significantly impedes a proceeding, or provides such
information but the information cannot be verified.
Evident from a comparison between the pre-URAA statute and the new
statute is the fact that the circumstances triggering use of facts
available are virtually identical to those triggering use of best
information available (``BIA''). Significantly, however, although the
circumstances giving rise to use of BIA and facts available are
basically indistinguishable, the presumptive adverse inference
associated with use of BIA is not automatically associated with use of
facts available. Specifically, section 776(b) of the Act provides that
only 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'' may the Department use an inference that is
adverse to the interests of that party in selecting from among the
facts otherwise available. Therefore, the determination of what to use
as facts available will be affected by whether or not the Department
may make an adverse inference under the statute.
A number of commentators proposed that the regulations set forth
the Department's current two-tiered methodology for selecting BIA.
However, given the differences between the Department's past practice
regarding BIA and the new statutory provisions on facts available, the
Department does not believe this proposal would be appropriate.
In cases where the Department determines that an interested party
has not failed to cooperate, the Department will apply simply the
``facts available''; i.e., the Department will make its determination
``based on all evidence of record.'' SAA at 869. However, as paragraph
(e) provides (by cross-reference to section 782(e) of the Act), the
Department will consider information that is submitted by an interested
party and is necessary to the determination, but that does not meet all
the applicable requirements established by the Department, only if: (1)
The information is submitted by the deadline established for its
submission, (2) the information can be verified, (3) the information is
not so incomplete that it cannot serve as a reliable basis for reaching
the applicable determination, (4) the interested party has demonstrated
that it acted to the best of its ability in providing the information
and meeting the requirements established by the Department with respect
to the information, and (5) the information can be used without undue
difficulties.
One commentator suggested that information contained in the
petition should not be used as facts available. The statute, however,
does not limit the specific sources from which the Department can
obtain facts available.
In cases 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, section 776(b) of the Act provides that
the Department may make an adverse inference about the missing
[[Page 7328]]
information, and, hence, apply ``adverse facts available.'' A number of
commentators proposed that ``a good faith effort'' to provide
information responsive to the Department's request for information be
sufficient to meet the requirement of ``acting to the best of [a
company's] ability.'' The determination of whether a company has acted
to the best of its ability will be decided on a fact- and case-specific
basis, and the Department will consider whether a failure to respond
was deliberate or simply due to practical difficulties that made the
company unable to respond within the specified deadline. However, it is
clear that affirmative evidence of bad faith on the part of a
respondent is not required before the Department may make an adverse
inference.
Several commentators additionally suggested that where information
is not maintained by the respondent in the ordinary course of trade,
failure to produce such information should not presumptively be a
violation of the ``best of its ability'' standard. However, not all
information that needs to be produced during the course of a proceeding
is kept in the ordinary course of business (e.g., worksheets), and
failure to provide such information may be deemed to violate the ``best
of ability'' standard. The determination as to 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.
Consistent with section 776(b) of the Act and the SAA, at 870,
paragraph (c) provides that an adverse inference may include reliance
on secondary information or any other information placed on the record.
Paragraph (c)(1) indicates that secondary information includes
information derived from the petition, a final determination in an
antidumping or countervailing duty investigation, or any previous
review.
Paragraph (d) explains 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. Consistent with the SAA, at 870, the third
sentence of paragraph (d) indicates that ``corroborate'' in this
context means that the Department will look to such sources reasonably
at the Department's disposal to examine whether the secondary
information has probative value. Paragraph (d) also indicates that in
accordance with the SAA, at 870, where corroboration is not
practicable, the Department still may apply an adverse inference.
One commentator argued that secondary information taken from a
petition need not be corroborated, because the Department used this
information as the basis for its initiation. Section 776(c) of the Act,
however, specifically provides that, 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. As a result, the Department has not adopted this
proposal.
Section 351.309
Section 351.309 deals with written argument, and is based on
existing Secs. 353.38 and 355.38.
Paragraph (b)(1) provides that the Department will consider in
making its final determination or final results of review written
arguments in case or rebuttal briefs filed within the applicable time
limits.
Paragraph (b)(2) provides that the Department may request written
argument on any issue from any person at any time during a proceeding.
For example, the Department may choose to request post-hearing briefs
on a particular topic.
Paragraph (c)(1) sets out the time limits for filing case briefs in
investigations and reviews. Paragraph (c)(2) indicates that, as part of
the case brief, parties are encouraged to provide a summary of the
arguments not to exceed five pages.
Paragraph (d)(1) sets out the time limits for filing rebuttal
briefs. The time limit for filing rebuttal briefs--within five days
after the case briefs are filed--is now the same in both investigations
and reviews. Paragraph (d)(2) indicates that, as part of the rebuttal
brief, parties are encouraged to provide a summary of arguments not to
exceed five pages.
Section 351.310
Section 351.310 is new, and deals with matters related to hearings.
Although portions of section 351.310 are based on existing
Secs. 353.38(b), 355.38(b), 353.38(f) and 355.38(f), other portions are
entirely new. These provisions have been modified from prior
regulations with an eye to easing the burdens and costs imposed on
parties appearing before the Department.
