Antidumping Duties; Countervailing Duties

DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Parts 351, 353, and 355

[Docket No. 950306068-6361-04]

RIN 0625-AA45

Antidumping Duties; Countervailing Duties

AGENCY: International Trade Administration, Commerce.

ACTION: Final rule.

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SUMMARY: The Department of Commerce (``the Department'') hereby revises

its regulations on antidumping and countervailing duty proceedings to

conform the Department's existing regulations to the Uruguay Round

Agreements Act, which implemented the results of the Uruguay Round

multilateral trade negotiations. In addition to conforming changes, in

these regulations the Department has sought to: where appropriate and

feasible, translate the principles of the implementing legislation into

specific and predictable rules, thereby facilitating the administration

of these laws and providing greater predictability for private parties

affected by these laws; simplify and streamline the Department's

administration of antidumping and countervailing duty proceedings in a

manner consistent with the purpose of the statute and the President's

regulatory principles; and codify certain administrative practices

determined to be appropriate under the new statute and under the

President's Regulatory Reform Initiative.

DATES: The effective date of this final rule is June 18, 1997. See

Sec. 351.701 for applicability dates.

FOR FURTHER INFORMATION CONTACT: Michael Rill (202) 482-3058. For

information concerning matters relating to the scope of orders or

changed circumstances reviews, contact the Office of Policy (202) 482-

4412.

SUPPLEMENTARY INFORMATION:

Background

The publication of this notice of final rules completes a

significant portion of the process of developing regulations under the

Uruguay Round Agreements Act (``URAA''). This process began when the

Department took the unusual step of requesting advance public comments

in order to ensure that, at the earliest possible stage, we could

consider and take into account the views of the private sector entities

that are affected by the antidumping (``AD'') and countervailing duty

(``CVD'') laws. On February 27, 1996, the Department published proposed

rules dealing with AD and CVD procedures and AD methodology (``AD

Proposed Regulations''). The Department received over five hundred

written public comments regarding the AD Proposed Regulations. On June

7, 1996, the Department held a public hearing, and, thereafter,

received over one hundred additional post-hearing written public

comments on the AD Proposed Regulations.1

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\1\ The prior notices published by the Department as part of its

URAA rulemaking activity are: (1) Advance Notice of Proposed

Rulemaking and Request for Public Comments (Antidumping Duties;

Countervailing Duties; Article 1904 of the North American Free Trade

Agreement), 60 FR 80 (Jan. 3, 1995); (2) Advance Notice of Proposed

Rulemaking: Extension of Comment Period (Antidumping Duties;

Countervailing Duties; Article 1904 of the North American Free Trade

Agreement), 60 FR 9802 (Feb. 22, 1995); (3) Interim Regulations;

Request for Comments (Antidumping and Countervailing Duties), 60 FR

25130 (May 11, 1995); (4) Proposed Rule; Request for Comments

(Antidumping and Countervailing Duty Proceedings; Administrative

Protective Order Procedures; Procedures for Imposing Sanctions for

Violation of a Protective Order), 61 FR 4826 (Feb. 8, 1996); (5)

Notice of Proposed Rulemaking and Request for Public Comments

(Antidumping Duties; Countervailing Duties), 61 FR 7308 (Feb. 27,

1996); (6) Extension of Deadline to File Public Comments on Proposed

Antidumping and Countervailing Duty Regulations and Announcement of

Public Hearing (Antidumping Duties; Countervailing Duties), 61 FR

18122 (April 24, 1996); (7) Announcement of Opportunity to File

Public Comments on the Public Hearing of Proposed Antidumping and

Countervailing Duty Regulations (Antidumping Duties; Countervailing

Duties), 61 FR 28821 (June 6, 1996); (8) Notice of Proposed

Rulemaking and Request for Public Comments (Countervailing Duties),

62 FR 8818 (Feb. 26, 1997); and (9) Extension of Deadline to File

Public Comments on Proposed Countervailing Duty Regulations

(Countervailing Duties), 62 FR 19719 (April 23, 1997).

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In drafting these final rules, the Department has carefully

reviewed and considered each of the hundreds of comments it received.

While we have not always adopted suggestions made by commenters, we

found the comments to be extremely useful in helping us to work our way

through the legal and policy thickets created by the massive rewriting

of our operating statute. Therefore, we are extremely grateful to those

who took the time and trouble to express their views regarding how the

Department should administer the AD and CVD laws in the future.

In addition, in these final rules, the Department has continued to

be guided by the objectives described in the AD Proposed Regulations.

Specifically, these objectives are: (1) Conformity with the statutory

amendments made by the URAA; (2) the elaboration through regulation of

certain statements contained in the Statement of Administrative Action

(``SAA''); 2 and (3) consistency with President Clinton's

Regulatory Reform Initiative and his directive to identify and

eliminate obsolete and burdensome regulations.

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\2\ Statement of Administrative Action Accompanying H.R. 5110,

H.R. Doc. No. 316, Vol. 1, 103d Cong., 2d Sess. (1994).

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Explanation of the Final Rules

General Background

Consolidation of Antidumping and Countervailing Duty Regulations

As described in the AD Proposed Regulations, in response to the

President's Regulatory Reform Initiative and to reduce the amount of

duplicative material in the regulations, the Department proposed to

consolidate the AD and CVD regulations into a new part 351, and to

remove parts 353 and 355. The Department did not receive any comments

concerning the consolidation of the regulations, and, upon further

review, we believe that the consolidation reduces duplication and makes

the AD/CVD regulations easier to use. Accordingly, we are promulgating

a single part 351, and are removing parts 353 and 355.

The structure of part 351 is as follows. Subpart A (Scope and

Definitions) is based on former subpart A of parts 353 and 355. Among

other things, the regulations contained in subpart A deal with general

definitions applicable to AD/CVD proceedings, the record for such

proceedings, de minimis standards for countervailable subsidies and

dumping margins, and the rates to be applied in the case of

nonproducing exporters or AD proceedings involving nonmarket economy

countries.

Subpart B (Antidumping and Countervailing Duty Procedures) is based

on former subpart B of parts 353 and 355. As indicated by the title,

subpart B deals with procedural aspects of AD and CVD proceedings.

Where the procedures for AD and CVD proceedings are different, the

regulations in subpart B so specify.

Subpart C (Information and Argument) is based on former subpart C

of parts 353 and 355. Subpart C establishes rules for AD/CVD

proceedings regarding such matters as the submission of information,

the treatment of business proprietary information, the verification of

information, and determinations based on the facts available. Certain

portions of subpart C dealing with the treatment of business

proprietary information and administrative protective order procedures

were the subject of a separate notice of proposed rulemaking

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and request for public comments on February 8, 1996. 61 FR 4826. A

separate notice of final regulations will be published for these

portions of subpart C.

Subpart D (Calculation of Export Price, Constructed Export Price,

Fair Value, and Normal Value) is based on former subpart D of part 353.

Subpart D deals with methodologies for identifying and measuring

dumping.

Subpart E is designated ``[Reserved].'' Proposed rules to be

included in subpart E were published in a separate notice of proposed

rulemaking and request for public comments on February 26, 1997. 62 FR

8818. The Department will publish a separate notice of final

regulations after reviewing and considering public comments submitted

in connection with proposed subpart E.

Subpart F (Cheese Subject to In-Quota Rate of Duty) is based on

subpart D of former part 355, and implements section 702 of the Trade

Agreements Act of 1979, as amended by the URAA.

Comments on Overall Drafting Approach

The Department received a few comments regarding the overall

drafting approach used in the AD Proposed Regulations. One commenter

complimented the Department on its use of introductory paragraphs

before each regulation, but noted that in several instances the

language of the introductory paragraph did not accurately reflect the

content of the regulation itself. In addition, this same commenter

noted that in several instances, the Department's use of the citation

signal ``See'' to a particular statutory provision was ambiguous. We

have taken this commenter's suggestions to heart, and in drafting these

final regulations we have reviewed the introductory paragraphs and our

citation signals in order to improve the clarity and precision of these

regulations.

A different commenter noted that in the AD Proposed Regulations,

when the Department referred to a particular section of the statute, it

referenced only the Tariff Act of 1930 (the ``Act'') itself, not the

section of the U.S. Code where the section is codified. This commenter

suggested that to make the regulations more ``user friendly,'' the

Department should refer to the relevant U.S. Code section of the Act or

to both the U.S. Code and the Act.

While we appreciate the spirit in which this suggestion was made,

we have not adopted it in drafting these final regulations. For years,

the Department generally has referenced sections of the Act in its

regulations, and we are not aware of any objections having been raised

regarding this drafting practice (other than the instant comment). The

absence of objections to this practice, as well as the absence of any

other comments endorsing the use of U.S. Code citations, suggests to us

that those who use these laws are comfortable with our practice of

referencing sections of the Act. As for the suggestion that we

reference both the Act and U.S. Code sections, given the numerous

statutory references in these final regulations, the adoption of this

suggestion would add considerably to the overall length of the

regulations without, in our view, contributing significantly to their

ease of use.

Explanation of Particular Provisions

In drafting these final regulations, the Department carefully

considered each of the comments received. In addition, we conducted our

own independent review of those provisions of the AD Proposed

Regulations that were not the subject of public comments. The following

sections contain a summary of the comments we received and the

Department's responses to those comments. In addition, these sections

contain an explanation of any changes the Department has made to the AD

Proposed Regulations either in response to comments or on its own

initiative. The following sections do not contain a discussion of those

provisions that remain unchanged from the AD Proposed Regulations and

that were not the subject of any public comments.

Subpart A--Scope and Definitions

Subpart A of part 351 sets forth the scope of part 351,

definitions, and other general matters applicable to AD/CVD

proceedings.

Section 351.102

Section 351.102 sets forth definitions of terms that are used

throughout part 351. With respect to most of the definitions contained

in Sec. 351.102, we received no comments. Definitions that we have

added or revised, or on which we received comments, are discussed

below.

We received one general comment suggesting that we number each of

the definitions contained in Sec. 351.102(b) as a separate numbered

paragraph. According to the commenter, the absence of subparagraph

numbering will make shorthand references to a particular definition

impossible and will render definitions difficult to locate.

We have not adopted this suggestion, because we have followed the

guidelines set forth in the Document Drafting Handbook 1991 ed. (Office

of the Federal Register), which states, at page 21, that ``paragraph

designations are not required for the terms being defined, if the terms

are listed in alphabetical order,'' as is the case with respect to

Sec. 351.102(b). Because the definitions in Sec. 102(b) are listed in

alphabetical order, we do not believe that it will be difficult to

locate a particular definition. In addition, we do not believe that the

format we have used precludes shorthand references.

Affiliated persons; affiliated parties: Many commenters claimed

that because the statute and the SAA do not provide sufficient guidance

as to when the Department will consider an affiliation to exist by

virtue of ``control,'' the Department should provide clearer guidance

in the regulations. In this regard, we received a number of specific

suggestions relating to the issue of ``control,'' many of which had

been submitted previously.

As a general observation, the Department appreciates the desire for

additional detail regarding the concept of affiliation. To the extent

possible, we have attempted to provide additional guidance in this

explanatory material. However, we continue to believe that it would be

premature to codify much guidance in the form of a regulation. As

explained in the AD Proposed Regulations, 61 FR at 7310, we believe

that it is more appropriate to develop our practice regarding

affiliation through the adjudication of actual cases.

Turning to specific suggestions, several commenters suggested that

the definition should state that in order for control to exist within

the meaning of section 771(33) of the Act, a relationship must affect

the subject merchandise or foreign like product. These commenters

argued that the purpose of such a requirement would be to winnow out

those relationships that, while unquestionably close enough to

constitute control in the abstract, do not affect the production or

sale of the product that the Department is examining. According to

these commenters, this approach is in line with the statement in the AD

Proposed Regulations, 61 FR at 7310, that the Department would look at

the ability to impact production, pricing, or cost, an analysis which,

they claimed, must be directed at the product under investigation or

review.

In general we agree with the suggestion that we focus on

relationships that have the potential to impact decisions concerning

production, pricing or cost. This does not mean however, that proof is

required that a relationship in fact has

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had such an impact. In this regard, section 771(33), which refers to a

person being ``in a position to exercise restraint or direction,''

properly focuses the Department on the ability to exercise ``control''

rather than the actuality of control over specific decisions.

Therefore, we will consider the full range of criteria identified in

the SAA, at 838, in determining whether ``control'' exists. Moreover,

we do not believe that we should ignore situations in which a control

relationship, while relating directly to another product or another

type of commercial activity, could affect decisions involving the

production, pricing or cost of the merchandise under consideration.

Therefore, in these types of situations, where a control relationship

exists, the respondent will have to demonstrate that the relationship

does not have the potential to affect the subject merchandise or

foreign like product.

Several commenters suggested that the Department reconsider the

statement in the preamble to the AD Proposed Regulations, 61 FR at

7310, that ``temporary market power, created by variations in supply

and demand conditions, would not suffice [as evidence of control].''

With respect to this comment, we continue to believe that temporary

market power generally would not constitute sufficient evidence of

control. However, where the issue arises, the Department will conduct a

case-by-case examination to determine whether market power is truly

``temporary.''

Another commenter suggested that the regulations state that in

analyzing control, the Department will focus on long-term, rather than

short-term, relationships. With respect to this suggestion, the

Department normally will not consider firms to be affiliated where the

evidence of ``control'' is limited, for example, to a two-month

contract. On the other hand, the Department cannot rule out the

possibility that a short-term relationship could result in control.

Therefore, the Department will consider the temporal aspect of a

relationship as one factor to consider in determining whether control

exists. In this regard, we also should note that we do not intend to

ignore a control relationship that happens to terminate at the

beginning (or comes into existence at the end) of a period of

investigation or review.

A number of commenters asked that the Department refrain from

finding an affiliation in situations where the applicable national law

prevents one firm from exercising control over another. With respect to

this suggestion, the Department will take national laws into account in

examining the existence of control. However, the Department also will

consider whether, national laws notwithstanding, there is any de facto

control.

Many commenters requested that the Department establish (1)

rebuttable presumptions for when control does or does not exist; (2)

bright-line thresholds establishing when control does not exist; and

(3) specific examples in the regulations of relationships that do or do

not constitute control. We have not adopted these suggestions, because

they require the type of fact-specific determinations that the

Department is not prepared to make at this time. As discussed above,

the Department intends to establish guidelines concerning affiliation

gradually as we gain experience through the resolution of issues in

actual cases.

One commenter suggested that the Department should find control to

exist only if a relationship resulted in an impact on prices or other

significant terms of sale. The Department has not adopted this

suggestion, because we do not agree that it is appropriate to require

evidence regarding the actual impact of a relationship. Because section

771(33) refers to a person being ``in a position to exercise restraint

or direction,'' we are required to examine the ability to control, not

the actual exercise of control.

Another commenter suggested that the Department should not consider

``normal commercial relationships'' as giving rise to control. We have

not adopted this suggestion, because ``normal'' is a subjective term

that lacks any clear definition. In our view, a standard of

``normality'' would be subject to substantial confusion, argument, and

litigation. More importantly, there is nothing in the statute or the

legislative history that suggests that ``normal commercial

relationships'' cannot give rise to control. To the contrary, the SAA

at 838 states: ``A company may be in a position to exercise restraint

or direction, for example, through corporate or family groupings,

franchises or joint venture agreements, debt financing, or close

supplier relationships in which the supplier or buyer becomes reliant

upon the other.'' Each of the relationships described in this passage

can be characterized as ``normal'' in the sense that they are

commercial relationships commonly entered into by firms. Nevertheless,

notwithstanding the ``normality'' of these commercial relationships,

the SAA indicates that they can give rise to control.

