# Antidumping Duties; Countervailing Duties

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## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** May 19, 1997
- **Citation:** 62 FR 27296

## Text

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

[[Page 27297]]

and request for public comments on February 8, 1996. 61 FR 4826. A
separate notice of final regulations will be published for these
portions of subpart C.
Subpart D (Calculation of Export Price, Constructed Export Price,
Fair Value, and Normal Value) is based on former subpart D of part 353.
Subpart D deals with methodologies for identifying and measuring
dumping.
Subpart E is designated ``[Reserved].'' Proposed rules to be
included in subpart E were published in a separate notice of proposed
rulemaking and request for public comments on February 26, 1997. 62 FR
8818. The Department will publish a separate notice of final
regulations after reviewing and considering public comments submitted
in connection with proposed subpart E.
Subpart F (Cheese Subject to In-Quota Rate of Duty) is based on
subpart D of former part 355, and implements section 702 of the Trade
Agreements Act of 1979, as amended by the URAA.
Comments on Overall Drafting Approach
The Department received a few comments regarding the overall
drafting approach used in the AD Proposed Regulations. One commenter
complimented the Department on its use of introductory paragraphs
before each regulation, but noted that in several instances the
language of the introductory paragraph did not accurately reflect the
content of the regulation itself. In addition, this same commenter
noted that in several instances, the Department's use of the citation
signal ``See'' to a particular statutory provision was ambiguous. We
have taken this commenter's suggestions to heart, and in drafting these
final regulations we have reviewed the introductory paragraphs and our
citation signals in order to improve the clarity and precision of these
regulations.
A different commenter noted that in the AD Proposed Regulations,
when the Department referred to a particular section of the statute, it
referenced only the Tariff Act of 1930 (the ``Act'') itself, not the
section of the U.S. Code where the section is codified. This commenter
suggested that to make the regulations more ``user friendly,'' the
Department should refer to the relevant U.S. Code section of the Act or
to both the U.S. Code and the Act.
While we appreciate the spirit in which this suggestion was made,
we have not adopted it in drafting these final regulations. For years,
the Department generally has referenced sections of the Act in its
regulations, and we are not aware of any objections having been raised
regarding this drafting practice (other than the instant comment). The
absence of objections to this practice, as well as the absence of any
other comments endorsing the use of U.S. Code citations, suggests to us
that those who use these laws are comfortable with our practice of
referencing sections of the Act. As for the suggestion that we
reference both the Act and U.S. Code sections, given the numerous
statutory references in these final regulations, the adoption of this
suggestion would add considerably to the overall length of the
regulations without, in our view, contributing significantly to their
ease of use.
Explanation of Particular Provisions
In drafting these final regulations, the Department carefully
considered each of the comments received. In addition, we conducted our
own independent review of those provisions of the AD Proposed
Regulations that were not the subject of public comments. The following
sections contain a summary of the comments we received and the
Department's responses to those comments. In addition, these sections
contain an explanation of any changes the Department has made to the AD
Proposed Regulations either in response to comments or on its own
initiative. The following sections do not contain a discussion of those
provisions that remain unchanged from the AD Proposed Regulations and
that were not the subject of any public comments.

Subpart A--Scope and Definitions

Subpart A of part 351 sets forth the scope of part 351,
definitions, and other general matters applicable to AD/CVD
proceedings.

Section 351.102

Section 351.102 sets forth definitions of terms that are used
throughout part 351. With respect to most of the definitions contained
in Sec. 351.102, we received no comments. Definitions that we have
added or revised, or on which we received comments, are discussed
below.
We received one general comment suggesting that we number each of
the definitions contained in Sec. 351.102(b) as a separate numbered
paragraph. According to the commenter, the absence of subparagraph
numbering will make shorthand references to a particular definition
impossible and will render definitions difficult to locate.
We have not adopted this suggestion, because we have followed the
guidelines set forth in the Document Drafting Handbook 1991 ed. (Office
of the Federal Register), which states, at page 21, that ``paragraph
designations are not required for the terms being defined, if the terms
are listed in alphabetical order,'' as is the case with respect to
Sec. 351.102(b). Because the definitions in Sec. 102(b) are listed in
alphabetical order, we do not believe that it will be difficult to
locate a particular definition. In addition, we do not believe that the
format we have used precludes shorthand references.
Affiliated persons; affiliated parties: Many commenters claimed
that because the statute and the SAA do not provide sufficient guidance
as to when the Department will consider an affiliation to exist by
virtue of ``control,'' the Department should provide clearer guidance
in the regulations. In this regard, we received a number of specific
suggestions relating to the issue of ``control,'' many of which had
been submitted previously.
As a general observation, the Department appreciates the desire for
additional detail regarding the concept of affiliation. To the extent
possible, we have attempted to provide additional guidance in this
explanatory material. However, we continue to believe that it would be
premature to codify much guidance in the form of a regulation. As
explained in the AD Proposed Regulations, 61 FR at 7310, we believe
that it is more appropriate to develop our practice regarding
affiliation through the adjudication of actual cases.
Turning to specific suggestions, several commenters suggested that
the definition should state that in order for control to exist within
the meaning of section 771(33) of the Act, a relationship must affect
the subject merchandise or foreign like product. These commenters
argued that the purpose of such a requirement would be to winnow out
those relationships that, while unquestionably close enough to
constitute control in the abstract, do not affect the production or
sale of the product that the Department is examining. According to
these commenters, this approach is in line with the statement in the AD
Proposed Regulations, 61 FR at 7310, that the Department would look at
the ability to impact production, pricing, or cost, an analysis which,
they claimed, must be directed at the product under investigation or
review.
In general we agree with the suggestion that we focus on
relationships that have the potential to impact decisions concerning
production, pricing or cost. This does not mean however, that proof is
required that a relationship in fact has

[[Page 27298]]