Paragraph (b) is new, and provides that the Department may conduct
a pre-hearing conference to facilitate the conduct of the hearing. In
most instances, the pre-hearing conference will be held by telephone.
Examples of issues to be discussed include the necessity of conducting
a hearing, time limits for direct and rebuttal presentations,
identification of significant issues, and page limits for case and
rebuttal briefs.
Paragraph (c) is based on existing Secs. 353.38(b) and 355.338(b),
and sets forth the time limit for requesting a hearing. The existing
time limits for requesting a hearing in both investigations and reviews
have been extended. The extended time limit--30 days after the date of
publication of the preliminary determination or preliminary results of
review--will allow parties more time to consider the necessity of
requesting a hearing.
Paragraph (d) is based on existing Secs. 353.38(f) and 355.38(f),
and indicates that upon request, the Department will hold a public
hearing normally two days after rebuttal briefs are filed. Under
section 774(b) and section 751(e) of the Act, the Department is
required to hold a hearing upon the request of an interested party in
an investigation and in any review under section 751 of the Act. In
other segments of a proceeding, such as scope inquiries, the decision
to hold a hearing is discretionary. Consistent with section 774(b) of
the Act and existing Secs. 353.38(f)(3) and 355.38(f)(3), paragraph
(d)(2) provides that such hearings are not subject to the
Administrative Procedure Act.
Paragraph (e) is new, and provides that the Department may
consolidate hearings in two or more cases. Cases where the Department
is most likely to consolidate hearings are those where common issues
exist concerning the same product from different countries or where
common issues exist concerning different products from the same
country.
Paragraph (f) is new, and indicates that the Department may conduct
closed hearing sessions where parties wish to discuss business
proprietary information. The Department's existing regulations do not
expressly provide for representatives to discuss business proprietary
information during administrative hearings, although, in limited
instances, the Department has allowed discussion of business
proprietary information during a hearing. One commentator suggested
that the Department should consider procedures similar to those used by
the ITC regarding in camera sessions for purposes of discussing
business proprietary information that cannot be adequately summarized
for discussion at a public hearing. The commentator argued that the
inability to conduct a closed hearing may prejudice parties,
[[Page 7329]]
who may not be able to give a full presentation of their arguments.
We agree that the Department should be able to conduct closed
hearing sessions where appropriate. Paragraph (f), therefore, allows an
interested party to request a closed hearing session. However, the
Department believes that in the interest of transparency, closed
hearing sessions should not consume the entirety of a hearing.
Therefore, the Department intends to limit the duration of such
sessions, and to limit them to the discrete issues identified by the
requesting party. Before a closed hearing session begins, the hearing
room will be cleared of all persons not subject to APO. Consistent with
paragraph (g), the section of the transcript from a closed hearing
session will be treated like other documents containing business
proprietary information.
Section 351.311
Section 351.311 deals with countervailable subsidy practices
discovered during an investigation or review, and is based on existing
Sec. 355.39. Apart from minor clarifications, the only change is the
addition of subsidy programs in violation of Article 8 of the SCM
Agreement, which the Department is notified of by the United States
Trade Representative.
Section 351.312
Section 351.312 is new, and, consistent with section 777(h) of the
Act, provides consumer organizations and industrial users the
opportunity to submit information and argument on matters relevant to a
particular determination of dumping, subsidization, or injury. Although
such parties are not ``parties to the proceeding'' as defined in the
statute, the Department recognizes, as pointed out by one commentator,
``that industrial users' comments are a potential authoritative source
for available factual information supporting Department
determinations.'' The importance of input from industrial users and
consumer organizations is recognized in both the AD Agreement, at
Article 6.12, and the SCM Agreement, at Article 12.10. The SAA, at 871,
while emphasizing that section 777(h) of the Act does not confer
``interested party'' status on such users and organizations, explains
that this provision explicitly requires the Department to furnish such
users and organizations with an opportunity to provide relevant
information.
Paragraph (b) indicates that industrial users and representative
consumer organizations may submit to the Department relevant factual
information and relevant written argument in the form of case and
rebuttal briefs. Paragraph (b) also makes clear that all such
submissions must be filed in accordance with the procedural rules in
Sec. 351.303.
One commentator noted that the opportunity under the Act for such
users and organizations to submit relevant information would not be
meaningful if the Department did not respond to such information. With
respect to this comment, the Department will include in the record of a
proceeding Information submitted by industrial users and consumer
organizations, and the Department may rely on such information as
appropriate. Furthermore, the Department intends to address relevant
comments made by industrial users and consumer organizations in making
its determinations in the same manner that it considers and responds to
``interested party'' comments.
Paragraph (c) clarifies that industrial users and consumer
organizations may submit business proprietary information, but neither
they nor their representatives will be granted access under APO to
business proprietary information submitted by other persons.
Part 351, Subpart D--Calculation of Export Price, Constructed Export
Price, Fair Value and Normal Value
Subpart D deals with the calculation of export price, constructed
export price (``CEP''), fair value and normal value, and corresponds to
subpart D of Part 353 of the Department's existing regulations.
Section 351.401
Section 351.401 deals with general principles common to the
identification and calculat
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