One commenter suggested that the Department clarify that the

provision of a loan by one firm to another on terms consistent with

commercial considerations will not constitute control. The Department

has not adopted this suggestion, because we do not believe that the

fact that a loan is provided on terms consistent with commercial

considerations is necessarily dispositive with respect to the issue of

control. For example, in situations where the supply of credit is

limited, the availability of a loan, regardless of the loan's terms,

may allow the lender to exercise control over the recipient of the

loan.

Several commenters suggested that the Department should define

legal or operational control as the ``enforceable ability to compel or

restrain commercial actions.'' As a further refinement of this

suggestion, one commenter suggested that the Department should find

control only if one firm is capable of forcing another firm to act

against its own interests.

The Department has not adopted these suggestions, because we do not

believe that ``enforceability'' is a requisite factor under section

771(33). In addition, in the case of the second suggestion, we believe

that focusing on the speculative question of what is or is not in a

firm's interests would render our analysis of affiliation less, rather

than more, predictable.

Aggregate basis: We received one comment concerning the definition

of the term ``aggregate basis,'' a term that describes CVD proceedings

in which the Department, under section 777A(e)(2)(B) of the Act,

determines a single country-wide subsidy rate applicable to all

exporters and producers. The commenter suggested that we substitute the

word ``principally'' for ``solely'' so that the definition would read:

`` `Aggregate basis' means the calculation of a country-wide subsidy

rate based principally on information provided by the foreign

government.'' According to the commenter, the purpose of the

modification would be to avoid confusion when the Department conducts a

CVD investigation or review on an aggregate basis, but one or more

producers request an individual review or exclusion.

We have adopted this suggestion, although not for the reason

suggested. Although section 777A(e) of the Act establishes a preference

for individual countervailable subsidy rates, section 777A(e)(2)

provides for alternative methods where there are a large number of

exporters or producers involved in an investigation or review. Under

section 777A(e)(2)(B), one of these alternatives is to determine a

single country-wide subsidy rate. Should the Department

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have to use the country-wide rate method of section 777A(e)(2)(B), the

Department will not review firms individually, although, where

practicable, the Department will consider requests for an individual

zero rate in an administrative review under Sec. 351.213(k). In

addition, while the Department will consider requests for exclusions

from firms that claim to have received no countervailable subsidies,

the Department will not calculate subsidy rates to be applied to

merchandise produced or exported by such firms. Instead, the Department

merely will determine whether or not a firm requesting exclusion

receives countervailable subsidies in more than de minimis amounts. If

the firm does not, the Department will exclude the firm. If the firm

does receive more than de minimis countervailable subsidies, the

Department will not exclude the firm, and will apply to that firm the

country-wide subsidy rate.

Thus, the definition of ``aggregate basis'' is not inaccurate

insofar as it relates to the calculation of individual rates and the

granting of exclusions. On the other hand, the definition, as drafted,

fails to reflect the fact that even in a CVD proceeding in which the

Department calculates a single country-wide rate, it may have to obtain

information from one or more firms with respect to certain types of

subsidies, such as equity infusions. Therefore, we have substituted the

word ``principally'' for ``solely'' to reflect this fact.

Country-wide subsidy rate: One commenter suggested that we add to

Sec. 351.102(b) a definition of ``country-wide subsidy rate.'' The

proposed definition included a statement that the Secretary shall use

``the smallest applicable and feasible jurisdictional unit consistent

with'' the definition of ``country'' in section 771(3) of the Act. The

thrust of the comment was that the Department should calculate separate

``country-wide subsidy rates'' for individual subnational

jurisdictions, such as provinces or states. A different commenter

opposed this suggestion.

We have not adopted this suggestion, because the statute does not

require the Department to calculate state- or province-specific subsidy

rates. The Department rejected province-specific rates in Certain

Softwood Lumber Products from Canada, 57 FR 22570, 22578-80 (1992), and

the Department's position was sustained in Certain Softwood Lumber

Products from Canada, No. USA-92-1904-01, Slip op. 139-43 (FTA Panel

May 6, 1993). We do not believe that any of the statutory amendments

made by the URAA warrants a different outcome. Moreover, there is no

indication in the legislative history that Congress intended any change

to the Department's practice in this regard.

Ordinary course of trade: We received several comments concerning

the Department's proposed definition of the term ``ordinary course of

trade.'' Some of these comments dealt with the definition in general,

while other comments focussed on particular aspects of the definition.

The definition in general: One commenter stated that the definition

should establish a presumption that sales are in the ordinary course of

trade until a party demonstrates otherwise on a sale-by-sale basis

(with the exception of home-market sales at prices below cost of

production). This commenter also argued that the standards for making

such a claim should be exacting, and that no general unsupported

conclusions should suffice to exclude selected transactions. This

commenter also urged the Department to omit from the regulation

examples of sales that might be outside the ordinary course of trade,

stating that each case should turn on its facts.

We have adopted this suggestion in part. We have not adopted the

suggestion regarding the establishment of a presumption, because we

believe that judicial precedent is sufficiently clear that the party

making the claim bears the burden of proving that sales are outside the

ordinary course of trade. See, e.g., Koyo Seiko Co., Ltd. v. United

States, Slip op. 96-101 (Ct. Int'l Trade June 19, 1996), pp. 22-25, and

cases cited therein. In addition, we have not adopted the suggestion

that we delete references to particular types of sales that might be

considered as outside the ordinary course of trade. Given the

illustrative examples of such sales in the SAA, we believe that it is

appropriate to provide guidance to parties by describing certain types

of transactions that, depending on the facts, might be deemed to be

outside the ordinary course of trade.

However, we have modified the definition so as to emphasize the

fact-specific nature of ordinary course of trade analyses. As revised,

the definition states that, as required by judicial precedent, the

Secretary will evaluate ``all the circumstances particular to the sales

in question.''

Another commenter expressed satisfaction with the proposed

definition, but suggested that the Department's placement of the closed

parenthesis in the definition was incorrect. We agree that we misplaced

the closed parenthesis. However, we have corrected the error by

restating the parenthetical as a separate sentence.

Abnormally high profits: Several commenters objected to the

reference in the proposed definition to ``merchandise sold * * * with

abnormally high profits.'' According to one commenter, neither the

statute nor the SAA refers to ``abnormally high profits'' as a factor

in considering whether merchandise is sold in the ordinary course of

trade. In addition, this commenter asserted that the inclusion of this

factor in the definition would invite respondents to argue for the

exclusion of allegedly overly profitable sales.

Another commenter acknowledged that the SAA does discuss sales with

``abnormally high profits'' as being outside the ordinary course of

trade, but that it does so in the context of constructed value profit.

This same commenter also argued that the proposed definition is overtly

biased in favor of respondents, because it does not provide for the

exclusion of sales with abnormally ``low'' profits as being outside the

ordinary course of trade. A third commenter, also noting that the

proposed definition does not refer to sales with abnormally ``low''

profits, requested that the Department either delete the reference to

abnormally high profits or revise the definition to refer to

``merchandise sold at aberrational prices or profits.''

We have not adopted these suggestions. With respect to the

propriety of including in the definition any reference to sales with

abnormally high profits, we believe that the SAA warrants such a

reference. As acknowledged by one of the commenters, the SAA at 839-40

does refer to sales with abnormally high profits as being outside the

ordinary course of trade. Although this reference is made in the

context of constructed value profit, we believe that it applies in

other contexts, as well. The SAA at 839 itself notes that ``constructed

value serves as a proxy for a sales price.'' Thus, where normal value

is based on constructed value, the constructed value is supposed to

approximate what a price-based normal value would be if there were

usable sales. Because, according to the SAA, a constructed value that

included a profit element based on sales with abnormally high prices

would not constitute an acceptable normal value, it follows that it

would be improper to use sales with abnormally high profits as a basis

for a price-based normal value.

With respect to the suggestion that the Department will be

overwhelmed with arguments from respondents claiming

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that particular sales have abnormally high profits, as discussed above,

the burden of establishing that a particular sale is outside the

ordinary course of trade rests on the party making the claim. Over

time, we believe that this evidentiary burden will ensure that only

serious claims are presented to the Department.

Finally, we do not believe that the proposed definition favors

respondents. When one considers the proposed definition in light of the

entire statute and the SAA, it is apparent that the Department may

exclude sales with both abnormally low (i.e., negative) and abnormally

high profits from a dumping analysis. The only difference is that the

Department considers sales with abnormally low profits under the rubric

of ``sales below cost of production'' and section 773(b) of the Act.

However, as section 771(15)(A) of the Act makes clear, sales that are

disregarded under section 773(b)(1) as being below cost are considered

to be outside the ordinary course of trade.

Off-quality merchandise: One commenter requested that the

Department delete the reference in the proposed definition to ``off-

quality merchandise.'' According to this commenter, neither the statute

nor the SAA mentions ``off-quality merchandise,'' and such merchandise

may be in the ordinary course of trade in certain industries and

markets.

We have not adopted this suggestion. Contrary to the comment, the

SAA at 839 does refer to ``off-quality merchandise,'' albeit in the

context of constructed value profit. For the reasons set forth above in

connection with the issue of ``abnormally high profits,'' we believe

that this reference is relevant to the general definition of ``ordinary

course of trade.'' As for the argument that sales of ``off-quality

merchandise'' may be in the ordinary course of trade in certain

industries and markets, the inclusion of the reference to ``off-quality

merchandise'' does not mean that sales of such merchandise are

automatically outside the ordinary course of trade. As discussed above,

and as the revised definition now makes clear, the Secretary will

conclude that particular sales are outside the ordinary course of trade

only after an evaluation of all of the circumstances.

Samples and Prototypes: One commenter suggested that the Department

should consider sales of sample and prototype merchandise to be outside

the ordinary course of trade, and should exclude such sales from its

calculations of dumping margins. We have not adopted this suggestion

for several reasons. First, there needs to be some limit on the number

of items included in a non-exhaustive list of examples. While we do not

disagree that there may be instances in which the Department might

consider sales of samples or prototypes to be outside the ordinary

course of trade, the commenter acknowledged that such sales already may

be embraced by the regulatory reference to merchandise ``sold pursuant

to unusual terms of sale.'' Second, the commenter requested that sales

of samples or prototypes be excluded from the dumping margin

calculation altogether. However, as both the Department and the courts

have made clear on numerous occasions, the statutory exclusion for

sales outside the ordinary course of trade applies only to sales used

to determine foreign market value (now normal value), not sales used to

determine U.S. price (now export price or constructed export price).

Thus, the courts have sustained the inclusion of all United States

sales whether in or out of the ordinary course of trade. See, e.g.,

Bowe Passat Reinigungs-Und Waschereitechnik GMBH v. United States, 926

F. Supp. 1138, 1147-49 (Ct. Int'l Trade 1996), and cases cited therein.

Price adjustment: We have added to Sec. 351.102(b) a definition of

the term ``price adjustment.'' This term is intended to describe a

category of changes to a price, such as discounts, rebates and post-

sale price adjustments, that affect the net outlay of funds by the

purchaser. As discussed in connection with Sec. 351.401, below, such

price changes are not ``expenses'' as the Department usually uses that

term, but rather are changes that the Department must take into account

in identifying the actual starting price. Numerous commenters requested

clarification on whether price adjustments would be treated as direct

or indirect expenses. As discussed more fully below, price adjustments

are neither direct nor indirect expenses, although they impact price as

additions or deductions.

Sale or likely sale: The proposed definition of ``likely sale,''

which was based on 19 CFR Secs. 353.2(t) and 355.2(p), defined this

term as meaning ``a person's irrevocable offer to sell.'' One commenter

suggested that the Department liberalize this definition to encompass

something less than an irrevocable offer to sell.

Although the Department has not adopted this particular suggestion,

we have taken another look at the ``irrevocable offer'' standard.

Because most AD/CVD petitions are based on sales, rather than likely

sales, the Department rarely has applied this standard. However, in one

case where the use of the irrevocable offer standard was at issue, the

court criticized the standard. Kerr-McGee Chemical Corp. v. United

States, 765 F. Supp. 1576 (Ct. Int'l Trade 1991). Therefore, the

Department has decided to eliminate the definition of ``likely sale''

in Sec. 351.102(b). Should the meaning of this term become an issue in

future cases, we will interpret the term in light of the statute and

the legislative history.

Segment of the proceeding: One commenter suggested that paragraph

(2) of the definition of ``segment of the proceeding'' include a

reference to scope inquiries, because such inquiries are separately

reviewable under section 516A of the Act. We have adopted this

suggestion, and have revised paragraph (2) of the definition

accordingly.

Another commenter did not object to the definition itself, but

stated that the Department should treat each whole review as a separate

proceeding, and should rely upon the record from each proceeding only

in connection with that particular proceeding. Because this commenter

did not propose any revisions to the definition, we have not made any

changes to the definition based on this comment.

Suspension of liquidation: One commenter suggested that in order to

eliminate confusion created by ``suspensions'' ordered by agencies

other than the Department, such as the Customs Service, the Department

should add to Sec. 351.102 a definition of ``suspension of

liquidation.'' The commenter included a proposed definition that, in

general, defined ``suspension of liquidation'' as a suspension of

liquidation specifically ordered by the Department under the authority

of title VII or title X of the Tariff Act, or by the courts in

litigation involving antidumping or countervailing duties. No commenter

opposed this suggestion.

We have adopted the suggestion, and have added to Sec. 351.102(b) a

definition of ``suspension of liquidation'' along the lines suggested

by the commenter. However, we have modified the language proposed by

the commenter in order to make the definition more accurate with

respect to suspensions of liquidation ordered by courts.

Section 351.104

Section 351.104 defines what constitutes the official and public

records of an AD/CVD proceeding, and prohibits the removal of a record

or any portion thereof unless ordered by the Secretary or required by

law.

In connection with Sec. 351.104(a)(1) and its list of examples of

materials that will be included in the official record,

[[Page 27301]]

one commenter suggested that the Department add to this list ``changes

to the electronic database that are made by Commerce (or by

respondents)'' and ``computer programs.'' Although the material

described by the commenter is, as a matter of practice, included in the

official record, we have not adopted this suggestion. As the commenter

acknowledged, paragraph (a)(1) merely contains examples of material

that will be included in the record, and is not itself an exhaustive

list. The commenter did not indicate that the absence of a reference in

the former regulations to computer programs or changes to the

electronic database gave rise to difficulties in actual cases. In the

absence of such difficulties, we see no need to revise this regulation.

One commenter supported Sec. 351.104(a)(2)(ii), which deals with

the inclusion in the official record of documents returned to the

submitter. The commenter requested that this provision remain

unchanged. The Department has not revised this provision.

Section 351.105

Section 351.105 defines the four categories of information

applicable to AD/CVD proceedings: public, business proprietary,

privileged, and classified. After a review of proposed Sec. 351.105 and

the comments submitted pertaining to that section, we have left

Sec. 351.105 unchanged, but for some stylistic changes involving the

substitution of ``that'' for ``which.''