had such an impact. In this regard, section 771(33), which refers to a
person being ``in a position to exercise restraint or direction,''
properly focuses the Department on the ability to exercise ``control''
rather than the actuality of control over specific decisions.
Therefore, we will consider the full range of criteria identified in
the SAA, at 838, in determining whether ``control'' exists. Moreover,
we do not believe that we should ignore situations in which a control
relationship, while relating directly to another product or another
type of commercial activity, could affect decisions involving the
production, pricing or cost of the merchandise under consideration.
Therefore, in these types of situations, where a control relationship
exists, the respondent will have to demonstrate that the relationship
does not have the potential to affect the subject merchandise or
foreign like product.
Several commenters suggested that the Department reconsider the
statement in the preamble to the AD Proposed Regulations, 61 FR at
7310, that ``temporary market power, created by variations in supply
and demand conditions, would not suffice [as evidence of control].''
With respect to this comment, we continue to believe that temporary
market power generally would not constitute sufficient evidence of
control. However, where the issue arises, the Department will conduct a
case-by-case examination to determine whether market power is truly
``temporary.''
Another commenter suggested that the regulations state that in
analyzing control, the Department will focus on long-term, rather than
short-term, relationships. With respect to this suggestion, the
Department normally will not consider firms to be affiliated where the
evidence of ``control'' is limited, for example, to a two-month
contract. On the other hand, the Department cannot rule out the
possibility that a short-term relationship could result in control.
Therefore, the Department will consider the temporal aspect of a
relationship as one factor to consider in determining whether control
exists. In this regard, we also should note that we do not intend to
ignore a control relationship that happens to terminate at the
beginning (or comes into existence at the end) of a period of
investigation or review.
A number of commenters asked that the Department refrain from
finding an affiliation in situations where the applicable national law
prevents one firm from exercising control over another. With respect to
this suggestion, the Department will take national laws into account in
examining the existence of control. However, the Department also will
consider whether, national laws notwithstanding, there is any de facto
control.
Many commenters requested that the Department establish (1)
rebuttable presumptions for when control does or does not exist; (2)
bright-line thresholds establishing when control does not exist; and
(3) specific examples in the regulations of relationships that do or do
not constitute control. We have not adopted these suggestions, because
they require the type of fact-specific determinations that the
Department is not prepared to make at this time. As discussed above,
the Department intends to establish guidelines concerning affiliation
gradually as we gain experience through the resolution of issues in
actual cases.
One commenter suggested that the Department should find control to
exist only if a relationship resulted in an impact on prices or other
significant terms of sale. The Department has not adopted this
suggestion, because we do not agree that it is appropriate to require
evidence regarding the actual impact of a relationship. Because section
771(33) refers to a person being ``in a position to exercise restraint
or direction,'' we are required to examine the ability to control, not
the actual exercise of control.
Another commenter suggested that the Department should not consider
``normal commercial relationships'' as giving rise to control. We have
not adopted this suggestion, because ``normal'' is a subjective term
that lacks any clear definition. In our view, a standard of
``normality'' would be subject to substantial confusion, argument, and
litigation. More importantly, there is nothing in the statute or the
legislative history that suggests that ``normal commercial
relationships'' cannot give rise to control. To the contrary, the SAA
at 838 states: ``A company may be in a position to exercise restraint
or direction, for example, through corporate or family groupings,
franchises or joint venture agreements, debt financing, or close
supplier relationships in which the supplier or buyer becomes reliant
upon the other.'' Each of the relationships described in this passage
can be characterized as ``normal'' in the sense that they are
commercial relationships commonly entered into by firms. Nevertheless,
notwithstanding the ``normality'' of these commercial relationships,
the SAA indicates that they can give rise to control.
One commenter suggested that the Department clarify that the
provision of a loan by one firm to another on terms consistent with
commercial considerations will not constitute control. The Department
has not adopted this suggestion, because we do not believe that the
fact that a loan is provided on terms consistent with commercial
considerations is necessarily dispositive with respect to the issue of
control. For example, in situations where the supply of credit is
limited, the availability of a loan, regardless of the loan's terms,
may allow the lender to exercise control over the recipient of the
loan.
Several commenters suggested that the Department should define
legal or operational control as the ``enforceable ability to compel or
restrain commercial actions.'' As a further refinement of this
suggestion, one commenter suggested that the Department should find
control only if one firm is capable of forcing another firm to act
against its own interests.
The Department has not adopted these suggestions, because we do not
believe that ``enforceability'' is a requisite factor under section
771(33). In addition, in the case of the second suggestion, we believe
that focusing on the speculative question of what is or is not in a
firm's interests would render our analysis of affiliation less, rather
than more, predictable.
Aggregate basis: We received one comment concerning the definition
of the term ``aggregate basis,'' a term that describes CVD proceedings
in which the Department, under section 777A(e)(2)(B) of the Act,
determines a single country-wide subsidy rate applicable to all
exporters and producers. The commenter suggested that we substitute the
word ``principally'' for ``solely'' so that the definition would read:
`` `Aggregate basis' means the calculation of a country-wide subsidy
rate based principally on information provided by the foreign
government.'' According to the commenter, the purpose of the
modification would be to avoid confusion when the Department conducts a
CVD investigation or review on an aggregate basis, but one or more
producers request an individual review or exclusion.
We have adopted this suggestion, although not for the reason
suggested. Although section 777A(e) of the Act establishes a preference
for individual countervailable subsidy rates, section 777A(e)(2)
provides for alternative methods where there are a large number of
exporters or producers involved in an investigation or review. Under
section 777A(e)(2)(B), one of these alternatives is to determine a
single country-wide subsidy rate. Should the Department

[[Page 27299]]

have to use the country-wide rate method of section 777A(e)(2)(B), the
Department will not review firms individually, although, where
practicable, the Department will consider requests for an individual
zero rate in an administrative review under Sec. 351.213(k). In
addition, while the Department will consider requests for exclusions
from firms that claim to have received no countervailable subsidies,
the Department will not calculate subsidy rates to be applied to
merchandise produced or exported by such firms. Instead, the Department
merely will determine whether or not a firm requesting exclusion
receives countervailable subsidies in more than de minimis amounts. If
the firm does not, the Department will exclude the firm. If the firm
does receive more than de minimis countervailable subsidies, the
Department will not exclude the firm, and will apply to that firm the
country-wide subsidy rate.
Thus, the definition of ``aggregate basis'' is not inaccurate
insofar as it relates to the calculation of individual rates and the
granting of exclusions. On the other hand, the definition, as drafted,
fails to reflect the fact that even in a CVD proceeding in which the
Department calculates a single country-wide rate, it may have to obtain
information from one or more firms with respect to certain types of
subsidies, such as equity infusions. Therefore, we have substituted the
word ``principally'' for ``solely'' to reflect this fact.
Country-wide subsidy rate: One commenter suggested that we add to
Sec. 351.102(b) a definition of ``country-wide subsidy rate.'' The
proposed definition included a statement that the Secretary shall use
``the smallest applicable and feasible jurisdictional unit consistent
with'' the definition of ``country'' in section 771(3) of the Act. The
thrust of the comment was that the Department should calculate separate
``country-wide subsidy rates'' for individual subnational
jurisdictions, such as provinces or states. A different commenter
opposed this suggestion.
We have not adopted this suggestion, because the statute does not
require the Department to calculate state- or province-specific subsidy
rates. The Department rejected province-specific rates in Certain
Softwood Lumber Products from Canada, 57 FR 22570, 22578-80 (1992), and
the Department's position was sustained in Certain Softwood Lumber
Products from Canada, No. USA-92-1904-01, Slip op. 139-43 (FTA Panel
May 6, 1993). We do not believe that any of the statutory amendments
made by the URAA warrants a different outcome. Moreover, there is no
indication in the legislative history that Congress intended any change
to the Department's practice in this regard.
Ordinary course of trade: We received several comments concerning
the Department's proposed definition of the term ``ordinary course of
trade.'' Some of these comments dealt with the definition in general,
while other comments focussed on particular aspects of the definition.
The definition in general: One commenter stated that the definition
should establish a presumption that sales are in the ordinary course of
trade until a party demonstrates otherwise on a sale-by-sale basis
(with the exception of home-market sales at prices below cost of
production). This commenter also argued that the standards for making
such a claim should be exacting, and that no general unsupported
conclusions should suffice to exclude selected transactions. This
commenter also urged the Department to omit from the regulation
examples of sales that might be outside the ordinary course of trade,
stating that each case should turn on its facts.
We have adopted this suggestion in part. We have not adopted the
suggestion regarding the establishment of a presumption, because we
believe that judicial precedent is sufficiently clear that the party
making the claim bears the burden of proving that sales are outside the
ordinary course of trade. See, e.g., Koyo Seiko Co., Ltd. v. United
States, Slip op. 96-101 (Ct. Int'l Trade June 19, 1996), pp. 22-25, and
cases cited therein. In addition, we have not adopted the suggestion
that we delete references to particular types of sales that might be
considered as outside the ordinary course of trade. Given the
illustrative examples of such sales in the SAA, we believe that it is
appropriate to provide guidance to parties by describing certain types
of transactions that, depending on the facts, might be deemed to be
outside the ordinary course of trade.
However, we have modified the definition so as to emphasize the
fact-specific nature of ordinary course of trade analyses. As revised,
the definition states that, as required by judicial precedent, the
Secretary will evaluate ``all the circumstances particular to the sales
in question.''
Another commenter expressed satisfaction with the proposed
definition, but suggested that the Department's placement of the closed
parenthesis in the definition was incorrect. We agree that we misplaced
the closed parenthesis. However, we have corrected the error by
restating the parenthetical as a separate sentence.
Abnormally high profits: Several commenters objected to the
reference in the proposed definition to ``merchandise sold * * * with
abnormally high profits.'' According to one commenter, neither the
statute nor the SAA refers to ``abnormally high profits'' as a factor
in considering whether merchandise is sold in the ordinary course of
trade. In addition, this commenter asserted that the inclusion of this
factor in the definition would invite respondents to argue for the
exclusion of allegedly overly profitable sales.
Another commenter acknowledged that the SAA does discuss sales with
``abnormally high profits'' as being outside the ordinary course of
trade, but that it does so in the context of constructed value profit.
This same commenter also argued that the proposed definition is overtly
biased in favor of respondents, because it does not provide for the
exclusion of sales with abnormally ``low'' profits as being outside the
ordinary course of trade. A third commenter, also noting that the
proposed definition does not refer to sales with abnormally ``low''
profits, requested that the Department either delete the reference to
abnormally high profits or revise the definition to refer to
``merchandise sold at aberrational prices or profits.''
We have not adopted these suggestions. With respect to the
propriety of including in the definition any reference to sales with
abnormally high profits, we believe that the SAA warrants such a
reference. As acknowledged by one of the commenters, the SAA at 839-40
does refer to sales with abnormally high profits as being outside the
ordinary course of trade. Although this reference is made in the
context of constructed value profit, we believe that it applies in
other contexts, as well. The SAA at 839 itself notes that ``constructed
value serves as a proxy for a sales price.'' Thus, where normal value
is based on constructed value, the constructed value is supposed to
approximate what a price-based normal value would be if there were
usable sales. Because, according to the SAA, a constructed value that
included a profit element based on sales with abnormally high prices
would not constitute an acceptable normal value, it follows that it
would be improper to use sales with abnormally high profits as a basis
for a price-based normal value.
With respect to the suggestion that the Department will be
overwhelmed with arguments from respondents claiming

[[Page 27300]]

that particular sales have abnormally high profits, as discussed above,
the burden of establishing that a particular sale is outside the
ordinary course of trade rests on the party making the claim. Over
time, we believe that this evidentiary burden will ensure that only
serious claims are presented to the Department.
Finally, we do not believe that the proposed definition favors
respondents. When one considers the proposed definition in light of the
entire statute and the SAA, it is apparent that the Department may
exclude sales with both abnormally low (i.e., negative) and abnormally
high profits from a dumping analysis. The only difference is that the
Department considers sales with abnormally low profits under the rubric
of ``sales below cost of production'' and section 773(b) of the Act.
However, as section 771(15)(A) of the Act makes clear, sales that are
disregarded under section 773(b)(1) as being below cost are considered
to be outside the ordinary course of trade.
Off-quality merchandise: One commenter requested that the
Department delete the reference in the proposed definition to ``off-
quality merchandise.'' According to this commenter, neither the statute
nor the SAA mentions ``off-quality merchandise,'' and such merchandise
may be in the ordinary course of trade in certain industries and
markets.
We have not adopted this suggestion. Contrary to the comment, the
SAA at 839 does refer to ``off-quality merchandise,'' albeit in the
context of constructed value profit. For the reasons set forth above in
connection with the issue of ``abnormally high profits,'' we believe
that this reference is relevant to the general definition of ``ordinary
course of trade.'' As for the argument that sales of ``off-quality
merchandise'' may be in the ordinary course of trade in certain
industries and markets, the inclusion of the reference to ``off-quality
merchandise'' does not mean that sales of such merchandise are
automatically outside the ordinary course of trade. As discussed above,
and as the revised definition now makes clear, the Secretary will
conclude that particular sales are outside the ordinary course of trade
only after an evaluation of all of the circumstances.
Samples and Prototypes: One commenter suggested that the Department
should consider sales of sample and prototype merchandise to be outside
the ordinary course of trade, and should exclude such sales from its
calculations of dumping margins. We have not adopted this suggestion
for several reasons. First, there needs to be some limit on the number
of items included in a non-exhaustive list of examples. While we do not
disagree that there may be instances in which the Department might
consider sales of samples or prototypes to be outside the ordinary
course of trade, the commenter acknowledged that such sales already may
be embraced by the regulatory reference to merchandise ``sold pursuant
to unusual terms of sale.'' Second, the commenter requested that sales
of samples or prototypes be excluded from the dumping margin
calculation altogether. However, as both the Department and the courts
have made clear on numerous occasions, the statutory exclusion for
sales outside the ordinary course of trade applies only to sales used
to determine foreign market value (now normal value), not sales used to
determine U.S. price (now export price or constructed export price).
Thus, the courts have sustained the inclusion of all United States
sales whether in or out of the ordinary course of trade. See, e.g.,
Bowe Passat Reinigungs-Und Waschereitechnik GMBH v. United States, 926
F. Supp. 1138, 1147-49 (Ct. Int'l Trade 1996), and cases cited therein.
Price adjustment: We have added to Sec. 351.102(b) a definition of
the term ``price adjustment.'' This term is intended to describe a
category of changes to a price, such as discounts, rebates and post-
sale price adjustments, that affect the net outlay of funds by the
purchaser. As discussed in connection with Sec. 351.401, below, such
price changes are not ``expenses'' as the Department usually uses that
term, but rather are changes that the Department must take into account
in identifying the actual starting price. Numerous commenters requested
clarification on whether price adjustments would be treated as direct
or indirect expenses. As discussed more fully below, price adjustments
are neither direct nor indirect expenses, although they impact price as
additions or deductions.
Sale or likely sale: The proposed definition of ``likely sale,''
which was based on 19 CFR Secs. 353.2(t) and 355.2(p), defined this
term as meaning ``a person's irrevocable offer to sell.'' One commenter
suggested that the Department liberalize this definition to encompass
something less than an irrevocable offer to sell.
Although the Department has not adopted this particular suggestion,
we have taken another look at the ``irrevocable offer'' standard.
Because most AD/CVD petitions are based on sales, rather than likely
sales, the Department rarely has applied this standard. However, in one
case where the use of the irrevocable offer standard was at issue, the
court criticized the standard. Kerr-McGee Chemical Corp. v. United
States, 765 F. Supp. 1576 (Ct. Int'l Trade 1991). Therefore, the
Department has decided to eliminate the definition of ``likely sale''
in Sec. 351.102(b). Should the meaning of this term become an issue in
future cases, we will interpret the term in light of the statute and
the legislative history.
Segment of the proceeding: One commenter suggested that paragraph
(2) of the definition of ``segment of the proceeding'' include a
reference to scope inquiries, because such inquiries are separately
reviewable under section 516A of the Act. We have adopted this
suggestion, and have revised paragraph (2) of the definition
accordingly.
Another commenter did not object to the definition itself, but
stated that the Department should treat each whole review as a separate
proceeding, and should rely upon the record from each proceeding only
in connection with that particular proceeding. Because this commenter
did not propose any revisions to the definition, we have not made any
changes to the definition based on this comment.
Suspension of liquidation: One commenter suggested that in order to
eliminate confusion created by ``suspensions'' ordered by agencies
other than the Department, such as the Customs Service, the Department
should add to Sec. 351.102 a definition of ``suspension of
liquidation.'' The commenter included a proposed definition that, in
general, defined ``suspension of liquidation'' as a suspension of
liquidation specifically ordered by the Department under the authority
of title VII or title X of the Tariff Act, or by the courts in
litigation involving antidumping or countervailing duties. No commenter
opposed this suggestion.
We have adopted the suggestion, and have added to Sec. 351.102(b) a
definition of ``suspension of liquidation'' along the lines suggested
by the commenter. However, we have modified the language proposed by
the commenter in order to make the definition more accurate with
respect to suspensions of liquidation ordered by courts.

Section 351.104

Section 351.104 defines what constitutes the official and public
records of an AD/CVD proceeding, and prohibits the removal of a record
or any portion thereof unless ordered by the Secretary or required by
law.
In connection with Sec. 351.104(a)(1) and its list of examples of
materials that will be included in the official record,

[[Page 27301]]

one commenter suggested that the Department add to this list ``changes
to the electronic database that are made by Commerce (or by
respondents)'' and ``computer programs.'' Although the material
described by the commenter is, as a matter of practice, included in the
official record, we have not adopted this suggestion. As the commenter
acknowledged, paragraph (a)(1) merely contains examples of material
that will be included in the record, and is not itself an exhaustive
list. The commenter did not indicate that the absence of a reference in
the former regulations to computer programs or changes to the
electronic database gave rise to difficulties in actual cases. In the
absence of such difficulties, we see no need to revise this regulation.
One commenter supported Sec. 351.104(a)(2)(ii), which deals with
the inclusion in the official record of documents returned to the
submitter. The commenter requested that this provision remain
unchanged. The Department has not revised this provision.