One commenter suggested that the proposed definition of ``public

information'' in Sec. 351.105(b) is too narrow, because it excludes

business information claimed by the submitter to be business

proprietary unless the submitter has published the information or

otherwise made it public. According to this commenter, the definition

should include all non-classified information that a party learns

through any lawful means outside the context of disclosure under an

administrative protective order (``APO''). The commenter cited, for

example, information acquired through market research that may not have

been published or made generally available to the public at large. In

addition, this commenter proposed that the definition of ``business

proprietary information'' contained in Sec. 351.105(c) expressly

exclude all ``public information'' as the commenter would define

``public information.''

For the following reasons, the Department has not adopted this

suggestion. The Department places a high priority on the safeguarding

of business proprietary information. The definition of ``public

information'' in Sec. 351.105(b) is identical to the definition of that

term in former 19 CFR Secs. 353.4(a) and 355.4(a). Absent some evidence

that the definition interferes with a party's ability to defend its

interests in an AD/CVD proceeding, we are reluctant to transform what

heretofore has been considered as business proprietary information into

public information. However, the commenter did not offer any evidence

that the Department's longstanding definition of ``public information''

has had this effect. Instead, the commenter merely asserted that it is

not the Department's role ``to regulate lawfully acquired commercial

information.''

The same commenter suggested that the Department should amend

Sec. 351.105(b) so as to add the following additional category of

information normally considered as public: ``descriptions of reporting

methodologies, such as allocation methods.'' We have not adopted this

suggestion, because here, too, there is no indication that the absence

of a reference in Sec. 351.105(b) to this type of information has

interfered with a party's ability to defend its interests in an AD/CVD

proceeding.

We should note, however, that the former regulations did not, and

these regulations will not, preclude a party from arguing in a given

case that business proprietary treatment should not be accorded to

particular information. In this regard, Sec. 351.104(b)(3) continues to

treat as ``public information'' information ``that the Secretary

determines is not properly designated as business proprietary.''

However, we should emphasize here that where a party seeks to challenge

the business proprietary status of certain information, it should take

care to ensure that in submitting its challenge to the Secretary, it

does not inadvertently disclose the information in dispute.

Finally, we received two comments that essentially suggested that

the Department delete proposed Sec. 351.105(c)(10), which provides for

business proprietary treatment of the position of a domestic producer

or workers regarding a petition. According to one commenter,

Sec. 351.105(c)(10) would effectively preclude industrial users and

consumers from commenting on the issue of industry support for a

petition, because users and consumers would not be eligible to obtain

this information under APO. In addition, both commenters were skeptical

regarding the ability of the Department to grant APO access to this

information in a timely manner so that ``interested parties'' will be

able to comment on the issue of industry support within the 20-day

statutory deadline. A third commenter, however, opposed deleting

paragraph (c)(10), although it agreed that the Department should

expedite the APO process.

We have not adopted this suggestion for several reasons. As we

stated in the AD Proposed Regulations, 61 FR at 7314, several

commenters indicated that, due to concerns regarding commercial

retaliation, business proprietary treatment may be necessary in order

to encourage domestic producers and workers to present their candid

views regarding a petition. The instant commenters did not challenge

the validity of these concerns. As for APO disclosure, the Department

is aware of the need for expedited disclosure with respect to

information concerning industry support, and is confident that it will

be able to process APO requests in a timely manner that allows

interested parties to exercise their right to comment on the existence

of industry support for a petition.

Section 351.106

Section 351.106 deals with the de minimis standard, and implements

section 703(b)(4) and section 733(b)(3) of the Act. After reviewing

proposed Sec. 351.106 and the comments pertaining to that section, we

have left Sec. 351.106 unchanged.

One commenter objected to the fact that the de minimis standard for

reviews remained at 0.5 percent, and suggested that this was

inconsistent with the spirit, if not the letter, of the AD Agreement.

We have left the de minimis standard for reviews at 0.5 percent,

because, as stated in the AD Proposed Regulations, 61 FR at 7312, this

result is required by the statute and is consistent with both the AD

Agreement and the SCM Agreement.

As discussed above in connection with Sec. 351.102(b), one

commenter suggested a definition of ``country-wide subsidy rate'' that

would have provided for the application of country-wide subsidy rates

on a state-or province-specific basis. This same commenter, assuming

the adoption of its prior suggestion, proposed that we add a paragraph

to Sec. 351.106 that would have applied the de minimis standard to

country-wide rates on a state-or province-specific basis. The same

commenter that opposed the prior suggestion also opposed the instant

suggestion concerning the de minimis standard. Because we have not

adopted the prior suggestion, we are not adopting the corresponding

suggestion regarding the de minimis standard; i.e.,

[[Page 27302]]

we will not apply the de minimis standard on a subnational level.

We have left unchanged proposed Sec. 351.106(c)(2), which applies

the de minimis standard to the assessment of antidumping duties.

Applying the de minimis standard to assessments on an importer-specific

basis resolves the inconsistency between the treatment of cash deposits

and assessments. If a de minimis amount of estimated duties is not

worth collecting, then there is no reason to believe that a de minimis

level of definitively determined duties is worth assessing and

collecting either. Paragraph (c)(2) also avoids an inconsistency

between the administration of the AD and CVD laws, something that the

Department has expressed as one of its goals.

One commenter contended that the Department should not apply the de

minimis standard to the assessment of antidumping duties, because such

a policy does not result in any reduction in the Department's

administrative burden, is contrary to the SAA, and is not allowed by

the statute. This commenter cited the statutory requirement that

antidumping duties be imposed ``in an amount equal to the amount by

which the normal value exceeds the export price (or the constructed

export price) for the merchandise'' for the proposition that the

Department never may decline to assess antidumping duties, regardless

of how small such duties may be. With regard to the SAA, this commenter

contended that the SAA expressly limits the application of the de

minimis standard to the collection of deposits only by stating:

``Commerce will continue its present practice in reviews of waiving the

collection of estimated cash deposits if the deposit rate is below 0.5

percent ad valorem, the existing regulatory standard for de minimis.''

As noted above, the Department will apply the de minimis standard

to the assessment of antidumping duties on an importer-specific basis.

Regarding the commenter's statutory arguments, we believe that the

statute is silent on the issue. Although the statutory provisions cited

provide that the Department must assess duties, as the courts have

recognized, these provisions do not specify any particular assessment

methodology. See, e.g., FAG Kugelfischer Georg Schafer KGaA v. United

States, Slip Op. 95-158, 1995 Ct. Int'l. Trade LEXIS 209 (1996), aff'd,

No. 96-1074 (Fed. Cir. May 20, 1996). Significantly, the statutory

provisions cited by the commenter do not address how the Department

should apply the de minimis standards in reviews. Instead, the only

mention of such standards applying in reviews is contained in the SAA.

However, the SAA statement cited by the commenter (that the Department

will continue its practice of waiving cash deposits below 0.5 percent

in reviews) does not address the assessment issue at all. Read in

context, the statement refers to the fact that the de minimis standard

in reviews will continue to be 0.5 percent, as opposed to the new 2

percent standard for AD investigations. This statement does not address

the issue of whether the application of the 0.5 percent standard is

limited to the collection of cash deposits of estimated duties. As the

Department noted in the AD Proposed Regulations, 61 FR at 7312, the

only statement addressing that issue in the SAA is the general

statement that ``de minimis margins are regarded as zero margins.'' The

commenter offers no policy arguments for adopting an approach that

would limit the application of the de minimis standard to the deposit

of estimated duties.

Another commenter agreed with the Department's proposal to apply

the de minimis standard to the assessment of antidumping duties. In

addition, this commenter proposed that the Department clarify that

where an importer purchases from more than one exporter, the importer

will receive producer-specific assessment rates, and that no duties

will be assessed for individual de minimis rates.

In general, we agree with this comment, although we do not believe

that revisions to the regulations are necessary. As discussed below,

under Sec. 351.212(b)(1), the Department, as it has in many previous

cases, will calculate importer-specific assessment rates for each

producer or exporter reviewed. Thus, if one importer purchases from

several producers or exporters, the Department will assign that

importer an assessment rate for each producer or exporter. The

Department will apply the de minimis standard to these individual

assessment rates.

Proposed paragraph (c)(2) provided that the Secretary will instruct

the Customs Service to liquidate without regard to antidumping duties

all entries of subject merchandise for which the Secretary calculates

an assessment rate that is de minimis (i.e., less than 0.5 percent ad

valorem. Two commenters noted that the proposed regulations did not

indicate which entries will be subject to paragraph (c)(2) if it is

issued in final form. According to the commenters, paragraph (c)(2)

should apply to all entries that are unliquidated as of the date of

issuance of the final regulations.

The Department recognizes the need for guidance on this issue, but

has not adopted the solution proposed. Instead, the Department will

apply paragraph (c)(2) to all liquidations done pursuant to final

results in reviews that the Department initiates after the effective

date of these regulations. This approach is consistent with the

applicability date set forth in Sec. 351.701. In addition, this

approach is necessary in order to avoid the extreme administrative

burden the Department would face if it applied paragraph (c)(2)

retroactively, in which case the Department would have to amend the

numerous liquidation instructions that it has sent to the Customs

Service over the years. Normally, the Customs Service liquidates

entries soon after the Department issues liquidation instructions.

However, the Department has no way to determine whether the Customs

Service has liquidated all entries subject to liquidation instructions,

because liquidation may have been delayed for reasons unrelated to the

existence of an AD order. Therefore, to implement the commenters'

proposal, the Department would have to amend all of its previously

issued liquidation instructions.

One commenter expressed concern that the Department will apply

paragraph (c)(2) based upon de minimis weighted-average dumping

margins. With respect to this comment, we note that Department usually

uses the term ``weighted-average dumping margin'' to refer to an

exporter-or producer-specific margin that the Department uses for cash

deposit purposes. As discussed above, the Department normally will

apply paragraph (c)(2) on the basis of importer-specific assessment

rates. However, although the Department has been calculating importer-

specific assessment rates for some time, there are some cases that are

held up in litigation. In these cases, we may not be able to calculate

importer-specific assessment rates, because the record does not contain

the necessary information. In such situations, where the Department

issues assessment instructions at the conclusion of the litigation, we

will apply the de minimis rule on the basis of the weighted-average

dumping margin calculated for the exporter or producer.

Section 351.107

We have added a new Sec. 351.107 that deals with (1) the

establishment of deposit rates in situations involving a nonproducing

exporter, (2) the selection of the appropriate deposit rate where entry

documents do not identify the

[[Page 27303]]

producer of subject merchandise, and (3) the calculation of rates in AD

proceedings involving nonmarket economy countries.

Nonproducing exporters: In the AD Proposed Regulations, 61 FR at

7311, the Department requested additional public comment on the issue

of whether to promulgate special rules regarding the rates applicable

to exporters that are not also producers, such as trading companies. We

noted that one alternative would be to calculate a separate rate for

each exporter/producer combination.

One commenter suggested that the Department should apply this

approach in all instances. Other commenters argued that the Department

should not codify an across-the-board rule, but instead should

establish rates for exporter/producer combinations on a case-by-case

basis. Another commented that it would be inappropriate to determine

rates solely on the basis of exporter/producer combinations, and that

normally the Department should base deposits of estimated duties on the

rate calculated for the producer.

The Department agrees with the comments suggesting that it is

appropriate in some instances to establish rates for exporter/producer

combinations. Therefore, in paragraph (b)(1)(i), we have provided for

the establishment of such ``combination rates.''

We believe that combination rates are appropriate, because, in an

AD proceeding, the Department usually investigates or reviews sales by

a nonproducing exporter only if that exporter's supplier sold the

subject merchandise to the exporter without knowledge that the

merchandise would be exported to the United States. While we agree with

one commenter that in these instances the producer's pricing is not at

issue, we are concerned about the proper application of any deposit

rate determined on the basis of the exporter's pricing. Establishing a

deposit rate for an exporter and, without regard to the identity of the

supplier, applying that rate to all future exports by that exporter

could lead to the application of that rate even if other suppliers sold

to the exporter with knowledge of exportation to the United States.

This would enable a producer with a relatively high deposit rate to

avoid the application of its own rate by selling to the United States

through an exporter with a low rate. Therefore, in order to ensure the

proper application of deposit rates, the Department believes that it

should establish, where appropriate, individual rates for nonproducing

exporters in combination with the particular supplier or suppliers from

whom the exporter purchased the subject merchandise.

On the other hand, the Department believes that there are

situations where it may be inappropriate and/or impractical to

establish combination rates. For example, it may not be necessary to

establish combination rates when investigating or reviewing

nonproducing exporters that are not trading companies, such as original

equipment manufacturers. In addition, it may not be practicable to

establish combination rates when there are a large number of producers,

such as in certain agricultural cases. The Department will make such

exceptions to combination rates on a case-by-case basis.

Another instance in which the Department assigns rates to exporters

is in AD investigations and reviews of imports from nonmarket economies

(NMEs). In those cases, if sales to the United States are made through

an NME trading company, we assign a noncombination rate to the trading

company regardless of whether the NME producer supplying the trading

company has knowledge of the destination of the merchandise. One

exception to this NME practice occurs where we find no dumping and

exclude an exporter from an AD order. Where exclusions are involved, we

publish a combination rate to address the same concerns described above

regarding redirection of exports through an excluded trading company.

Nothing in Sec. 351.107(b)(1) is intended to change our policy for

assigning rates in NME proceedings.

The Department also believes it is not appropriate to establish

combination rates in an AD investigation or review of a producer; i.e.,

where a producer sells to an exporter with knowledge of exportation to

the United States. In these situations, the establishment of separate

rates for a producer in combination with each of the exporters through

which it sells to the United States could lead to manipulation by the

producer. Furthermore, the Department recognizes that in many

industries it is not uncommon for a producer to sell some amount of

merchandise purchased from other producers. In such situations, the

Department generally intends to establish a single rate for such a

respondent based on its status as a producer, although unusual

circumstances may warrant the application of a combination rate.

The Department also generally agrees with the comment that, in AD

cases, if an exporter changes its supplier, the supplier's rate should

be applied for deposit purposes rather than the ``all-others'' rate.

Therefore, paragraph (b)(2) provides that for purposes of deposits, the

Department will apply the producer's rate to entries if the Department

has not established previously a deposit rate for the particular

exporter/producer combination or the exporter alone. If the Department

has not calculated an individual rate for the producer, the Department

will apply the ``all-others'' rate. Again, nothing in this section is

intended to change our practice regarding the rates assigned to NME

exporters. In particular, an ``all-others'' rate may not be calculated

in an NME proceeding or, if it is, it may not apply to the new shippers

covered in this section.

In the case of CVD proceedings, subject merchandise may be

subsidized by means of subsidies provided to both the producer and the

exporter. In the Department's view, all subsidies conferred on the

production of subject merchandise benefit that merchandise, even if it

is exported to the United States by a reseller rather than the producer

itself. Therefore, the Department calculates countervailable subsidy

rates on the basis of any subsidies provided to the producer, as well

as those provided to the exporter in any investigation or review

involving exports by a nonproducing exporter. As a result, rates

established for particular combinations of exporters and producers are

the most accurate rates. Moreover, as in an AD proceeding, combination

rates help to ensure the proper application of combination rates when

other producers sell through the same exporter.

As in AD proceedings, in CVD proceedings there may be situations in

which it is not appropriate or practicable to establish combination

rates. In such situations, the Department will make exceptions to its

combination rate approach on a case-by-case basis. In addition, for a

new combination of exporter and producer, the Department believes that

it should apply the supplier's rate, rather than the ``all-others''

rate, for deposit purposes. Therefore, under paragraph (b)(2), in a CVD

proceeding the Department intends to apply the producer's rate to

entries for deposit purposes if the Department has not established a

rate for the particular exporter/producer combination or the exporter

alone. If the producer's rate is applicable, but the Department has not

established a rate for that producer, the Department will apply the

``all-others'' rate.

In this regard, however, in a CVD proceeding, the Department

intends to establish a deposit rate for each

[[Page 27304]]

producer that it investigates or reviews, even if during the period of

investigation or review the producer happened to be selling to the

United States through a reseller. The purpose of this approach is to

ensure that if the producer subsequently begins to export to the United

States directly, the Department will be able to apply a deposit rate

based on the producer's own level of subsidization, as opposed to the

``all-others'' rate.

The proper application of rates to entries for deposit purposes

generally requires that the producer of the merchandise be identified.

Accordingly, under paragraph (c), if an entry does not identify the

producer (or the exporter's supplier if the exporter is not the

producer), the Department will instruct the Customs Service to use the

higher of: (1) the highest of any combination rate involving that

exporter, (2) the highest rate for any producer other than a producer

for which the Secretary has established a combination rate involving

the exporter in question, or (3) the ``all-others'' rate. The objective

of paragraph (c) is to prevent an exporter from obtaining a lower

deposit rate by means of withholding the identity of its supplier from

the Customs Service.

As an example of how paragraph (c) would operate, assume that in an

AD proceeding the existing rates are: Exporter A/Producer 1--5 percent;

Exporter B/Producer 2--20 percent; Producer 1--18 percent; Producer 2--

15 percent; and All Others--10 percent. If an entry did not identify

the producer of subject merchandise exported by Exporter A, the

Department would instruct the Customs Service to apply Producer 2's

deposit rate of 15 percent. 15 percent would be the appropriate rate if

Producer 2 were the supplier, and it also is the highest of the

possible rates applicable had the producer been identified (those rates

being 5, 10, and 15 percent in this example). Producer 1's rate of 18

percent would not be appropriate, because the Department already would

have established that, when Producer 1 exports through Exporter A, the

appropriate rate is 5 percent.

Nonmarket economy cases: The second sentence of the definition of

``rates'' in proposed Sec. 351.102(b) provided the Department with the

authority to apply a single AD margin to all producers and exporters

from a nonmarket economy (``NME'') country. We have moved that sentence

to paragraph (d) of Sec. 351.107.

As explained in the AD Proposed Regulations, 61 FR at 7311, the

Department elected not to codify its current presumption that a single

rate will be applied in NME cases. We received several comments on this

issue.

Four commenters suggested that the Department codify its current

presumption of a single rate. Three of these commenters viewed the

presumption as correct, because the fact that a country is an NME

carries with it an assumption that the government controls all

exporters. Moreover, these commenters asserted that NME governments,

due to their control, can funnel sales of the subject merchandise

through, or transfer production of the subject merchandise to, the

entity that receives the most favorable dumping margin. These

commenters further urged the Department to extend the presumption of

control beyond the central NME government to provincial and municipal

governments, as well. One commenter that urged the Department to codify

the presumption of a single rate also argued that the presumption is

consistent with the statute, because all NME companies are under common

ownership and, hence, comprise a single exporter. Consequently, in this

commenter's view, the Department should calculate a single dumping

margin just as it would calculate a single dumping margin in situations

where the Department ``collapses'' market economy producers under

common ownership. This same commenter urged the Department to make

clear that the NME-wide rate calculated as a consequence of the

presumption is different from the ``all-others'' rate described in

section 735(c)(1)(B)(i)(II) of the Act.

One commenter opposed the presumption. In discussing the People's

Republic of China (``PRC''), this commenter pointed to the reforms that

have been instituted in the PRC economy, claiming that the underlying

premise of the presumption--that the central government controls

exporters--is erroneous. According to the commenter, the Department's

experience in administering the presumption confirms this conclusion,

because in virtually every case since the Department instituted the

presumption, individual PRC producers have been able to demonstrate

that they are entitled to their own rates. Consequently, this commenter

argued, the Department should abandon the presumption of a single NME-

wide rate, and non-investigated exporters in an NME should receive an

all-others rate. Another commenter asked that even if the Department

does not codify the presumption, the Department should clarify that it

will continue to calculate separate rates in appropriate cases.

Several commenters went on to make specific suggestions for

amending the so-called ``separate rates test''; i.e., the conditions

that must be met for rebutting the presumption. One commenter urged the

Department to incorporate into the separate rates test the affiliated

party criteria from section 771(33) of the Act and Secs. 351.102(b) and

351.401(f) of the regulations. In this commenter's view, the affiliated

party criteria provide appropriate guidance on when parties under

common ownership should be subject to a single AD rate. A second

commenter recommended amending the test to include an assessment of

possible central government influence in the future. Also, in this

commenter's view, the NME exporter seeking a separate rate should be

required to present affirmative evidence that the government is not

involved in the exporter's pricing decision. In other words, this

commenter claimed, an absence of evidence of control should not be

sufficient to rebut the presumption. Finally, this commenter suggested

that, because of the potential for circumvention, the Department should

calculate individual rates only for manufacturers, and not for export

trading companies.

Another commenter pointed to the unfairness of having to prove the

negative; i.e., the absence of control. This commenter also suggested

that the Department should focus on events during the period of

investigation and not speculate about events that might occur in the

future. Two commenters urged the Department to provide an opportunity

for firms to receive separate rates in those situations where the

Department chooses not to investigate all exporters. In their view,

instead of using the punitive NME-wide rate, the Department should

assign these non-investigated exporters an average dumping margin

calculated on the basis of investigated firms receiving separate rates.

As in the proposed regulations, we have refrained from codifying

the presumption of a single rate in NME AD cases. Nor have we adopted a

modified version of the presumption. We appreciate the many thoughtful

comments that we received on this topic. However, because of the

changing conditions in those NME countries most frequently subject to

AD proceedings, we do not believe it is appropriate to promulgate the

presumption or the separate rates test in these regulations. Instead,

we intend to continue developing our policy in this area, and the

comments that were submitted will help us in that process. We would

like

[[Page 27305]]

to clarify, however, that we do intend to grant separate rates in

appropriate circumstances, and that our decision not to codify the

presumption or the separate rates test should not be seen, as one

commenter suggested, as a decision not to grant separate rates. Also,

as discussed above in connection with Sec. 351.107(b)(1), we intend to

continue calculating AD rates for NME export trading companies, and not

the manufacturers supplying the trading companies.

Subpart B--Antidumping Duty and Countervailing Duty Procedures

Subpart B deals with AD/CVD procedures, and is based on subpart B

of part 353 and part 355 of the Department's former regulations.

Section 351.202

Section 351.202 deals with the contents of, and filing requirements

for, AD/CVD petitions. We received several comments regarding proposed

Sec. 351.202.

Contents of petitions: Proposed Sec. 351.202(b), consistent with

the statute, provided that a petition must contain specified

information ``to the extent reasonably available to the petitioner.''

One commenter suggested that the Department revise Sec. 351.202(b) so

as to make clear that the ``reasonably available'' standard is

flexible, and that, in particular, the Department expressly acknowledge

in the regulation that cost is a relevant consideration in determining

what is ``reasonably available.''

We have not adopted this suggestion. While we do not disagree with

the proposition that the ``reasonably available'' standard is flexible,

we believe that the word ``reasonably'' makes this flexibility

manifest. In addition, while we also do not disagree with the notion

that cost to a petitioner is a factor in determining what is reasonably

available, it is only one of many possible factors. To identify in the

regulation one factor to the exclusion of others might result in undue

emphasis being placed on the factor of cost. The ``reasonably

available'' standard has been in the statute for many years, and we

believe that it provides sufficient guidance to petitioners as to the

efforts they must undertake in providing information to the Department.

The same commenter objected to the requirement in proposed

Sec. 351.202(b)(3) that a petitioner provide production data for each

domestic producer identified by the petitioner. This commenter argued

that Article 5.2 of the AD Agreement and Article 11.2 of the SCM

Agreement merely require that a petitioner provide aggregate production

data for all known domestic producers. A second commenter supported

proposed Sec. 351.202(b)(3) as drafted, arguing that the SAA at 861

clearly requires producer-specific production data.

We do not agree with the first commenter's interpretation of

articles 5.2 and 11.2. However, even if that interpretation were

correct, it is the U.S. statute that controls. The SAA clearly requires

that a petitioner provide producer-specific production data, subject,

of course, to the proviso that such information is reasonably available

to the petitioner. This information is necessary in order to enable the

Department to determine whether an adequate portion of domestic

producers support a petition, an inquiry which is based on production

volumes of domestic producers. Therefore, we have left

Sec. 351.202(b)(3) unchanged.

Two commenters suggested that the Department coordinate with the

Commission with respect to regulations dealing with the contents of

petitions, and that the Department incorporate into Sec. 351.202(b) the

specific requirements contained in the Commission's corresponding

regulation. In addition, these commenters suggested that, in light of

the Commission's proposed Sec. 207.11(b)(2)(iv), the Department should

revise its own proposed Sec. 351.202(b)(8) so as to require volume and

value information regarding the subject merchandise for the most recent

three-year period, as opposed to a two-year period.

We have adopted these suggestions in part. The Commission completed

its rulemaking activity and issued final rules on July 22, 1996. See 61

FR 3818. These final rules contain a revised 19 CFR Sec. 207.11 that

deals with the contents of AD/CVD petitions. We have incorporated

elements of the Commission's regulations into Sec. 351.202(b) where the

information identified in Sec. 207.11 is of the same general type as

that sought by the Department. With respect to the identity of

importers, we have revised proposed Sec. 351.202(b)(9) so as to require

telephone numbers for each importer identified, to the extent such

information is reasonably available to the petitioner. On the other

hand, we have not incorporated elements of Sec. 207.11 where the

information identified in that regulation is not of the same general

type as that sought by the Department. For example, we have not

included the requirement of Sec. 207.11(b)(2)(iv) that a petitioner

identify each product for which the petitioner requests the Commission

to seek pricing information in its questionnaires. Finally, we have

added a sentence to paragraph (a) that advises petitioners to refer to

the Commission's regulations concerning petition contents.

With respect to the suggestion that we require three, rather than

two, years of volume and value information, as required by proposed

Sec. 207.11(b)(2)(iv), we note that the Commission deleted this

provision in its final rule. Therefore, we are not adopting this

suggestion for purposes of Sec. 351.202(b).

Amendments to petitions: One commenter objected to the substitution

of ``may'' for ``will'' in proposed Sec. 351.202(e) (``The Secretary

may allow timely amendment of the petition''). The commenter argued

that the substitution is improper, because it confers on the Department

more discretion than is allowed by section 732(b)(1) of the Act. We

have retained the language of the proposed rule. In our view, the

statute, by permitting the Secretary to establish on a case-by-case

basis the timing and conditions for any amendments to a petition,

confers considerable discretion. We continue to believe that the word

``may'' more accurately reflects this discretionary authority than does

the word ``will.''

Pre-initiation communications: Commenting on proposed

Sec. 351.202(i), one commenter suggested that because the statutory

limitation on pre-initiation communications is limited to comments that

are unsolicited by the Department, the Department should revise

Sec. 351.202(i) so as to clarify that the Department retains the

discretion to ``solicit'' comments on its own initiative. According to

this commenter, the Department's interpretation of the SAA in the AD

Proposed Regulations is incorrect. See 61 FR at 7313. The commenter

argued that while the SAA limits the pre-initiation right of parties to

comment to the issue of industry support, Congress deliberately used

the word ``unsolicited'' in sections 702(b)(4)(B) and 732(b)(3)(B) of

the Act in order to provide the Department with the discretion to

solicit comments on any issue where necessary. Two other commenters

submitted similar comments.

Three commenters, however, opposed the suggestion described in the

preceding paragraph. In addition, these commenters proposed that the

Department revise the proposed regulations so as to expressly state

that the Department will not solicit information from sources other

than domestic interested parties.

We have not adopted either of these competing suggestions. As noted

above,

[[Page 27306]]

in drafting these regulations, the Department has sought to avoid

repeating the statute to the extent possible. Consistent with this

objective, in proposed Sec. 351.202(i), the Department sought to do no

more than clarify that the filing of a notice of appearance would not

constitute a ``communication'' within the meaning of the statute. The

Department referred in paragraph (i) to sections 702(b)(4)(B) and

732(b)(3)(B) merely to provide a context for this clarification. As for

the Department's discussion of the SAA mentioned by the first

commenter, this discussion was in response to suggestions that the

Department should solicit comments regarding a petition, an activity

clearly not contemplated by the statute or the SAA.

Each group of commenters is asking the Department to place a

different gloss on the statute. At this time, we do not believe that

either gloss is necessary or appropriate. However, in view of the fact

that both groups of commenters apparently misinterpreted the

Department's intent in drafting proposed Sec. 351.202(i), we have

revised that paragraph to clarify that it deals only with the treatment

of notices of appearance.

We should note that the Department has no intention of soliciting

comments concerning the adequacy and accuracy of a petition. In this

regard, the Department intends to follow the general rule articulated

by the Federal Circuit in United States v. Roses, Inc., 706 F.2d 1563

(1983), that, in order to determine whether a petition is adequate

under the law, the Department should look only within the four corners

of the petition. This general principle is now incorporated in sections

702(b)(4)(B) and 732(b)(3)(B) of the Act.

The three exceptions to this rule are those specified in the Act

and the SAA: for comments concerning industry support for the petition;

for inquiries concerning the status of the Department's consideration

of the petition; and for government-to-government consultations in CVD

investigations. With respect to industry support, the statutory

exception is necessary in part because the issue of industry support

cannot be revisited after initiation. The SAA at 194 makes clear that

the Department is to construe this exception narrowly. The Department

may accept and answer inquiries concerning the status of the

Department's consideration of a petition, because such inquiries do not

constitute comments on the accuracy and adequacy of the petition

itself. In the case of CVD investigations, section 702(b)(4)(B)

expressly directs the Department to provide the government of the

exporting country with an opportunity for consultations on the

petition. This requirement implements Section 13.1 of the SCM

Agreement. The Department will determine what weight to give to any

information received during the course of such consultations on a case-

by-case basis.

Other comments: One commenter argued that it was improper for a

Department official to counsel a petitioner in preparing a petition and

then, after the petition is formally filed, participate in an analysis

of the adequacy of the petition. According to this commenter, such

activity gives rise to an appearance of impropriety and violates the

Department's own rules on ethical conduct. The commenter proposed a

revision to Sec. 351.202 which would have (1) required the Department

to disclose publicly the names of all Department personnel who assisted

in the preparation of a petition; and (2) precluded any such official

from participating in the relevant AD/CVD proceeding once the petition

was filed.

We have not adopted this comment, and we disagree strongly with its

underlying premise. We do not believe that Department personnel lose

their objectivity or impartiality regarding the merits of a petition

when they have provided advice to a petitioner in the preparation of a

petition. In addition, we do not believe that there is an appearance of

impropriety or a violation of the Department's rules of ethical conduct

when such personnel participate in an AD/CVD proceeding triggered by

the filing of a petition with respect to which they may have offered

pre-filing advice.