Section 351.105

Section 351.105 defines the four categories of information
applicable to AD/CVD proceedings: public, business proprietary,
privileged, and classified. After a review of proposed Sec. 351.105 and
the comments submitted pertaining to that section, we have left
Sec. 351.105 unchanged, but for some stylistic changes involving the
substitution of ``that'' for ``which.''
One commenter suggested that the proposed definition of ``public
information'' in Sec. 351.105(b) is too narrow, because it excludes
business information claimed by the submitter to be business
proprietary unless the submitter has published the information or
otherwise made it public. According to this commenter, the definition
should include all non-classified information that a party learns
through any lawful means outside the context of disclosure under an
administrative protective order (``APO''). The commenter cited, for
example, information acquired through market research that may not have
been published or made generally available to the public at large. In
addition, this commenter proposed that the definition of ``business
proprietary information'' contained in Sec. 351.105(c) expressly
exclude all ``public information'' as the commenter would define
``public information.''
For the following reasons, the Department has not adopted this
suggestion. The Department places a high priority on the safeguarding
of business proprietary information. The definition of ``public
information'' in Sec. 351.105(b) is identical to the definition of that
term in former 19 CFR Secs. 353.4(a) and 355.4(a). Absent some evidence
that the definition interferes with a party's ability to defend its
interests in an AD/CVD proceeding, we are reluctant to transform what
heretofore has been considered as business proprietary information into
public information. However, the commenter did not offer any evidence
that the Department's longstanding definition of ``public information''
has had this effect. Instead, the commenter merely asserted that it is
not the Department's role ``to regulate lawfully acquired commercial
information.''
The same commenter suggested that the Department should amend
Sec. 351.105(b) so as to add the following additional category of
information normally considered as public: ``descriptions of reporting
methodologies, such as allocation methods.'' We have not adopted this
suggestion, because here, too, there is no indication that the absence
of a reference in Sec. 351.105(b) to this type of information has
interfered with a party's ability to defend its interests in an AD/CVD
proceeding.
We should note, however, that the former regulations did not, and
these regulations will not, preclude a party from arguing in a given
case that business proprietary treatment should not be accorded to
particular information. In this regard, Sec. 351.104(b)(3) continues to
treat as ``public information'' information ``that the Secretary
determines is not properly designated as business proprietary.''
However, we should emphasize here that where a party seeks to challenge
the business proprietary status of certain information, it should take
care to ensure that in submitting its challenge to the Secretary, it
does not inadvertently disclose the information in dispute.
Finally, we received two comments that essentially suggested that
the Department delete proposed Sec. 351.105(c)(10), which provides for
business proprietary treatment of the position of a domestic producer
or workers regarding a petition. According to one commenter,
Sec. 351.105(c)(10) would effectively preclude industrial users and
consumers from commenting on the issue of industry support for a
petition, because users and consumers would not be eligible to obtain
this information under APO. In addition, both commenters were skeptical
regarding the ability of the Department to grant APO access to this
information in a timely manner so that ``interested parties'' will be
able to comment on the issue of industry support within the 20-day
statutory deadline. A third commenter, however, opposed deleting
paragraph (c)(10), although it agreed that the Department should
expedite the APO process.
We have not adopted this suggestion for several reasons. As we
stated in the AD Proposed Regulations, 61 FR at 7314, several
commenters indicated that, due to concerns regarding commercial
retaliation, business proprietary treatment may be necessary in order
to encourage domestic producers and workers to present their candid
views regarding a petition. The instant commenters did not challenge
the validity of these concerns. As for APO disclosure, the Department
is aware of the need for expedited disclosure with respect to
information concerning industry support, and is confident that it will
be able to process APO requests in a timely manner that allows
interested parties to exercise their right to comment on the existence
of industry support for a petition.

Section 351.106

Section 351.106 deals with the de minimis standard, and implements
section 703(b)(4) and section 733(b)(3) of the Act. After reviewing
proposed Sec. 351.106 and the comments pertaining to that section, we
have left Sec. 351.106 unchanged.
One commenter objected to the fact that the de minimis standard for
reviews remained at 0.5 percent, and suggested that this was
inconsistent with the spirit, if not the letter, of the AD Agreement.
We have left the de minimis standard for reviews at 0.5 percent,
because, as stated in the AD Proposed Regulations, 61 FR at 7312, this
result is required by the statute and is consistent with both the AD
Agreement and the SCM Agreement.
As discussed above in connection with Sec. 351.102(b), one
commenter suggested a definition of ``country-wide subsidy rate'' that
would have provided for the application of country-wide subsidy rates
on a state-or province-specific basis. This same commenter, assuming
the adoption of its prior suggestion, proposed that we add a paragraph
to Sec. 351.106 that would have applied the de minimis standard to
country-wide rates on a state-or province-specific basis. The same
commenter that opposed the prior suggestion also opposed the instant
suggestion concerning the de minimis standard. Because we have not
adopted the prior suggestion, we are not adopting the corresponding
suggestion regarding the de minimis standard; i.e.,

[[Page 27302]]

we will not apply the de minimis standard on a subnational level.
We have left unchanged proposed Sec. 351.106(c)(2), which applies
the de minimis standard to the assessment of antidumping duties.
Applying the de minimis standard to assessments on an importer-specific
basis resolves the inconsistency between the treatment of cash deposits
and assessments. If a de minimis amount of estimated duties is not
worth collecting, then there is no reason to believe that a de minimis
level of definitively determined duties is worth assessing and
collecting either. Paragraph (c)(2) also avoids an inconsistency
between the administration of the AD and CVD laws, something that the
Department has expressed as one of its goals.
One commenter contended that the Department should not apply the de
minimis standard to the assessment of antidumping duties, because such
a policy does not result in any reduction in the Department's
administrative burden, is contrary to the SAA, and is not allowed by
the statute. This commenter cited the statutory requirement that
antidumping duties be imposed ``in an amount equal to the amount by
which the normal value exceeds the export price (or the constructed
export price) for the merchandise'' for the proposition that the
Department never may decline to assess antidumping duties, regardless
of how small such duties may be. With regard to the SAA, this commenter
contended that the SAA expressly limits the application of the de
minimis standard to the collection of deposits only by stating:
``Commerce will continue its present practice in reviews of waiving the
collection of estimated cash deposits if the deposit rate is below 0.5
percent ad valorem, the existing regulatory standard for de minimis.''
As noted above, the Department will apply the de minimis standard
to the assessment of antidumping duties on an importer-specific basis.
Regarding the commenter's statutory arguments, we believe that the
statute is silent on the issue. Although the statutory provisions cited
provide that the Department must assess duties, as the courts have
recognized, these provisions do not specify any particular assessment
methodology. See, e.g., FAG Kugelfischer Georg Schafer KGaA v. United
States, Slip Op. 95-158, 1995 Ct. Int'l. Trade LEXIS 209 (1996), aff'd,
No. 96-1074 (Fed. Cir. May 20, 1996). Significantly, the statutory
provisions cited by the commenter do not address how the Department
should apply the de minimis standards in reviews. Instead, the only
mention of such standards applying in reviews is contained in the SAA.
However, the SAA statement cited by the commenter (that the Department
will continue its practice of waiving cash deposits below 0.5 percent
in reviews) does not address the assessment issue at all. Read in
context, the statement refers to the fact that the de minimis standard
in reviews will continue to be 0.5 percent, as opposed to the new 2
percent standard for AD investigations. This statement does not address
the issue of whether the application of the 0.5 percent standard is
limited to the collection of cash deposits of estimated duties. As the
Department noted in the AD Proposed Regulations, 61 FR at 7312, the
only statement addressing that issue in the SAA is the general
statement that ``de minimis margins are regarded as zero margins.'' The
commenter offers no policy arguments for adopting an approach that
would limit the application of the de minimis standard to the deposit
of estimated duties.
Another commenter agreed with the Department's proposal to apply
the de minimis standard to the assessment of antidumping duties. In
addition, this commenter proposed that the Department clarify that
where an importer purchases from more than one exporter, the importer
will receive producer-specific assessment rates, and that no duties
will be assessed for individual de minimis rates.
In general, we agree with this comment, although we do not believe
that revisions to the regulations are necessary. As discussed below,
under Sec. 351.212(b)(1), the Department, as it has in many previous
cases, will calculate importer-specific assessment rates for each
producer or exporter reviewed. Thus, if one importer purchases from
several producers or exporters, the Department will assign that
importer an assessment rate for each producer or exporter. The
Department will apply the de minimis standard to these individual
assessment rates.
Proposed paragraph (c)(2) provided that the Secretary will instruct
the Customs Service to liquidate without regard to antidumping duties
all entries of subject merchandise for which the Secretary calculates
an assessment rate that is de minimis (i.e., less than 0.5 percent ad
valorem. Two commenters noted that the proposed regulations did not
indicate which entries will be subject to paragraph (c)(2) if it is
issued in final form. According to the commenters, paragraph (c)(2)
should apply to all entries that are unliquidated as of the date of
issuance of the final regulations.
The Department recognizes the need for guidance on this issue, but
has not adopted the solution proposed. Instead, the Department will
apply paragraph (c)(2) to all liquidations done pursuant to final
results in reviews that the Department initiates after the effective
date of these regulations. This approach is consistent with the
applicability date set forth in Sec. 351.701. In addition, this
approach is necessary in order to avoid the extreme administrative
burden the Department would face if it applied paragraph (c)(2)
retroactively, in which case the Department would have to amend the
numerous liquidation instructions that it has sent to the Customs
Service over the years. Normally, the Customs Service liquidates
entries soon after the Department issues liquidation instructions.
However, the Department has no way to determine whether the Customs
Service has liquidated all entries subject to liquidation instructions,
because liquidation may have been delayed for reasons unrelated to the
existence of an AD order. Therefore, to implement the commenters'
proposal, the Department would have to amend all of its previously
issued liquidation instructions.
One commenter expressed concern that the Department will apply
paragraph (c)(2) based upon de minimis weighted-average dumping
margins. With respect to this comment, we note that Department usually
uses the term ``weighted-average dumping margin'' to refer to an
exporter-or producer-specific margin that the Department uses for cash
deposit purposes. As discussed above, the Department normally will
apply paragraph (c)(2) on the basis of importer-specific assessment
rates. However, although the Department has been calculating importer-
specific assessment rates for some time, there are some cases that are
held up in litigation. In these cases, we may not be able to calculate
importer-specific assessment rates, because the record does not contain
the necessary information. In such situations, where the Department
issues assessment instructions at the conclusion of the litigation, we
will apply the de minimis rule on the basis of the weighted-average
dumping margin calculated for the exporter or producer.