The same commenter also suggested that the Department revise

proposed Sec. 351.202(i)(2), which provides that, in the case of a CVD

petition, the Department will invite the government of the exporting

country involved for consultations under Article 13.1 of the SCM

Agreement. Consistent with other comments made by this commenter based

on its analysis of the statutory term ``country,'' the commenter

suggested that the Department modify paragraph (i)(2) to provide that

the Department also will invite for consultations the government of any

political subdivision of a named country.

We have not adopted this suggestion. Although there certainly are

situations in which the statute treats political subdivisions as

``countries,'' this is not one of those situations. Section

702(b)(4)(A)(ii) of the Act refers to consultations with a ``Subsidies

Agreement country.'' In our view, a state or provincial government does

not meet the definition of ``Subsidies Agreement country'' in section

702(b) of the Act.

Moreover, under Article 13.1, the obligation of the United States

is to consult with ``Members'' of the WTO, a term that excludes

subnational governments, such as states and provinces. While the

central government of a WTO Member may choose to be accompanied at

consultations by representatives of subnational levels of government,

the Department will not embroil itself in the internal politics of

another country by inviting such representatives to participate in

Article 13.1 consultations.

Finally, one commenter proposed that the following sentence be

added to proposed Sec. 351.202(c): ``Other filing requirements are set

forth in Sec. 351.303.'' The purpose of this addition would be to put

petitioners on notice as to the existence and location of distinct

filing requirements. The Department agrees with this suggestion, and we

have revised paragraph (c) accordingly.

Other changes: In light of the recent reorganization of Import

Administration, we have revised Sec. 351.202(h)(2) to provide that

persons seeking information concerning petitions should contact Import

Administration's Director for Policy and Analysis.

Section 351.203

Section 351.203 deals with determinations regarding the sufficiency

of an AD or CVD petition, and implements sections 702(c) and 732(c) of

the Act. We received several comments regarding Sec. 351.203.

Adequacy of allegations: Three commenters made suggestions relating

to proposed Sec. 351.203(b)(1), which provides that ``the Secretary, on

the basis of sources readily available to the Secretary, will examine

the accuracy and adequacy of the evidence provided in the petition and

determine whether to initiate an investigation.'' While these

commenters agreed that proposed Sec. 351.203(b)(1) was consistent with

the statute, they were concerned that the Department's commentary in

the AD Proposed Regulations and/or the Department's practice was not.

In the commentary, we described our prior practice in reviewing a

petition and stated that this practice was consistent with the type of

review contemplated by the new statute. In particular, we noted that it

was the Department's practice to seek additional information when a

particular allegation lacked sufficient support or appeared

aberrational, even though the allegation was supported by some

documentation. 61 FR at 7313.

[[Page 27307]]

One of the three commenters, however, stated that the practice

described amounted to the weighing of evidence, and that this practice

is inconsistent with the legislative history of the Trade Agreements

Act of 1979, a legislative history that the SAA endorsed. This

commenter proposed that the 1979 legislative history be incorporated

into Sec. 351.203(b)(1).

The second of the three commenters also complained that the

Department's commentary suggested the weighing of evidence, and

disagreed that the Department's proposal was consistent with past

practice. Asserting that the statute and legislative history do not

envision an adversarial pre-initiation proceeding, this commenter

proposed that the Department clarify that (1) it will not allow

respondents to bring public information to the Department's attention

for purposes of assessing the sufficiency of a petition; and (2) that

the new regulations are not intended to increase the burden on

petitioners for initiating investigations.

The third of the three commenters agreed with proposed

Sec. 351.203(b)(1) and the accompanying commentary, but alleged that

over time, the Department has been subjecting petitioners to

substantially increased demands for additional factual support.

Therefore, while not suggesting any changes to Sec. 351.203(b)(1) or

the commentary, this commenter suggested that the Department review its

practice to ensure that that practice is consistent with the regulation

and the commentary.

We agree that the pre-initiation process should not become an

adversarial process between the petitioner and potential respondents.

On the other hand, however, the Department has a statutory obligation

to examine the accuracy and adequacy of the evidence provided in the

petition, an exercise which necessarily entails making some judgments

regarding the quantity and quality of the information contained in a

petition. Whether or not such an examination constitutes the ``weighing

of evidence'' is, in our view, largely a question of semantics.

However, we believe that the practice described in the commentary

accompanying proposed Sec. 351.203(b)(1) does not result in an

adversarial process and that this practice is consistent with the

legislative history of the 1979 Act. That legislative history states,

inter alia, that a petition must be ``reasonably supported by the facts

alleged.'' H.R. Rep. No. 317, 96th Cong., 1st Sess. 51 (1979) (emphasis

added). In our view, this means that the mere provision of any

documentation is not necessarily sufficient, and the Department, where

appropriate, should be able to seek additional information where

support for a particular allegation is weak or information appears

aberrational.

Therefore, we have not changed proposed Sec. 351.203(b)(1) in light

of these comments. However, we wish to reiterate what we said in the

commentary accompanying proposed Sec. 351.203(b)(1); namely, that we do

``not believe that the new statutory standard constitutes a significant

departure from past Department practice.'' 61 FR at 7313.

Sources readily available: Commenting on proposed

Sec. 351.203(b)(1), one commenter suggested that the regulations make

clear that ``sources readily available'' to the Department include any

information that is relevant to its evaluation of a petition and that

is submitted by an interested person further to the Department's

request. We have not adopted this suggestion, because we prefer to

develop our interpretation of this new statutory term on a case-by-case

basis.

The same commenter urged the Department to refrain from allowing a

petitioner to comment on any pre-initiation submissions that a

respondent interested party makes in response to a Department request.

Presumably, this commenter was referring to the following statement in

the preamble to the AD Proposed Regulations: ``The Department will give

the petitioner an opportunity to comment on any such information

acquired by the Department.'' 61 FR at 7313. We have not adopted this

suggestion either, because we continue to believe that it is

appropriate to provide a petitioner with an opportunity to comment on

information collected during the pre-initiation process.

Also in connection with proposed Sec. 351.203(b)(1), another

commenter proposed that after the phrase ``sources readily available to

the Secretary,'' the Department should add the following clause:

``including information provided to the Department by foreign

governments during the consultations required under 19 U.S.C.

Sec. 1671a(b)(4)(A)(ii). * * *'' This commenter was referring to the

pre-initiation consultations provided for in Article 13.1 of the SCM

Agreement and referred to in section 702(b)(4)(A)(ii) of the Act.

According to the commenter, the ``right to consult is meaningless if

the Department were not to consider information provided in the

consultations in making its decision whether to initiate an

investigation and, if so, on what programs.'' Another commenter,

however, opposed this suggestion, arguing that neither the statute nor

the Department's practice concerning CVD petitions allows the

Department to transform Article 13.1 consultations into pre-initiation

litigation.

While we have not adopted the suggestion, we do not disagree with

the thrust of the first commenter's position. Under Article 13.1 of the

SCM Agreement, foreign governments have a right to consultations prior

to the initiation of an investigation. The purpose of these

consultations is to clarify the matters referred to in a petition. The

right to consultations is specifically provided for in

Sec. 702(b)(4)(A)(ii) of the Act. We note that under Sec. 702(b)(4)(B),

the Department is prohibited from accepting any unsolicited oral or

written communication from potential respondents, except as provided

for under the aforementioned provision of the Act requiring that

foreign governments be given an opportunity for consultations.

Therefore, we believe that the Department may consider relevant

information provided by a foreign government prior to the initiation of

an investigation. The use of such information and the weight given to

it, either prior to the initiation decision or during an investigation,

will be determined by the Department on a case-by-case basis.

Industry support: Commenting on proposed Sec. 351.203(e)(1), one

commenter suggested that when measuring domestic production as an index

of industry support for a petition, the Department (1) never should

measure production over a period of less than twelve months; and (2)

should retain the flexibility to examine a period greater than twelve

months in appropriate circumstances. A second commenter endorsed

proposed Sec. 351.203(e)(1), arguing that the use of the word

``normally'' in that provision provided the Department with the

necessary flexibility to use periods greater or lesser than twelve

months when appropriate.

We have left Sec. 351.203(e)(1) unchanged. Because the statutory

standard for determining industry support is new, we are reluctant to

adopt a regulation that would preclude, in all cases, the use of a

period shorter than twelve months. As observed by the second commenter,

there may well be industries for which use of a shorter period is

appropriate. While we expect that in most cases the Department will use

a twelve-month period, use of the word ``normally'' provides us with

sufficient flexibility to use longer or shorter periods when

appropriate.

[[Page 27308]]

One commenter suggested that the Department revise proposed

Sec. 351.203(e)(3) to provide that: (1) the Department may base the

position of workers on a statistically valid sampling of the views of

individual workers; and (2) the views of workers and management be

recorded in writing and certified in accordance with Sec. 351.303(g). A

second commenter objected to these suggestions, arguing that (1) the

first commenter's notion of sampling effectively would rewrite the

statute; and (2) a separate certification requirement is unnecessary,

because Sec. 351.303(g) already requires certification of submissions

containing factual information.

We have not adopted the first commenter's suggestions. With respect

to sampling of individual workers, this suggestion would require a

level of regulatory detail greater than what we consider to be

appropriate at this time. The statute does provide for the use of

statistically valid sampling methods to determine industry support, but

only when there are a large number of producers in the relevant

industry. In the AD Proposed Regulations, we deliberately refrained

from elaborating on what is, for the Department, a new and untried

method for determining industry support. For purposes of these final

regulations, we continue to believe that we should develop this method

on a case-by-case basis. With respect to the first commenter's

suggestion regarding filing requirements for industry positions, we

agree with the second commenter that the changes proposed are redundant

and unnecessary.

Another commenter sought clarification with respect to proposed

Sec. 351.203(e)(3), a provision that states that the Secretary will

accord equal weight to the positions of management and workers

regarding a petition. The commenter stated that the 25 percent

threshold for determining industry support should not be subject to

Sec. 351.203(e)(3), apparently based on the commenter's belief that

this provision somehow undermines the 25 percent threshold. A second

commenter offered an interpretation of the first commenter's comment,

and suggested, based on its interpretation, that the commenter's

``complaint should be dismissed.''

The first commenter did not seek a change to the regulation, and we

do not believe that a change is necessary. However, the Department

wishes to confirm that in situations where the views of the management

and workers of a firm negate each other, the production of the firm in

question will be included as part of the total production of the

domestic like product for purposes of applying the 25 percent threshold

in sections 702(c)(4)(A)(i) and 732(c)(4)(A)(i) of the Act.

The same commenter also sought clarification that all interested

parties would be given access to non-confidential information related

to the positions of domestic producers and workers. With respect to

this comment, the Department can confirm that public information (e.g.,

non-business proprietary information) concerning the positions of

producers and workers will be included in the public record of an AD/

CVD proceeding. Under Sec. 351.104(b), the public record will be

available to the public, including interested parties, for inspection

and copying in Import Administration's Central Records Unit.

Another commenter made some suggestions regarding proposed

Sec. 351.203(e)(5), which deals with determinations of industry support

in cases where the petitioner alleges the existence of a regional

industry. This commenter proposed that in regional industry cases, the

Department should (1) determine the position of all members of the

national industry regarding the petition, initiate based upon support

within the alleged region, but terminate the investigation for lack of

interest if there is insufficient support from producers within the

region or nation, as determined by the Commission in its preliminary

determination; and (2) consult extensively with the Commission prior to

initiation regarding the adequacy of the regional industry allegation

and, if the Commission's advice is that the alleged region is

questionable, advise the petitioner to withdraw the petition and refile

it as a national case or with a more properly defined region. According

to the commenter, such an approach is necessary (1) to address the

``anomaly'' in the statute that arises when the Commission rejects a

regional industry alleged in a petition; and (2) to ensure that

allegations of regional industry in a petition are not used to

circumvent the industry support requirements.

A second commenter opposed these suggestions. First, this commenter

noted, the statute addresses this very situation, because the statute

expressly states that (1) the Department shall determine industry

support based on production in the region alleged in the petition, and

(2) the Department shall not reconsider a determination of industry

support once it is made. Second, there is no ``anomaly'' limited to

regional industry cases, because in any case, including a case in which

the petitioner alleges a national industry, the Commission may define

the relevant product in such a way that the scope of the relevant

industry analyzed for injury purposes differs from the scope of the

industry analyzed for purposes of determining industry support. Third,

there is no basis for the Department to revisit its industry support

determination based on the Commission's preliminary determination,

because in its final determination the Commission may change the

definition of the industry at issue yet again, or even revert back to

the definition originally alleged in the petition. Finally, the second

commenter suggested that the first commenter's concerns about

circumvention were overblown, stating that the first commenter did not

understand the difficulties involved in bringing a regional industry

case.

In light of these comments, and because the SAA is clear on this

point, we have deleted paragraph (e)(5).

Other comments: One commenter submitted a comment concerning

proposed Sec. 351.203(c)(2), which requires that, after initiation of

an investigation, the Secretary provide a public version of the

petition to all known exporters who sell for export to the United

States. Section 351.203(c)(2) makes an exception for situations where

the number of exporters is ``particularly large.'' The commenter

suggested that the Department should invoke the exception only in

situations where the number of exporters is ``exceptionally large.'' We

have not adopted this suggestion, because the phrase ``particularly

large'' tracks the language of the SAA and the relevant provisions of

the AD Agreement and the SCM Agreement.

The same commenter also suggested that Sec. 351.203(c)(2) provide

that, upon request, any exporter, producer, or importer of subject

merchandise be provided, free of charge, with a public version of the

petition. We have not adopted this suggestion, because Sec. 351.104(b)

adequately deals with matters relating to access to the public record,

including the public version of a petition.

Section 351.204

Section 351.204 deals with issues relating to the time period and

persons to be examined in an investigation, voluntary respondents, and

exclusions. In the section title, we have substituted ``Time periods''

for ``Transactions'' to reflect more accurately the contents of

Sec. 351.204.

Period of investigation in AD investigations: In proposed

[[Page 27309]]

Sec. 351.204(b)(1), the Department revised the period of investigation

(``POI'') for antidumping investigations. In the past, the Department

normally used a six-month POI that ended with the month in which the

petition was filed. 19 CFR Sec. 353.42(b)(1) (1995). In

Sec. 351.204(b)(1), the Department expanded the POI from six months to

four fiscal quarters (twelve months), with the exception of nonmarket

economy cases. In addition, the Department provided that the POI would

consist of the four most recently completed fiscal quarters as of the

month preceding, instead of including, the month in which the petition

was filed or in which the Secretary self-initiated an investigation.

Finally, the Department preserved its discretion to use a different POI

in appropriate circumstances.

We received several comments concerning this change in the standard

AD POI. One commenter, while approving the expansion of the POI to

twelve months, objected to reliance upon fiscal quarters completed as

of the month preceding the month in which a petition was filed.

According to this commenter, domestic industries are badly buffeted by

dumped imports at least up to the date of the filing of a petition. If

the Department relied on completed fiscal quarters, however, it would

ignore at least two months worth of dumping activity, activity that was

automatically covered by the Department's former POI. In addition, this

commenter asserted, the use of months, rather than fiscal quarters,

``has worked well generally in the past and has not demonstrably been

an impediment to verification.'' Therefore, this commenter proposed

that the standard AD POI be the twelve-month period ending in the month

of filing or self-initiation, and that respondents should have the

burden of proving that a different POI is appropriate.

A second commenter, on the other hand, generally supported the use

of fiscal quarters, but believed that the Department should rely on

completed quarters as of the end of the month of filing or self-

initiation. In addition, this commenter objected to the expansion of

the POI from six months to twelve months, arguing that the Department

had not explained the reasons for this expansion and that it appeared

to be inconsistent with the Department's stated goal of easing

reporting requirements and permitting more efficient verification.

With respect to the expansion of the POI to twelve months, we

believe that this expansion is required by Article 2.2.1, note 4 of the

AD Agreement. Note 4 states: ``The extended period of time should

normally be one year but shall in no case be less than six months.''

Although this statement is made in the context of analyzing sales below

the cost of production, implicit in the statement is the assumption

that the POI in an AD investigation normally will be one year.

Therefore, we have not adopted the suggestion of the second commenter

that we revert to a normal POI of six months.

With respect to the use of completed fiscal quarters rather than

months, while we do not dispute the first commenter's assertion that

domestic industries may be buffeted by dumped imports in the months

immediately preceding the filing of a petition, these imports would not

be subject to antidumping duties, regardless of whether they were

covered by the POI. Moreover, the timing of a petition filing often can

address such concerns. In addition, we continue to believe that

defining the POI in terms of completed fiscal quarters, rather than

calendar months running from the date of filing, will generate

considerable savings in time and money for both the Department and the

parties involved in AD proceedings. Our experience is that a

considerable amount of time is spent in reconciling AD submissions

(that until now have been based on calendar months) to a firm's

accounting records (that typically are based on fiscal quarters).

However, we should emphasize that Sec. 204(b)(1) refers to the POI that

the Secretary ``normally'' will use. Therefore, the Department retains

the discretion to depart from its standard POI where warranted by the

circumstances of a case.

Finally, we are not adopting the suggestion that we base our POI on

completed fiscal quarters as of the end of the month of filing or self-

initiation. In general, we believe that it is more appropriate to

investigate only sales made prior to the filing of a petition to

alleviate concerns about the effect of the petition on pricing

practices.

Period of investigation in CVD investigations: One commenter

suggested that we retain the modifier ``normally'' in the second

sentence of proposed Sec. 351.204(b)(2). According to this commenter,

the Department should retain the flexibility to adopt as the POI the

fiscal year of the foreign government or the main responding company.

We have retained the word ``normally'' in the second sentence.

However, we have changed the second sentence of Sec. 351.204(b)(2).

Originally, this sentence would have required the Secretary to set the

POI as the most recently completed calendar year, if the fiscal years

of the government and the exporters or producers differed. This

language did not correctly reflect our past practice, a practice that

we do not wish to change. The new language simply deletes the reference

to the government's fiscal year. Thus, the Department normally will set

the POI according to the fiscal year of the individual exporters or

producers. Only if the fiscal years of the exporters or producers

differ, will the POI be the most recently completed calendar year. In

the case of investigations conducted on an aggregate basis, the

Department's normal POI will continue to be based on the most recently

completed fiscal year for the government in question.

Acceptance of voluntary respondents: Two commenters submitted

virtually identical comments objecting to the requirement in proposed

Sec. 351.204(d)(2) that a voluntary respondent submit a questionnaire

response before the Department decides whether to examine the voluntary

respondent individually. Citing the Department's AD investigation on

Pasta from Italy, these commenters claimed that an exporter will not be

willing to expend the time and financial resources required to prepare

a questionnaire response without some prior assurance by the Department

that it will conduct an individual examination of the firm. Therefore,

they concluded, this requirement discourages voluntary responses and,

thus, violates Article 6.10.2 of the AD Agreement.

To remedy this alleged violation of international law, the

commenters proposed that the Department require only that any exporter

not selected as a mandatory respondent submit a letter if it is

interested in submitting a voluntary response. Based on these letters,

the Department would decide which, if any, voluntary respondents it

would examine. Only after being selected would voluntary respondents be

required to submit questionnaire responses.

We have not adopted this suggestion, because the approach that the

commenters objected to is made necessary by the requirements of

sections 777A(c)(2)(B) and 782(a) of the Act. Where the Department does

not examine all known producers and exporters, it often selects for

examination all producers or exporters ``that can be reasonably

examined'' in accordance with the requirements of section 777A(c)(2)(B)

of the Act. The selected producers and exporters in this group normally

represent the largest number of respondents the Department believes it

can examine at that time. The Department normally will decide the

number of selected respondents very early in the proceeding; i.e.,

before it

[[Page 27310]]

issues questionnaires to the selected respondents. Therefore, it

frequently is the case that the Department cannot make a determination

as to whether additional voluntary respondents can be reasonably

examined until after the deadline for questionnaire responses has

passed (e.g., one or more selected respondents have not responded). If

the additional voluntary respondents did not begin to prepare their

questionnaire responses until after the Department received

questionnaire responses from the selected respondents, the Department

would not be able to complete the investigation or review within the

statutory deadlines. Therefore, additional voluntary respondents must

submit the complete questionnaire response by the deadlines in

accordance with section 782(a) of the Act. In addition, we do not

believe that section 782(a) ``discourages'' voluntary responses within

the meaning of Article 6.10.2. Instead, it simply recognizes the

constraints on the Department's resources that must be taken into

account in determining whether we can accept a voluntary response. In

order to help potential voluntary respondents decide, prior to

acceptance as a respondent, whether to submit a questionnaire response,

we intend to accept voluntary responses based on the order in which

written requests to be accepted as voluntary respondents are submitted.

In those instances where we can make earlier determinations to accept

voluntary responses, we will do so.

One commenter submitted a comment suggesting that Sec. 351.204 be

amended to incorporate requests by voluntary respondents to be included

in the pool of companies investigated in cases conducted on an

``aggregate'' basis. We have not adopted this suggestion, because under

the statute, only CVD investigations are to be conducted on an

``aggregate basis,'' and it is clear from the comment that the

commenter was addressing AD investigations.

Voluntary respondents and the all-others rate: Proposed

Sec. 351.204(d)(3) provided that in calculating an all-others rate, the

Secretary will exclude weighted-average dumping margins or

countervailable subsidy rates calculated for voluntary respondents. In

the preamble to the AD Proposed Regulations, the Department explained

that the purpose of this provision was to prevent manipulation and to

maintain the integrity of the all-others rate. One commenter argued

that this provision is inconsistent with the statute and should be

deleted.

We do not agree with this comment, and have retained the rule as

drafted. The statute does not define the term ``investigated'' and does

not directly address the question of whether voluntary respondents

should be considered to be part of the Department's investigation.

Because the statute does not resolve the issue, we look to the AD

Agreement for guidance as to the best interpretation of the Act, in

keeping with the requirement that, to the extent possible, a statute be

interpreted in a manner consistent with the international obligations

of the United States.

Article 9.4 of the AD Agreement provides that the duties applied to

``exporters or producers not included in the examination'' (i.e.,

``all-others'') may not exceed the weighted-average margin for the

``selected exporters or producers.'' This implies that those exporters

or producers not ``selected'' are not considered to be included in the

``examination.'' Therefore, the better interpretation of section

735(c)(5) is that producers who are not ``selected'' by the Department

(i.e., voluntary respondents) are not considered to have been

``examined'' (i.e., investigated), so that their margins should not

contribute to the ``all-others'' rate. In effect, the Department

conducts parallel proceedings for voluntary respondents.

As we noted in the preamble to the AD Proposed Regulations,

exclusion of voluntary respondents from the determination of the all-

others rate serves the obvious purpose of preventing distortion or

outright manipulation of the all-others rate. The producers or

exporters most likely to submit voluntary responses are those with

reason to believe that they will obtain a lower margin by volunteering

than they would obtain by being subject to the all-others rate.

Inclusion of rates determined for voluntary respondents thus would be

expected to distort the weighted-average for the respondents selected

by the Department on a neutral basis.

Exclusions: In the AD Proposed Regulations, 61 FR at 7315, the

Department requested additional public comment on the issue of whether

there should be special exclusion rules for firms, such as trading

companies, that export, but do not produce, subject merchandise. We

noted that one alternative would be to limit the exclusion of a

nonproducing exporter to the subject merchandise produced by those

producers that supplied the exporter during the period of

investigation. Several commenters supported this approach, citing the

potential for other producers to avoid the imposition of duties by

selling through an excluded exporter. Other commenters argued that if

an exporter is excluded, the exclusion should apply to all exports by

that exporter, regardless of the producer.

The Department agrees with the first group of commenters that

normally the exclusion of a nonproducing exporter should be limited.

Therefore, we have added a new paragraph (e)(3) to provide that the

exclusion of a nonproducing exporter normally will be limited to

subject merchandise produced or supplied by those companies that

supplied the exporter during the period of investigation.

In an AD investigation, the Secretary may grant an exclusion to a

nonproducing exporter if the Secretary investigates the exporter's

sales and determines that the dumping margins on those sales are not

greater than de minimis. However, to prevent other producers from

selling through an excluded exporter in order to avoid the imposition

of duties, the Secretary normally will apply the exclusion only to the

exporter's exports of subject merchandise purchased from those

producer(s) found by the Secretary to lack knowledge of the exportation

of the merchandise to the United States. This limitation is

appropriate, because the lack of knowledge by these producers provided

the basis for investigating and establishing a rate for the exporter.

In a CVD investigation, the basis for the exclusion of a

nonproducing exporter is that neither the exporter nor the producers or

suppliers of subject merchandise sold by the exporter received more

than de minimis net countervailable subsidies. Therefore, it is

appropriate to limit the exclusion to merchandise purchased from the

same suppliers and producers.

With respect to requests for exclusion in a CVD investigation

conducted on an aggregate basis, we have renumbered paragraph (e)(3) as

paragraph (e)(4), and we have revised paragraph (e)(4)(iv) to clarify

that in the case of a non-producing exporter, the foreign government

must certify that neither the exporter nor the exporter's supplier

received more than de minimis countervailable subsidies during the

review period.

One commenter proposed that (1) the regulations make clear that the

Department has the authority to ``bring back'' under an order an

excluded company if the Department subsequently finds in a review that

the company is dumping, and (2) the regulations retain the requirements

of Secs. 353.14 and 355.14 of the Department's prior regulations.

According to the commenter, the Department required a company with a

[[Page 27311]]

zero or de minimis dumping margin or CVD rate to certify that the

company would not dump or receive countervailable subsidies in the

future. The commenter contended that this certification authorized the

Department to review excluded firms to confirm that they were acting in

a manner consistent with the certification. In addition, this commenter

claimed that because AD/CVD orders apply to countries, rather than to

individual companies, the Department has the authority to review

excluded companies.

We have not adopted these suggestions. With respect to the notion

of ``bringing back'' excluded companies, as a matter of administrative

practice, the Department never has reviewed sales of excluded

companies, with the exception of situations in which nonexcluded

companies attempt to funnel their ``non-excluded'' merchandise through

an excluded company. There is no indication in either the statute or

the SAA that Congress intended the Department to make such a radical

departure from its prior practice concerning exclusions. Moreover, we

believe that the ``inclusion'' of an excluded company would be

inconsistent with Article 5.8 of the AD Agreement and Article 11.9 of

the SCM Agreement (both of which require termination where the amount

of dumping or subsidization is de minimis).

As for former Secs. 353.14 and 355.14, with the exception of CVD

investigations conducted on an aggregate basis, these provisions are no

longer necessary in light of the amendments to the statute made by the

URAA, and, in any event, never functioned in the manner suggested by

the commenter. These provisions, notwithstanding their titles,

functioned as a mechanism for considering requests by voluntary

respondents to be investigated. As stated by the Department when it

adopted Sec. 351.14:

If the Department includes a producer or reseller in its

investigation and determines that the producer or reseller had no

dumping margin during the period of investigation, the Department

would automatically exclude that producer or reseller from the

antidumping duty order, even if the producer or reseller did not

request exclusion under the procedures described in [Sec. 353.14].

The purpose of this section merely is to provide an opportunity for

producers and resellers that the Department might not otherwise

include in its investigation to request that the Department

specifically include and investigate them.

Final Rule (Antidumping Duties), 54 FR 12742, 12748 (1989). The

Department made a virtually identical statement with respect to

Sec. 355.14. Final Rule (Countervailing Duties), 53 FR 53206, 52316

(1988).

Given their original purpose, Secs. 353.14 and 355.14 have become

superfluous in light of section 782(a) of the Act and Sec. 351.204(d)

(which establish new procedures for dealing with voluntary respondents)

and Sec. 351.204(e)(3) (which deals with exclusion requests in CVD

investigations conducted on an aggregate basis). Under these

provisions, decisions on exclusions will be based on a firm's actual

behavior, as opposed to assertions regarding its possible future

behavior.

Other comments: One commenter suggested that Sec. 351.204 be

modified to state explicitly that the Department retains the right to

seek and obtain information from importers in the United States of

subject merchandise. We have not adopted this suggestion. While we do

not disagree with the proposition that the Department may seek

information from importers, we also do not believe that there is any

doubt concerning the Department's authority to seek such information.

Therefore, we do not feel that the suggested modification is necessary.

Section 351.205

Section 351.205 deals with preliminary AD and CVD determinations.

Two commenters noted that, in connection with proposed Sec. 351.205(c),

the Department deleted (1) the requirement that a preliminary

determination include the factual and legal conclusions for the

Department's determination, and (2) the requirement that the Department

notify the parties to the proceeding. They suggested that paragraph (c)

be revised so as to include these requirements.

While we do not disagree with the substance of the comments, we do

not believe that a revision to paragraph (c) is appropriate. Section

777(i) of the Act requires the Department to include its factual and

legal conclusions in a preliminary determination, and sections 703(f)

and 733(f) of the Act require the Department to notify the petitioner

and other parties to an investigation. Therefore, given our overall

approach of avoiding repetitions of the statute, we have not made the

revisions suggested.

Section 351.206

Section 351.206 deals with critical circumstances findings. In

connection with Sec. 351.206, one commenter sought clarification that

provisional measures would not be imposed on merchandise imported prior

to the date of initiation of an AD or CVD investigation. We can confirm

that provisional measures will not be imposed on merchandise entered

prior to the date of initiation. Section 351.206(d), which deals with

retroactive suspension of liquidation, refers to sections 703(e)(2) and

733(e)(2) of the Act. These sections provide that suspension of

liquidation may not apply to merchandise entered prior to the date on

which notice of the determination to initiate is published in the

Federal Register. See also SAA at 878.

Section 351.207

Section 351.207 deals with the termination of investigations. We

received several comments regarding Sec. 351.207 from one commenter.

First, the commenter objected to the proviso in Sec. 351.207(b)(1)

that the Secretary may terminate an investigation if ``the Secretary

concludes that termination is in the public interest.'' The commenter

argued that because the relevant provisions of the statute do not

require a public interest finding, the regulations should not enlarge

upon the statutory criteria.

We have not adopted this suggestion, because the legislative

history of the Trade Agreements Act of 1979 indicates that Congress

intended that the Secretary make a public interest finding before

terminating a self-initiated investigation or an investigation in which

a petition is withdrawn. See, e.g., Trade Agreements Act of 1979

Statements of Administrative Action, H.R. Doc. No. 153, Pt. II, 96th

Cong., 1st Sess. 400, 418 (1979); and S. Rep. No. 249, 96th Cong., 1st

Sess. 54, 70-71 (1979). We believe that this legislative history

remains relevant in interpreting the post-URAA version of the Act.

Moreover, there is no indication in the legislative history of the URAA

that Congress intended that the Department abandon the requirement of a

public interest finding.