Section 351.107

We have added a new Sec. 351.107 that deals with (1) the
establishment of deposit rates in situations involving a nonproducing
exporter, (2) the selection of the appropriate deposit rate where entry
documents do not identify the

[[Page 27303]]

producer of subject merchandise, and (3) the calculation of rates in AD
proceedings involving nonmarket economy countries.
Nonproducing exporters: In the AD Proposed Regulations, 61 FR at
7311, the Department requested additional public comment on the issue
of whether to promulgate special rules regarding the rates applicable
to exporters that are not also producers, such as trading companies. We
noted that one alternative would be to calculate a separate rate for
each exporter/producer combination.
One commenter suggested that the Department should apply this
approach in all instances. Other commenters argued that the Department
should not codify an across-the-board rule, but instead should
establish rates for exporter/producer combinations on a case-by-case
basis. Another commented that it would be inappropriate to determine
rates solely on the basis of exporter/producer combinations, and that
normally the Department should base deposits of estimated duties on the
rate calculated for the producer.
The Department agrees with the comments suggesting that it is
appropriate in some instances to establish rates for exporter/producer
combinations. Therefore, in paragraph (b)(1)(i), we have provided for
the establishment of such ``combination rates.''
We believe that combination rates are appropriate, because, in an
AD proceeding, the Department usually investigates or reviews sales by
a nonproducing exporter only if that exporter's supplier sold the
subject merchandise to the exporter without knowledge that the
merchandise would be exported to the United States. While we agree with
one commenter that in these instances the producer's pricing is not at
issue, we are concerned about the proper application of any deposit
rate determined on the basis of the exporter's pricing. Establishing a
deposit rate for an exporter and, without regard to the identity of the
supplier, applying that rate to all future exports by that exporter
could lead to the application of that rate even if other suppliers sold
to the exporter with knowledge of exportation to the United States.
This would enable a producer with a relatively high deposit rate to
avoid the application of its own rate by selling to the United States
through an exporter with a low rate. Therefore, in order to ensure the
proper application of deposit rates, the Department believes that it
should establish, where appropriate, individual rates for nonproducing
exporters in combination with the particular supplier or suppliers from
whom the exporter purchased the subject merchandise.
On the other hand, the Department believes that there are
situations where it may be inappropriate and/or impractical to
establish combination rates. For example, it may not be necessary to
establish combination rates when investigating or reviewing
nonproducing exporters that are not trading companies, such as original
equipment manufacturers. In addition, it may not be practicable to
establish combination rates when there are a large number of producers,
such as in certain agricultural cases. The Department will make such
exceptions to combination rates on a case-by-case basis.
Another instance in which the Department assigns rates to exporters
is in AD investigations and reviews of imports from nonmarket economies
(NMEs). In those cases, if sales to the United States are made through
an NME trading company, we assign a noncombination rate to the trading
company regardless of whether the NME producer supplying the trading
company has knowledge of the destination of the merchandise. One
exception to this NME practice occurs where we find no dumping and
exclude an exporter from an AD order. Where exclusions are involved, we
publish a combination rate to address the same concerns described above
regarding redirection of exports through an excluded trading company.
Nothing in Sec. 351.107(b)(1) is intended to change our policy for
assigning rates in NME proceedings.
The Department also believes it is not appropriate to establish
combination rates in an AD investigation or review of a producer; i.e.,
where a producer sells to an exporter with knowledge of exportation to
the United States. In these situations, the establishment of separate
rates for a producer in combination with each of the exporters through
which it sells to the United States could lead to manipulation by the
producer. Furthermore, the Department recognizes that in many
industries it is not uncommon for a producer to sell some amount of
merchandise purchased from other producers. In such situations, the
Department generally intends to establish a single rate for such a
respondent based on its status as a producer, although unusual
circumstances may warrant the application of a combination rate.
The Department also generally agrees with the comment that, in AD
cases, if an exporter changes its supplier, the supplier's rate should
be applied for deposit purposes rather than the ``all-others'' rate.
Therefore, paragraph (b)(2) provides that for purposes of deposits, the
Department will apply the producer's rate to entries if the Department
has not established previously a deposit rate for the particular
exporter/producer combination or the exporter alone. If the Department
has not calculated an individual rate for the producer, the Department
will apply the ``all-others'' rate. Again, nothing in this section is
intended to change our practice regarding the rates assigned to NME
exporters. In particular, an ``all-others'' rate may not be calculated
in an NME proceeding or, if it is, it may not apply to the new shippers
covered in this section.
In the case of CVD proceedings, subject merchandise may be
subsidized by means of subsidies provided to both the producer and the
exporter. In the Department's view, all subsidies conferred on the
production of subject merchandise benefit that merchandise, even if it
is exported to the United States by a reseller rather than the producer
itself. Therefore, the Department calculates countervailable subsidy
rates on the basis of any subsidies provided to the producer, as well
as those provided to the exporter in any investigation or review
involving exports by a nonproducing exporter. As a result, rates
established for particular combinations of exporters and producers are
the most accurate rates. Moreover, as in an AD proceeding, combination
rates help to ensure the proper application of combination rates when
other producers sell through the same exporter.
As in AD proceedings, in CVD proceedings there may be situations in
which it is not appropriate or practicable to establish combination
rates. In such situations, the Department will make exceptions to its
combination rate approach on a case-by-case basis. In addition, for a
new combination of exporter and producer, the Department believes that
it should apply the supplier's rate, rather than the ``all-others''
rate, for deposit purposes. Therefore, under paragraph (b)(2), in a CVD
proceeding the Department intends to apply the producer's rate to
entries for deposit purposes if the Department has not established a
rate for the particular exporter/producer combination or the exporter
alone. If the producer's rate is applicable, but the Department has not
established a rate for that producer, the Department will apply the
``all-others'' rate.
In this regard, however, in a CVD proceeding, the Department
intends to establish a deposit rate for each