Second, in connection with Sec. 351.207(c), the commenter suggested

that the Department clarify that its authority to terminate an

investigation due to lack of interest is unaffected by those statutory

provisions prohibiting the post-initiation reconsideration of industry

support for a petition. We have not adopted this suggestion, because,

as the Department stated in the AD Proposed Regulations, 61 FR at 7315,

the SAA is clear on this point.

Finally, in connection with Sec. 351.207(b)(2), the commenter

suggested that in light of the prohibition against voluntary export

restraints found in the WTO Agreement on Safeguards, the Department

should exercise sparingly its discretion to terminate an investigation

based on a

[[Page 27312]]

foreign government's agreement to limit the volume of imports of

subject merchandise into the United States. The commenter did not

suggest any modifications to Sec. 351.207(b)(2), and we have left that

provision unchanged.

Section 351.208

Section 351.208 deals with suspension agreements and suspended

investigations. Most of the comments we received regarding Sec. 351.208

dealt with our proposed deadlines for initialing and signing suspension

agreements.

Deadlines: In proposed Sec. 351.208(f)(1)(i), we advanced the

deadline for submitting a proposed suspension agreement to 15 days

after a preliminary determination in an AD investigation and 5 days

after a preliminary determination in a CVD investigation. As explained

in the AD Proposed Regulations, the purpose of this change was to

reduce burdens on all parties and Department staff. 61 FR at 7316.

Public reaction to this change in deadlines was mixed, cutting across

respondent/domestic industry lines.

On the domestic industry side, one commenter strongly supported the

change, while another commenter thought the AD deadline too short. On

the respondent side, one commenter supported the change, but three

commenters considered the revised deadline to be too short.

After careful consideration of these comments, we have left the

deadlines as set forth in proposed Sec. 351.208(f)(1)(i). Several of

the commenters seeking a longer deadline argued that exporters are not

in a position to consider whether or not they desire to propose a

suspension agreement until the preliminary determination has been

issued. We can understand why respondent interested parties might wish

to see the results of a preliminary determination before formally

submitting a proposed suspension agreement. However, in our view, a

respondent interested party that is entertaining a suspension agreement

as an option may begin its deliberations as soon as the Department

initiates an investigation instead of waiting until the Department

issues a preliminary determination. If a respondent interested party

begins its deliberations early, we believe that the deadlines set forth

in Sec. 351.208(f)(1)(i) provide sufficient time in which to digest the

results of a preliminary determination.

We received other comments regarding deadlines, in addition to

those described above. One commenter suggested that the Department give

itself authority to extend the deadlines where necessary. We agree with

this suggestion, but note that it already is addressed by

Sec. 351.302(b), which provides the Secretary with authority to extend,

for good cause, any time limit established by part 351.

Another commenter suggested that in order to provide the Department

with more flexibility, the deadlines should run from the date of

publication of a preliminary determination instead of the date of

issuance. We have not adopted this suggestion. In order to accomplish

our objective of reducing burdens, we deliberately chose the date of

issuance, because one week can elapse between the date of issuance and

the date of publication in the Federal Register. However, we believe

that Sec. 351.302(b), discussed in the preceding paragraph, addresses

the commenter's concerns, because it permits the Secretary to extend a

deadline for good cause.

Another commenter suggested that if the deadline for submitting

proposed suspension agreements in CVD investigations remains at 5 days

from the preliminary determination, the timeframe should be modified to

5 business days, excluding applicable foreign holidays. We have adopted

this suggestion in part by changing the deadline from 5 days to 7 days.

However, we have not adopted the suggestion concerning the exclusion of

foreign holidays. If, in a particular case, the occurrence of a foreign

holiday should make this deadline unworkable, this is something that

the Secretary could consider under the extension authority of

Sec. 351.302(b).

Suspension agreement procedures: We received several comments

concerning the procedures to be followed in entering into a suspension

agreement. One commenter, arguing that current procedures deprive

petitioners of meaningful input, suggested that the Department amend

Sec. 351.208(f)(1) to: (1) require the foreign exporters or foreign

government to serve a copy of the proposed suspension agreement on the

petitioner at the same time that it is submitted to the Department; (2)

require the Department thereafter to consult with all parties and to

request written comments from all parties regarding the terms of the

agreement and whether the agreement is in the public interest; and (3)

require the Department to consider domestic industry opposition to a

suspension agreement as a strong indicator that the agreement is not in

the public interest.

Before addressing the specific suggestions, we should note at the

outset that, in our view, the Department's existing procedures have not

denied petitioners meaningful input regarding decisions to enter into

suspension agreements. Department precedents offer numerous examples of

revisions to proposed suspension agreements that the Department has

made in response to petitioners' comments. While the Department may not

always agree with all of a petitioner's comments, this does not mean

that the Department has not carefully considered those comments.

As for the specific suggestions, we have not adopted them for the

following reasons. With respect to the suggestion that the party

proposing a suspension agreement serve a copy on the petitioner, we

note that sections 704(e) and 734(e) of the Act contemplate that the

Department will notify the petitioner of a proposed suspension

agreement and provide the petitioner with a copy of the proposed

agreement at the time of notification. In our experience, this process

has worked well in the past and there is no need to change it at this

time. With respect to the suggestion that the Department consult with,

and request written comments from, all parties, sections 704(e)(1) and

734(e)(1) require the Department to consult only with the petitioner, a

requirement reflected in Sec. 351.208(f)(2)(iii). Other parties have a

right to comment on a proposed suspension agreement, however, and we do

not believe it is necessary or appropriate to impose an additional

consultation requirement on Department staff. With respect to written

comments, sections 704(e)(3) and 734(e)(3) permit all interested

parties to submit comments and information, a right that is already

reflected in Sec. 351.208(f)(3). Finally, with respect to the

suggestion concerning the significance of domestic industry opposition,

this is something to which the Department would accord considerable

weight when assessing the public interest. However, the Department must

assess the public interest based on all the facts, and we do not

believe it appropriate to issue a regulation that singles out one

factor to the exclusion of others.

Another commenter suggested that before entering into a suspension

agreement, the Department should consult potentially affected consuming

industries and potentially affected producers and workers in the

domestic industry, including producers and workers not party to the

investigation. As discussed above, we do not believe it is necessary or

appropriate to expand the consultation requirements beyond those set

forth in the statute. However, we have revised paragraph (f)(3) so as

to

[[Page 27313]]

expressly permit industrial users and consumers to submit written

argument and factual information concerning a proposed suspension

agreement.

Regional industry cases: One commenter stated that the Department

should clarify Sec. 351.208, in accordance with the new statutory

language, to make it clear that (1) it is not easier for respondents to

obtain a suspension agreement in a regional industry investigation, and

(2) the Department has no more obligation to accept a suspension

agreement in a regional industry investigation than in any other

investigation. We agree that a suspension agreement in a regional

industry investigation is subject to the same requirements as a

suspension agreement in a national industry investigation (including

the public interest requirement), and that the Department need not

accept an agreement in a regional industry investigation if those

requirements are not met. However, because the SAA at 859 makes this

clear, we do not think that additional clarification is necessary.

Revision to paragraph (f)(1): Although not the subject of public

comments, we have made certain stylistic revisions to paragraph (f)(1)

in order to make this provision accurate and more readable.

Section 351.209

Section 351.209 deals with the violation of suspension agreements.

Of the comments we received regarding this section, most related to

proposed Sec. 351.209(b)(2), which deals with the resumption of

suspended investigations that had not been completed under sections

704(g) or 734(g) of the Act. Proposed Sec. 351.209(b)(2) provided that

the Secretary may ``update previously submitted information where the

Secretary deems it appropriate to do so.''

Although one commenter supported the use of updated information,

three commenters opposed the use of updated information. Each of the

latter commenters argued that the use of updated information

constitutes poor policy, because it effectively rewards parties that

violate or take advantage of a suspension agreement. In addition, two

of the commenters referred to sections 704(j) and 734(j) of the Act,

which provide that in making a final determination the Secretary

``shall consider all of the subject merchandise, without regard to the

effect of any [suspension] agreement. . . .'' According to one of the

two commenters, these two statutory provisions preclude the use of

updated information. According to the second of the two commenters,

these provisions preclude the use of updated information except in the

unusual case where the Department is able to account for the effect of

the terminated suspension agreement.

While we do not believe that sections 704(j) and 734(j) necessarily

preclude the use of updated information, we have concluded that, in

light of the Department's limited experience with resumed

investigations, it would be premature at this time to resolve this

issue in the regulations. Therefore, we have revised paragraph (b)(2)

by deleting the phrase dealing with updated information.

One commenter also questioned whether Sec. 351.209(b) was intended

to broaden the circumstances under which it can be determined that a

suspension agreement has been violated. In this regard, our intent was

neither to broaden nor to narrow these circumstances.

Section 351.210

We received two comments concerning Sec. 351.210, which deals with

final determinations in investigations. As it did with respect to

proposed Sec. 351.205(c), one commenter objected to the deletion of (1)

the requirement that the Department include in a final determination

its factual and legal conclusions; and (2) the requirement that the

Department notify parties of a final determination. As we stated above

in connection with Sec. 351.205(c), because the Act clearly imposes

these requirements on the Department, these requirements need not be

reiterated in the regulations.

Another commenter suggested that the Department codify its practice

of treating a request for a postponement of a final determination as a

request for the extension of provisional measures. We agree with this

suggestion. However, instead of assuming that a request for

postponement includes an implied request for an extension of

provisional measures, we prefer to rely on the Department's

discretionary authority to deny requests for postponements of final

determinations. More specifically, the absence of a request to extend

provisional measures would constitute a compelling reason, within the

meaning of Sec. 351.210(e)(1), for denying a request to postpone a

final determination. Therefore, we have revised Sec. 351.210(e) so as

to provide that in the case of a request for postponement made by

exporters, the Secretary will not grant the request unless it is

accompanied by a request for an extension of provisional measures to

not more than 6 months.

Section 351.211

Section 351.211 deals with the issuance of AD and CVD orders. We

received several suggestions concerning proposed Sec. 351.211(c), which

established special procedures concerning the assessment of duties in

proceedings in which the Commission identified a regional industry.

Based on our own review of paragraph (c) and these suggestions, we have

deleted paragraph (c) and substituted in its place a new

Sec. 351.212(f). A discussion of the suggestions and this new provision

appears below under ``Section 351.212.''

Section 351.212

Section 351.212 deals with matters related to the assessment of

antidumping and countervailing duties. We received several comments

relating to automatic assessment of duties and the calculation of

assessment rates.

Automatic assessment: Under the former regulations, if the

Department did not receive a request for the review of particular

entries of subject merchandise, the Department would instruct the

Customs Service to liquidate those entries and assess duties at the

cash deposit rate applied to those entries at the time of entry. In

proposed Sec. 351.212(c), the Department proposed to assess duties on

entries for which there was no review request ``at rates equal to the

rates determined in the most recently completed segment of the

proceeding. . . .'' The Department believed that by relying on more

current rates as the basis for the assessment of duties, the number of

requests for reviews would decline.

Several commenters opposed this change, some describing their

opposition as ``strong.'' They argued that the proposed change would

create an undue element of uncertainty, because at the time when a

party would have to decide whether to request a review, it would not

know the rate that would be applied to its entries if it did not

request a review. This would force parties to request reviews solely to

protect their interests, thereby defeating the purpose of the proposal.

They also argued that the proposal would result in more work for the

Customs Service, a point the Department recognized in 1989. Finally,

even those who did not oppose the change argued that proposed

Sec. 351.212(c) needed additional refinements in order to provide some

minimum degree of certainty.

In light of the comments received, the Department has decided to

continue its current practice with respect to automatic assessment;

i.e., if an entry is

[[Page 27314]]

not subject to a request for a review, the Department will instruct the

Customs Service to liquidate that entry and assess duties at the rate

in effect at the time of entry. We have made the appropriate revisions

to paragraph (c).

Antidumping duty assessment rates: Proposed Sec. 351.212(b)(1)

dealt with the method that the Department will use to assess

antidumping duties upon completion of a review. In proposed paragraph

(b)(1), the Department provided that it normally will calculate an

``assessment rate'' for each importer by dividing the absolute dumping

margin found on merchandise reviewed by the entered value of that

merchandise. As such, paragraph (b)(1) merely codified an assessment

method that the Department has come to use more and more frequently in

recent years.

Historically, the Department (and, before it, the Department of the

Treasury) used the so-called ``master list'' (entry-by-entry)

assessment method. Under the master list method, the Department would

list the appropriate amount of duties to assess for each entry of

subject merchandise separately in its instructions to the Customs

Service. However, in recent years, the master list method has fallen

into disuse for two principal reasons. First, in most cases,

respondents have not been able to link specific entries to specific

sales, particularly in CEP situations in which there is a delay between

the importation of merchandise and its resale to an unaffiliated

customers. Absent an ability to link entries to sales, the Department

cannot apply the master list method. Second, even when respondents are

able to link entries to sales, there are practical difficulties in

creating and using a master list if the number of entries covered by a

review is large. Preparing a master list that covers hundreds or

thousands of entries is a time-consuming process, and one that is prone

to errors by Department and/or Customs Service staff. Therefore, as the

Department explained in the AD Proposed Regulations, 61 FR at 7317, the

Department would consider using the master list method of assessment

only in situations where there are few entries during a review period

and the Department can tie those entries to particular sales.

Several commenters suggested that the Department clarify that it

will apply the master list method if the importer can demonstrate that

the assessment rate approach would distort the amount of duty assessed

as compared to the amount assessed under the master list method. In

addition, one of these commenters urged the Department to clarify that,

regardless of the assessment method used, the Department will not

consider merchandise entered prior to the suspension of liquidation to

be ``subject merchandise'' under section 771(25) of the Act. Finally,

one commenter supported proposed paragraph (b)(1), and urged the

Department to apply the assessment rate method to all outstanding

unliquidated entries, regardless of whether the Department conducted

the applicable review under the pre-or post-URAA version of the Act.

The Department has adopted proposed paragraph (b)(1) without

change. As noted above, and as recognized by most of the commenters, to

a large extent, paragraph (b)(1) simply codifies the Department's

current practice.

With respect to the suggestions that the Department continue to

apply the master list method on a case-by-case basis, in our view, the

fact that a respondent is able to link its sales to entries, in itself,

constitutes an insufficient basis for using the master list method. As

discussed above, there are practical problems inherent in the use of

the master list method wholly apart from the linkage problem.

Thus, based on the results of each review, the Department generally

will assess duties on entries made during the review period and will

use assessment rates to effect those assessments. However, on a case-

by-case basis, the Department may consider whether the ability to link

sales with entries should cause the Department to base a review on

sales of merchandise entered during the period of review, rather than

on sales that occurred during the period of review. These two

approaches differ, because, in the case of CEP sales, the delay between

importation and resale to an unaffiliated customer means that

merchandise entered during the review period often is different from

the merchandise sold during that period. Because of the inability to

tie entries to sales, the Department normally must base its review on

sales made during the period of review. Where a respondent can tie its

entries to its sales, we potentially can trace each entry of subject

merchandise made during a review period to the particular sale or sales

of that same merchandise to unaffiliated customers, and we conduct the

review on that basis. However, the determination of whether to a review

sales of merchandise entered during the period of review hinges on such

case-specific factors as whether certain sales of subject merchandise

may be missed because, for example, the preceding review covered sales

made during that review period or sales may not have occurred in time

to be captured by the review. Additionally, the Department must

consider whether a respondent has been able to link sales and entries

previously for prior review periods and whether it appears likely that

the respondent will continue to be able to link sales and entries in

future reviews. The Department must consider these factors because of

the distortions that could arise by switching from one method to

another in different review periods. Also, in cases in which the

Department is sampling sales under section 777A of the Act, other

complicating factors mitigate against using entries during the POR as

the basis for the review.

Finally, the fact that the amount of duties assessed may differ

depending on the method used is not necessarily grounds to conclude

that the assessment rate method is distortive, because neither the Act

nor the AD Agreement specifies whether sales or entries are to be

reviewed, nor do they specify how the Department must calculate the

amount of duties to be assessed. See, Torrington Co. v. United States,

44 F.3d 1572, 1578 (Fed. Cir. 1995). Moreover, as the Court of

International Trade has recognized in upholding the Department's

assessment rate method, a review of sales, rather than entries,

``appears not to be biased in favor of, or against, respondents.'' FAG

Kugelfischer Georg Schafer KgaA v. United States, 1995 Ct. Int'l. Trade

LEXIS 209, *10 (1995), aff'd, 1996 U.S. App. LEXIS 11544 (Fed. Cir

1996).

With respect to the issue of whether merchandise entered prior to

suspension of liquidation is ``subject merchandise,'' the Department

addressed this issue in Stainless Steel Wire Rod from France, 61 FR

47874, 47875 (Sept. 11, 1996), in which the Department stated:

Sales of merchandise that can be demonstrably linked with

entries prior to the suspension of liquidation are not subject

merchandise and therefore are not subject to review by the

Department. Merchandise that entered the United States prior to the

suspension of liquidation (and in the absence of an affirmative

critical circumstances finding) is not subject merchandise within

the meaning of section 771(25) of the Act.

Finally, with respect to the effective date of paragraph (b)(1), in

many cases the Department currently is applying the assessment rate

method. However, the Department cannot apply this method to all

unliquidated entries. Because liquidation of entries may have been

delayed by the Customs Service for reasons unrelated to the collection

of

[[Page 27315]]

antidumping duties, applying this method to all unliquidated entries

would require the amendment all of our prior liquidation instructions.

Not only would this place an enormous burden on the Department and the

Customs Service, it also would cause uncertainty for the importing

community.

For these reasons, the Department will apply paragraph (b)(1) only

to assessment instructions issued on the basis of final results in

reviews initiated after the effective date of these regulations. As

noted previously, however, because this regulation merely codifies a

past practice, the Department will apply the assessment rate method in

those cases that are not technically subject to the regulation.

However, the Department will do so as a matter of practice, and not as

a regulatory requirement. The purpose of having an effective date is to

ensure that the Department is not required to amend old assessment

instructions based on reviews in which the Department did not collect

the necessary information.

Regional industry cases: As noted above, we received suggestions

from one commenter regarding proposed Sec. 351.211(c), which

established special procedures for proceedings in which the Commission

identified a regional industry. Under paragraph (c), which was designed

to implement sections 706(c) and 736(d) of the Act, the Secretary could

except from the assessment of duties merchandise of an exporter or

producer that did not supply the region during the POI.

While the commenter generally supported the procedures set forth in

Sec. 351.211(c), it suggested several improvements. First, it suggested

that the Department clarify that a petitioner has a right to respond to

certifications submitted by an exporter or producer. In its post-

hearing comments, this commenter further refined this suggestion by

proposing that the Department require certifications from foreign

exporters and producers to be submitted early in the investigation,

rather than at its end.

Second, for purposes of certifying and establishing whether an

exporter or producer exported subject merchandise for sale in the

region concerned during the POI, the commenter suggested that the

relevant POI be the ITC's POI. According to the commenter, the

Department's normal one-year POI is too short, and the Commission's

normal three-year POI is preferable.

Third, the commenter suggested that U.S. importers should be

required to certify to the Customs Service, upon entry into the United

States of merchandise from an exporter or producer whose merchandise

has been excepted from assessment, whether that merchandise will be

sold in the region concerned. If an importer certified that merchandise

would be sold in the region, the importer would be required to notify

the Department directly so that the Department could direct that

merchandise of the exporter or producer in question would be subject to

the assessment of duties.

Finally, in its post-hearing comments, the commenter suggested that

the certifications of exporters and producers should include the period

after the POI. In this regard, it noted that paragraph (c), as drafted,

required that the certifications of U.S. importers cover the period

after the POI.

We believe these suggestions have considerable merit, and with,

certain exceptions, we have incorporated them into these final

regulations. However, after reviewing the commenter's suggestions and

proposed Sec. 351.211(c), we came to the conclusion that instead of

creating an entirely new procedure, it would be more administrable for

the Department to consider requests for an exception from the

assessment of duties in the context of an existing procedural

mechanism. Among other things, this would ensure that domestic

interested parties have ample opportunity to comment on requests for an

exception, something which was one of the primary concerns of the

commenter. Entries of subject merchandise from an exporter or producer

that did not supply the region concerned during the original POI would

be subject to cash deposit requirements. However, because final duties

would not be levied if, in a review, the exporter or producer

established its eligibility for an exception from assessment, this

procedure is consistent with Article 4.2 of the AD Agreement and

Article 16.3 of the SCM Agreement.

Therefore, we have added a new paragraph (f) to Sec. 351.212 to

deal with requests for an exception from the assessment of duties in

regional industry cases. The procedures for obtaining an exception

would work as follows. First, paragraph (f)(1) sets forth the basic

standard for obtaining an exception, and incorporates some of the

suggestions of the commenter.

Paragraph (f)(2) provides that requests for an exception from

assessment will be considered in the context of an administrative

review or a new shipper review. Paragraph (f)(2)(i) provides that an

exporter or producer seeking an exception from assessment must request

an administrative review or a new shipper review under Sec. 351.213 or

Sec. 351.214, respectively. The request for review must be accompanied

by a request that the Secretary determine whether subject merchandise

of the exporter or producer satisfies the requirements of paragraph

(f)(1) and should be excepted from the assessment of duties. The

exporter or producer may request that the Secretary limit the review to

a determination as to whether an exception should be granted. In

addition, a request for review and exception from assessment must be

accompanied by the certifications described in paragraphs (f)(2)(i) (A)

and (B).

If the requirements of paragraph (f)(2)(i) and Sec. 351.213 or

Sec. 351.214, as the case may be, are satisfied, the Secretary will

initiate an administrative review or a new shipper review. The

Secretary will conduct the review in accordance with Sec. 351.221.

However, under paragraph (f)(2)(ii), the Secretary may limit the review

to a determination as to whether an exception from assessment should be

granted if requested to do so by the exporter or producer under

paragraph (f)(2)(i). Notwithstanding the submission of such a request,

the Secretary could decline to conduct a limited review if, for

example, a domestic interested party had requested an administrative

review of the particular exporter or producer.

Under paragraph (f)(3), if the Secretary determines that the

exporter or producer satisfies the requirements for an exception from

assessment, the Secretary will instruct the Customs Service to

liquidate entries without regard to antidumping or countervailing

duties. These instructions would apply only to entries of subject

merchandise of the exporter or producer concerned that were covered by

the review. Future entries of subject merchandise would remain subject

to cash deposit requirements for estimated duties, although the

exporter or producer could seek an exception from assessment for future

entries in a subsequent review.

Paragraph (f)(4) describes the actions that the Secretary will take

if the Secretary does not grant an exception from assessment. Under

paragraph (f)(4)(i), if the review was not limited to the question of

an exception from assessment, the Secretary will instruct the Customs

Service to assess duties in accordance with Sec. 351.212(b); i.e., to

assess duties in accordance with the results of the review. Under

paragraph (f)(4)(ii), however, if the review was limited to the

question of an exception from assessment, the Secretary will apply the

automatic assessment provisions of Sec. 351.212(c).

Returning to the commenter's suggestions, because we now have opted

[[Page 27316]]

to deal with requests for exception from assessment in the context of

reviews, we have not adopted the suggestion concerning the early

submission of certifications in an investigation. By dealing with

requests for an exception in the context of a review, domestic

interested parties should have ample opportunity to scrutinize, and

comment on, the certifications submitted by an exporter or producer.

In addition, we have not adopted the suggestion that we use the

Commission's POI. Neither section 703(c) nor section 706(d) expressly

state whether the relevant POI is the Department's or the ITC's.

However, we think that section 751(a)(2)(B) of the Act provides

guidance as to what Congress intended. Section 751(a)(2)(B), which

deals with new shipper reviews, refers to an

exporter or producer [that] did not export the merchandise * * * to

the United States (or, in the case of a regional industry, did not

export the subject merchandise for sale in the region concerned)

during the period of investigation. * * *

The Department interprets this section as referring to the

Department's period of investigation, because the section is directed

to the Department. If Congress had intended that the Department use the

Commission's POI for purposes of determining whether an exporter was a

new shipper under section 751(a)(2)(B), it would have said so

explicitly. Given the obvious interrelationship between section

751(a)(2)(B) and sections 706(c) and 736(d), the more reasonable

interpretation is that ``period of investigation,'' as used in the

latter two sections, means the Department's POI.

Provisional measures deposit cap: Although we have not revised

proposed paragraph (d) in these final regulations, the Department is

using this opportunity to clarify that the provisional measures deposit

cap contained in paragraph (d) will apply to entries subject to an AD

order secured by bonds as well as cash deposits, as stated in that

paragraph.

On July 29, 1991, the Court of International Trade (the CIT)

invalidated the Department's AD regulation on the provisional measures

deposit cap (19 CFR Sec. 353.23) in a case on televisions from Taiwan.

Zenith Electronics v. United States, 770 F. Supp. 648. The CIT followed

this precedent on July 28, 1992, in a challenge to a review of

televisions from Korea. Daewoo Electronics v. United States, 794 F.

Supp. 389 (Daewoo I). On September 30, 1993, the Court of Appeals for

the Federal Circuit reversed the CIT's decision in the Korean

television case, and upheld the regulation. Daewoo Electronics v.

United States, 6 Fed. 3d 1511 (Daewoo II). As a result of the Federal

Circuit's decision, the CIT subsequently vacated its July 29, 1991,

order in Taiwan televisions. The Department never amended its

regulation, and the original regulation (now replicated in paragraph

(d)) remains valid. For this and other reasons discussed below,

paragraph (d) and its predecessor provision should be applied to all

entries as though the CIT never invalidated it.

Section 733(d)(2) of the Act provides that an importer of

merchandise subject to an AD investigation must post bonds, cash

deposits, or other security for entries of the subject merchandise

between the Department's affirmative preliminary determination of sales

at less than fair value and the Commission's final injury

determination.

Assuming an AD order is imposed, a manufacturer or importer may

request an administrative review under section 751(a) of the Act to

determine the actual amount of antidumping duties due on the sales

during this period. Section 737(a)(1) of the Act provides that, if the

amount of a cash deposit collected as security for an estimated

antidumping duty is different from the amount of the antidumping duty

determined in the first section 751 administrative review, then the

difference shall be disregarded, to the extent that the cash deposit

collected is lower than the duty determined to be due under a section

751 administrative review. This is called the provisional measures

deposit cap, and applies to entries between publication of the

Department's preliminary determination and the Commission's final

determination of injury.

The provisional measures deposit cap for countervailing duties

(section 707 of the Act), on the other hand, explicitly provides that

the cap applies whether the entry is secured by a cash deposit or by a

bond or other security. That is, the Act at first glance appears to

apply the cap to entries secured both by cash deposits and by bonds in

CVD cases, but only by entries secured cash deposits in AD cases.

Since 1980, the Department, by regulation, took the position that

the difference between the AD and CVD provisions in the statute was an

oversight, and the agency thus applied the provisional cap to entries

secured both by bonds and by cash deposits in both AD and CVD cases. 19

C.F.R. Sec. 353.50 in pre-1989 regulations; 19 CFR Sec. 353.23 in the

post-1989 regulations.

On July 29, 1991, in a case involving televisions from Taiwan, the

CIT rejected the Department's interpretation that the statutory

differences between the AD and CVD provisions were an oversight, based

on its analysis of the statute and the Tokyo Round AD Code. It ruled

that, in AD cases, the provisional measures deposit cap applied only to

entries secured by cash deposits. Zenith.

The Department decided it would not appeal the decision when it

became final, and published notice of its acquiescence in the Federal

Register. 57 FR 45769 (1992). It also announced that, from the date of

the decision, it would apply the cap only to entries secured by cash

deposits in AD cases. However, the Department never amended its

regulations to be consistent with this position.

In 1992, the CIT followed its Taiwan television decision on the cap

in a case involving televisions from Korea. (Daewoo I) Respondents

appealed the decision on this issue to the Federal Circuit.

Although not directly before it, the Federal Circuit reviewed the

reasoning in the Zenith decision while deciding Daewoo II. The Federal

Circuit disagreed with the Zenith reasoning. It found that the statute

does not prohibit the application of the cap to bonds, that the

Department's interpretation was reasonable, and it overruled the CIT's

decision. On September 30, 1994, the Federal Circuit held that the

Department's regulation was valid, and that the cap can apply where

duties are secured by bonds as well as cash deposits. In footnote 17 of

its decision, the Federal Circuit noted with respect to the

Department's Federal Register notice:

After the Court of International Trade issued its opinion in

Zenith II [in 1991], Commerce indicated that it would follow that

holding, but prospectively only. The court here rejected that

limitation [to cash deposits]. In view of our resolution of this

issue, the changed regulation may have prospective application only

[from October 5, 1992 forward].

Thus, the Federal Circuit, erroneously treating our public notice

as an amendment to the Department's regulations, held that the

``amended regulation'' could only be applied prospectively from the

date it was adopted, October 5, 1992. It was not valid during the time

between the CIT decision in Zenith and the date of the Federal Register

notice. The Department's Federal Register notice, however, did not

amend its original regulation; it only stated that it did not intend to

appeal the Zenith decision and

[[Page 27317]]

would change its practice. Therefore, the original regulation remained

valid from the date the CIT overturned it to the present.

In addition, on October 21, 1994, when the Zenith decision became

final, the CIT vacated its original 1991 decision in Korean televisions

with regards to the cap. Zenith, Slip Op. 94-170.

Section 351.213

Section 351.213 deals with administrative reviews under section

751(a)(1) of the Act. We received a few comments concerning

Sec. 351.213.

Publication of preliminary dumping margins: One commenter suggested

that the Department refrain from including individual, company-specific

preliminary dumping margins in its published notices of preliminary

results of review. We have not adopted this suggestion, because, in our

view, section 777(i)(2)(A)(iii)(II) of the Act requires that individual

margins be included in the published notice of preliminary results.

Deferral of administrative reviews: To reduce burdens on parties

and the Department, in proposed Sec. 351.213(c) the Department

established a procedure by which the Secretary could defer the

initiation of an administrative review for one year if (i) the request

for review was accompanied by a request that the Secretary defer the

review; and (ii) no relevant party to the proceeding objected. One

commenter strongly supported this proposal, but two commenters opposed

it. According to the two opponents, deferral of reviews lacks a

statutory basis, is inconsistent with legislative intent, and may not

result in a reduction of burdens. In addition, the opposing commenters

argued that the requirement that no party object to deferral is an

inadequate procedural safeguard. They claim that the Department may

apply pressure on petitioners to acquiesce in re

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