[[Page 27304]]

producer that it investigates or reviews, even if during the period of
investigation or review the producer happened to be selling to the
United States through a reseller. The purpose of this approach is to
ensure that if the producer subsequently begins to export to the United
States directly, the Department will be able to apply a deposit rate
based on the producer's own level of subsidization, as opposed to the
``all-others'' rate.
The proper application of rates to entries for deposit purposes
generally requires that the producer of the merchandise be identified.
Accordingly, under paragraph (c), if an entry does not identify the
producer (or the exporter's supplier if the exporter is not the
producer), the Department will instruct the Customs Service to use the
higher of: (1) the highest of any combination rate involving that
exporter, (2) the highest rate for any producer other than a producer
for which the Secretary has established a combination rate involving
the exporter in question, or (3) the ``all-others'' rate. The objective
of paragraph (c) is to prevent an exporter from obtaining a lower
deposit rate by means of withholding the identity of its supplier from
the Customs Service.
As an example of how paragraph (c) would operate, assume that in an
AD proceeding the existing rates are: Exporter A/Producer 1--5 percent;
Exporter B/Producer 2--20 percent; Producer 1--18 percent; Producer 2--
15 percent; and All Others--10 percent. If an entry did not identify
the producer of subject merchandise exported by Exporter A, the
Department would instruct the Customs Service to apply Producer 2's
deposit rate of 15 percent. 15 percent would be the appropriate rate if
Producer 2 were the supplier, and it also is the highest of the
possible rates applicable had the producer been identified (those rates
being 5, 10, and 15 percent in this example). Producer 1's rate of 18
percent would not be appropriate, because the Department already would
have established that, when Producer 1 exports through Exporter A, the
appropriate rate is 5 percent.
Nonmarket economy cases: The second sentence of the definition of
``rates'' in proposed Sec. 351.102(b) provided the Department with the
authority to apply a single AD margin to all producers and exporters
from a nonmarket economy (``NME'') country. We have moved that sentence
to paragraph (d) of Sec. 351.107.
As explained in the AD Proposed Regulations, 61 FR at 7311, the
Department elected not to codify its current presumption that a single
rate will be applied in NME cases. We received several comments on this
issue.
Four commenters suggested that the Department codify its current
presumption of a single rate. Three of these commenters viewed the
presumption as correct, because the fact that a country is an NME
carries with it an assumption that the government controls all
exporters. Moreover, these commenters asserted that NME governments,
due to their control, can funnel sales of the subject merchandise
through, or transfer production of the subject merchandise to, the
entity that receives the most favorable dumping margin. These
commenters further urged the Department to extend the presumption of
control beyond the central NME government to provincial and municipal
governments, as well. One commenter that urged the Department to codify
the presumption of a single rate also argued that the presumption is
consistent with the statute, because all NME companies are under common
ownership and, hence, comprise a single exporter. Consequently, in this
commenter's view, the Department should calculate a single dumping
margin just as it would calculate a single dumping margin in situations
where the Department ``collapses'' market economy producers under
common ownership. This same commenter urged the Department to make
clear that the NME-wide rate calculated as a consequence of the
presumption is different from the ``all-others'' rate described in
section 735(c)(1)(B)(i)(II) of the Act.
One commenter opposed the presumption. In discussing the People's
Republic of China (``PRC''), this commenter pointed to the reforms that
have been instituted in the PRC economy, claiming that the underlying
premise of the presumption--that the central government controls
exporters--is erroneous. According to the commenter, the Department's
experience in administering the presumption confirms this conclusion,
because in virtually every case since the Department instituted the
presumption, individual PRC producers have been able to demonstrate
that they are entitled to their own rates. Consequently, this commenter
argued, the Department should abandon the presumption of a single NME-
wide rate, and non-investigated exporters in an NME should receive an
all-others rate. Another commenter asked that even if the Department
does not codify the presumption, the Department should clarify that it
will continue to calculate separate rates in appropriate cases.
Several commenters went on to make specific suggestions for
amending the so-called ``separate rates test''; i.e., the conditions
that must be met for rebutting the presumption. One commenter urged the
Department to incorporate into the separate rates test the affiliated
party criteria from section 771(33) of the Act and Secs. 351.102(b) and
351.401(f) of the regulations. In this commenter's view, the affiliated
party criteria provide appropriate guidance on when parties under
common ownership should be subject to a single AD rate. A second
commenter recommended amending the test to include an assessment of
possible central government influence in the future. Also, in this
commenter's view, the NME exporter seeking a separate rate should be
required to present affirmative evidence that the government is not
involved in the exporter's pricing decision. In other words, this
commenter claimed, an absence of evidence of control should not be
sufficient to rebut the presumption. Finally, this commenter suggested
that, because of the potential for circumvention, the Department should
calculate individual rates only for manufacturers, and not for export
trading companies.
Another commenter pointed to the unfairness of having to prove the
negative; i.e., the absence of control. This commenter also suggested
that the Department should focus on events during the period of
investigation and not speculate about events that might occur in the
future. Two commenters urged the Department to provide an opportunity
for firms to receive separate rates in those situations where the
Department chooses not to investigate all exporters. In their view,
instead of using the punitive NME-wide rate, the Department should
assign these non-investigated exporters an average dumping margin
calculated on the basis of investigated firms receiving separate rates.
As in the proposed regulations, we have refrained from codifying
the presumption of a single rate in NME AD cases. Nor have we adopted a
modified version of the presumption. We appreciate the many thoughtful
comments that we received on this topic. However, because of the
changing conditions in those NME countries most frequently subject to
AD proceedings, we do not believe it is appropriate to promulgate the
presumption or the separate rates test in these regulations. Instead,
we intend to continue developing our policy in this area, and the
comments that were submitted will help us in that process. We would
like

[[Page 27305]]

to clarify, however, that we do intend to grant separate rates in
appropriate circumstances, and that our decision not to codify the
presumption or the separate rates test should not be seen, as one
commenter suggested, as a decision not to grant separate rates. Also,
as discussed above in connection with Sec. 351.107(b)(1), we intend to
continue calculating AD rates for NME export trading companies, and not
the manufacturers supplying the trading companies.

Subpart B--Antidumping Duty and Countervailing Duty Procedures

Subpart B deals with AD/CVD procedures, and is based on subpart B
of part 353 and part 355 of the Department's former regulations.

Section 351.202

Section 351.202 deals with the contents of, and filing requirements
for, AD/CVD petitions. We received several comments regarding proposed
Sec. 351.202.
Contents of petitions: Proposed Sec. 351.202(b), consistent with
the statute, provided that a petition must contain specified
information ``to the extent reasonably available to the petitioner.''
One commenter suggested that the Department revise Sec. 351.202(b) so
as to make clear that the ``reasonably available'' standard is
flexible, and that, in particular, the Department expressly acknowledge
in the regulation that cost is a relevant consideration in determining
what is ``reasonably available.''
We have not adopted this suggestion. While we do not disagree with
the proposition that the ``reasonably available'' standard is flexible,
we believe that the word ``reasonably'' makes this flexibility
manifest. In addition, while we also do not disagree with the notion
that cost to a petitioner is a factor in determining what is reasonably
available, it is only one of many possible factors. To identify in the
regulation one factor to the exclusion of others might result in undue
emphasis being placed on the factor of cost. The ``reasonably
available'' standard has been in the statute for many years, and we
believe that it provides sufficient guidance to petitioners as to the
efforts they must undertake in providing information to the Department.
The same commenter objected to the requirement in proposed
Sec. 351.202(b)(3) that a petitioner provide production data for each
domestic producer identified by the petitioner. This commenter argued
that Article 5.2 of the AD Agreement and Article 11.2 of the SCM
Agreement merely require that a petitioner provide aggregate production
data for all known domestic producers. A second commenter supported
proposed Sec. 351.202(b)(3) as drafted, arguing that the SAA at 861
clearly requires producer-specific production data.
We do not agree with the first commenter's interpretation of
articles 5.2 and 11.2. However, even if that interpretation were
correct, it is the U.S. statute that controls. The SAA clearly requires
that a petitioner provide producer-specific production data, subject,
of course, to the proviso that such information is reasonably available
to the petitioner. This information is necessary in order to enable the
Department to determine whether an adequate portion of domestic
producers support a petition, an inquiry which is based on production
volumes of domestic producers. Therefore, we have left
Sec. 351.202(b)(3) unchanged.
Two commenters suggested that the Department coordinate with the
Commission with respect to regulations dealing with the contents of
petitions, and that the Department incorporate into Sec. 351.202(b) the
specific requirements contained in the Commission's corresponding
regulation. In addition, these commenters suggested that, in light of
the Commission's proposed Sec. 207.11(b)(2)(iv), the Department should
revise its own proposed Sec. 351.202(b)(8) so as to require volume and
value information regarding the subject merchandise for the most recent
three-year period, as opposed to a two-year period.
We have adopted these suggestions in part. The Commission completed
its rulemaking activity and issued final rules on July 22, 1996. See 61
FR 3818. These final rules contain a revised 19 CFR Sec. 207.11 that
deals with the contents of AD/CVD petitions. We have incorporated
elements of the Commission's regulations into Sec. 351.202(b) where the
information identified in Sec. 207.11 is of the same general type as
that sought by the Department. With respect to the identity of
importers, we have revised proposed Sec. 351.202(b)(9) so as to require
telephone numbers for each importer identified, to the extent such
information is reasonably available to the petitioner. On the other
hand, we have not incorporated elements of Sec. 207.11 where the
information identified in that regulation is not of the same general
type as that sought by the Department. For example, we have not
included the requirement of Sec. 207.11(b)(2)(iv) that a petitioner
identify each product for which the petitioner requests the Commission
to seek pricing information in its questionnaires. Finally, we have
added a sentence to paragraph (a) that advises petitioners to refer to
the Commission's regulations concerning petition contents.
With respect to the suggestion that we require three, rather than
two, years of volume and value information, as required by proposed
Sec. 207.11(b)(2)(iv), we note that the Commission deleted this
provision in its final rule. Therefore, we are not adopting this
suggestion for purposes of Sec. 351.202(b).
Amendments to petitions: One commenter objected to the substitution
of ``may'' for ``will'' in proposed Sec. 351.202(e) (``The Secretary
may allow timely amendment of the petition''). The commenter argued
that the substitution is improper, because it confers on the Department
more discretion than is allowed by section 732(b)(1) of the Act. We
have retained the language of the proposed rule. In our view, the
statute, by permitting the Secretary to establish on a case-by-case
basis the timing and conditions for any amendments to a petition,
confers considerable discretion. We continue to believe that the word
``may'' more accurately reflects this discretionary authority than does
the word ``will.''
Pre-initiation communications: Commenting on proposed
Sec. 351.202(i), one commenter suggested that because the statutory
limitation on pre-initiation communications is limited to comments that
are unsolicited by the Department, the Department should revise
Sec. 351.202(i) so as to clarify that the Department retains the
discretion to ``solicit'' comments on its own initiative. According to
this commenter, the Department's interpretation of the SAA in the AD
Proposed Regulations is incorrect. See 61 FR at 7313. The commenter
argued that while the SAA limits the pre-initiation right of parties to
comment to the issue of industry support, Congress deliberately used
the word ``unsolicited'' in sections 702(b)(4)(B) and 732(b)(3)(B) of
the Act in order to provide the Department with the discretion to
solicit comments on any issue where necessary. Two other commenters
submitted similar comments.
Three commenters, however, opposed the suggestion described in the
preceding paragraph. In addition, these commenters proposed that the
Department revise the proposed regulations so as to expressly state
that the Department will not solicit information from sources other
than domestic interested parties.
We have not adopted either of these competing suggestions. As noted
above,

[[Page 27306]]

in drafting these regulations, the Department has sought to avoid
repeating the statute to the extent possible. Consistent with this
objective, in proposed Sec. 351.202(i), the Department sought to do no
more than clarify that the filing of a notice of appearance would not
constitute a ``communication'' within the meaning of the statute. The
Department referred in paragraph (i) to sections 702(b)(4)(B) and
732(b)(3)(B) merely to provide a context for this clarification. As for
the Department's discussion of the SAA mentioned by the first
commenter, this discussion was in response to suggestions that the
Department should solicit comments regarding a petition, an activity
clearly not contemplated by the statute or the SAA.
Each group of commenters is asking the Department to place a
different gloss on the statute. At this time, we do not believe that
either gloss is necessary or appropriate. However, in view of the fact
that both groups of commenters apparently misinterpreted the
Department's intent in drafting proposed Sec. 351.202(i), we have
revised that paragraph to clarify that it deals only with the treatment
of notices of appearance.
We should note that the Department has no intention of soliciting
comments concerning the adequacy and accuracy of a petition. In this
regard, the Department intends to follow the general rule articulated
by the Federal Circuit in United States v. Roses, Inc., 706 F.2d 1563
(1983), that, in order to determine whether a petition is adequate
under the law, the Department should look only within the four corners
of the petition. This general principle is now incorporated in sections
702(b)(4)(B) and 732(b)(3)(B) of the Act.
The three exceptions to this rule are those specified in the Act
and the SAA: for comments concerning industry support for the petition;
for inquiries concerning the status of the Department's consideration
of the petition; and for government-to-government consultations in CVD
investigations. With respect to industry support, the statutory
exception is necessary in part because the issue of industry support
cannot be revisited after initiation. The SAA at 194 makes clear that
the Department is to construe this exception narrowly. The Department
may accept and answer inquiries concerning the status of the
Department's consideration of a petition, because such inquiries do not
constitute comments on the accuracy and adequacy of the petition
itself. In the case of CVD investigations, section 702(b)(4)(B)
expressly directs the Department to provide the government of the
exporting country with an opportunity for consultations on the
petition. This requirement implements Section 13.1 of the SCM
Agreement. The Department will determine what weight to give to any
information received during the course of such consultations on a case-
by-case basis.
Other comments: One commenter argued that it was improper for a
Department official to counsel a petitioner in preparing a petition and
then, after the petition is formally filed, participate in an analysis
of the adequacy of the petition. According to this commenter, such
activity gives rise to an appearance of impropriety and violates the
Department's own rules on ethical conduct. The commenter proposed a
revision to Sec. 351.202 which would have (1) required the Department
to disclose publicly the names of all Department personnel who assisted
in the preparation of a petition; and (2) precluded any such official
from participating in the relevant AD/CVD proceeding once the petition
was filed.
We have not adopted this comment, and we disagree strongly with its
underlying premise. We do not believe that Department personnel lose
their objectivity or impartiality regarding the merits of a petition
when they have provided advice to a petitioner in the preparation of a
petition. In addition, we do not believe that there is an appearance of
impropriety or a violation of the Department's rules of ethical conduct
when such personnel participate in an AD/CVD proceeding triggered by
the filing of a petition with respect to which they may have offered
pre-filing advice.
The same commenter also suggested that the Department revise
proposed Sec. 351.202(i)(2), which provides that, in the case of a CVD
petition, the Department will invite the government of the exporting
country involved for consultations under Article 13.1 of the SCM
Agreement. Consistent with other comments made by this commenter based
on its analysis of the statutory term ``country,'' the commenter
suggested that the Department modify paragraph (i)(2) to provide that
the Department also will invite for consultations the government of any
political subdivision of a named country.
We have not adopted this suggestion. Although there certainly are
situations in which the statute treats political subdivisions as
``countries,'' this is not one of those situations. Section
702(b)(4)(A)(ii) of the Act refers to consultations with a ``Subsidies
Agreement country.'' In our view, a state or provincial government does
not meet the definition of ``Subsidies Agreement country'' in section
702(b) of the Act.
Moreover, under Article 13.1, the obligation of the United States
is to consult with ``Members'' of the WTO, a term that excludes
subnational governments, such as states and provinces. While the
central government of a WTO Member may choose to be accompanied at
consultations by representatives of subnational levels of government,
the Department will not embroil itself in the internal politics of
another country by inviting such representatives to participate in
Article 13.1 consultations.
Finally, one commenter proposed that the following sentence be
added to proposed Sec. 351.202(c): ``Other filing requirements are set
forth in Sec. 351.303.'' The purpose of this addition would be to put
petitioners on notice as to the existence and location of distinct
filing requirements. The Department agrees with this suggestion, and we
have revised paragraph (c) accordingly.
Other changes: In light of the recent reorganization of Import
Administration, we have revised Sec. 351.202(h)(2) to provide that
persons seeking information concerning petitions should contact Import
Administration's Director for Policy and Analysis.

Section 351.203

Section 351.203 deals with determinations regarding the sufficiency
of an AD or CVD petition, and implements sections 702(c) and 732(c) of
the Act. We received several comments regarding Sec. 351.203.
Adequacy of allegations: Three commenters made suggestions relating
to proposed Sec. 351.203(b)(1), which provides that ``the Secretary, on
the basis of sources readily available to the Secretary, will examine
the accuracy and adequacy of the evidence provided in the petition and
determine whether to initiate an investigation.'' While these
commenters agreed that proposed Sec. 351.203(b)(1) was consistent with
the statute, they were concerned that the Department's commentary in
the AD Proposed Regulations and/or the Department's practice was not.
In the commentary, we described our prior practice in reviewing a
petition and stated that this practice was consistent with the type of
review contemplated by the new statute. In particular, we noted that it
was the Department's practice to seek additional information when a
particular allegation lacked sufficient support or appeared
aberrational, even though the allegation was supported by some
documentation. 61 FR at 7313.

[[Page 27307]]

One of the three commenters, however, stated that the practice
described amounted to the weighing of evidence, and that this practice
is inconsistent with the legislative history of the Trade Agreements
Act of 1979, a legislative history that the SAA endorsed. This
commenter proposed that the 1979 legislative history be incorporated
into Sec. 351.203(b)(1).
The second of the three commenters also complained that the
Department's commentary suggested the weighing of evidence, and
disagreed that the Department's proposal was consistent with past
practice. Asserting that the statute and legislative history do not
envision an adversarial pre-initiation proceeding, this commenter
proposed that the Department clarify that (1) it will not allow
respondents to bring public information to the Department's attention
for purposes of assessing the sufficiency of a petition; and (2) that
the new regulations are not intended to increase the burden on
petitioners for initiating investigations.
The third of the three commenters agreed with proposed
Sec. 351.203(b)(1) and the accompanying commentary, but alleged that
over time, the Department has been subjecting petitioners to
substantially increased demands for additional factual support.
Therefore, while not suggesting any changes to Sec. 351.203(b)(1) or
the commentary, this commenter suggested that the Department review its
practice to ensure that that practice is consistent with the regulation
and the commentary.
We agree that the pre-initiation process should not become an
adversarial process between the petitioner and potential respondents.
On the other hand, however, the Department has a statutory obligation
to examine the accuracy and adequacy of the evidence provided in the
petition, an exercise which necessarily entails making some judgments
regarding the quantity and quality of the information contained in a
petition. Whether or not such an examination constitutes the ``weighing
of evidence'' is, in our view, largely a question of semantics.
However, we believe that the practice described in the commentary
accompanying proposed Sec. 351.203(b)(1) does not result in an
adversarial process and that this practice is consistent with the
legislative history of the 1979 Act. That legislative history states,
inter alia, that a petition must be ``reasonably supported by the facts
alleged.'' H.R. Rep. No. 317, 96th Cong., 1st Sess. 51 (1979) (emphasis
added). In our view, this means that the mere provision of any
documentation is not necessarily sufficient, and the Department, where
appropriate, should be able to seek additional information where
support for a particular allegation is weak or information appears
aberrational.
Therefore, we have not changed proposed Sec. 351.203(b)(1) in light
of these comments. However, we wish to reiterate what we said in the
commentary accompanying proposed Sec. 351.203(b)(1); namely, that we do
``not believe that the new statutory standard constitutes a significant
departure from past Department practice.'' 61 FR at 7313.
Sources readily available: Commenting on proposed
Sec. 351.203(b)(1), one commenter suggested that the regulations make
clear that ``sources readily available'' to the Department include any
information that is relevant to its evaluation of a petition and that
is submitted by an interested person further to the Department's
request. We have not adopted this suggestion, because we prefer to
develop our interpretation of this new statutory term on a case-by-case
basis.
The same commenter urged the Department to refrain from allowing a
petitioner to comment on any pre-initiation submissions that a
respondent interested party makes in response to a Department request.
Presumably, this commenter was referring to the following statement in
the preamble to the AD Proposed Regulations: ``The Department will give
the petitioner an opportunity to comment on any such information
acquired by the Department.'' 61 FR at 7313. We have not adopted this
suggestion either, because we continue to believe that it is
appropriate to provide a petitioner with an opportunity to comment on
information collected during the pre-initiation process.
Also in connection with proposed Sec. 351.203(b)(1), another
commenter proposed that after the phrase ``sources readily available to
the Secretary,'' the Department should add the following clause:
``including information provided to the Department by foreign
governments during the consultations required under 19 U.S.C.
Sec. 1671a(b)(4)(A)(ii). * * *'' This commenter was referring to the
pre-initiation consultations provided for in Article 13.1 of the SCM
Agreement and referred to in section 702(b)(4)(A)(ii) of the Act.
According to the commenter, the ``right to consult is meaningless if
the Department were not to consider information provided in the
consultations in making its decision whether to initiate an
investigation and, if so, on what programs.'' Another commenter,
however, opposed this suggestion, arguing that neither the statute nor
the Department's practice concerning CVD petitions allows the
Department to transform Article 13.1 consultations into pre-initiation
litigation.
While we have not adopted the suggestion, we do not disagree with
the thrust of the first commenter's position. Under Article 13.1 of the
SCM Agreement, foreign governments have a right to consultations prior
to the initiation of an investigation. The purpose of these
consultations is to clarify the matters referred to in a petition. The
right to consultations is specifically provided for in
Sec. 702(b)(4)(A)(ii) of the Act. We note that under Sec. 702(b)(4)(B),
the Department is prohibited from accepting any unsolicited oral or
written communication from potential respondents, except as provided
for under the aforementioned provision of the Act requiring that
foreign governments be given an opportunity for consultations.
Therefore, we believe that the Department may consider relevant
information provided by a foreign government prior to the initiation of
an investigation. The use of such information and the weight given to
it, either prior to the initiation decision or during an investigation,
will be determined by the Department on a case-by-case basis.
Industry support: Commenting on proposed Sec. 351.203(e)(1), one
commenter suggested that when measuring domestic production as an index
of industry support for a petition, the Department (1) never should
measure production over a period of less than twelve months; and (2)
should retain the flexibility to examine a period greater than twelve
months in appropriate circumstances. A second commenter endorsed
proposed Sec. 351.203(e)(1), arguing that the use of the word
``normally'' in that provision provided the Department with the
necessary flexibility to use periods greater or lesser than twelve
months when appropriate.
We have left Sec. 351.203(e)(1) unchanged. Because the statutory
standard for determining industry support is new, we are reluctant to
adopt a regulation that would preclude, in all cases, the use of a
period shorter than twelve months. As observed by the second commenter,
there may well be industries for which use of a shorter period is
appropriate. While we expect that in most cases the Department will use
a twelve-month period, use of the word ``normally'' provides us with
sufficient flexibility to use longer or shorter periods when
appropriate.

[[Page 27308]]

One commenter suggested that the Department revise proposed
Sec. 351.203(e)(3) to provide that: (1) the Department may base the
position of workers on a statistically valid sampling of the views of
individual workers; and (2) the views of workers and management be
recorded in writing and certified in accordance with Sec. 351.303(g). A
second commenter objected to these suggestions, arguing that (1) the
first commenter's notion of sampling effectively would rewrite the
statute; and (2) a separate certification requirement is unnecessary,
because Sec. 351.303(g) already requires certification of submissions
containing factual information.
We have not adopted the first commenter's suggestions. With respect
to sampling of individual workers, this suggestion would require a
level of regulatory detail greater than what we consider to be
appropriate at this time. The statute does provide for the use of
statistically valid sampling methods to determine industry support, but
only when there are a large number of producers in the relevant
industry. In the AD Proposed Regulations, we deliberately refrained
from elaborating on what is, for the Department, a new and untried
method for determining industry support. For purposes of these final
regulations, we continue to believe that we should develop this method
on a case-by-case basis. With respect to the first commenter's
suggestion regarding filing requirements for industry positions, we
agree with the second commenter that the changes proposed are redundant
and unnecessary.
Another commenter sought clarification with respect to proposed
Sec. 351.203(e)(3), a provision that states that the Secretary will
accord equal weight to the positions of management and workers
regarding a petition. The commenter stated that the 25 percent
threshold for determining industry support should not be subject to
Sec. 351.203(e)(3), apparently based on the commenter's belief that
this provision somehow undermines the 25 percent threshold. A second
commenter offered an interpretation of the first commenter's comment,
and suggested, based on its interpretation, that the commenter's
``complaint should be dismissed.''
The first commenter did not seek a change to the regulation, and we
do not believe that a change is necessary. However, the Department
wishes to confirm that in situations where the views of the management
and workers of a firm negate each other, the production of the firm in
question will be included as part of the total production of the
domestic like product for purposes of applying the 25 percent threshold
in sections 702(c)(4)(A)(i) and 732(c)(4)(A)(i) of the Act.
The same commenter also sought clarification that all interested
parties would be given access to non-confidential information related
to the positions of domestic producers and workers. With respect to
this comment, the Department can confirm that public information (e.g.,
non-business proprietary information) concerning the positions of
producers and workers will be included in the public record of an AD/
CVD proceeding. Under Sec. 351.104(b), the public record will be
available to the public, including interested parties, for inspection
and copying in Import Administration's Central Records Unit.
Another commenter made some suggestions regarding proposed
Sec. 351.203(e)(5), which deals with determinations of industry support
in cases where the petitioner alleges the existence of a regional
industry. This commenter proposed that in regional industry cases, the
Department should (1) determine the position of all members of the
national industry regarding the petition, initiate based upon support
within the alleged region, but terminate the investigation for lack of
interest if there is insufficient support from producers within the
region or nation, as determined by the Commission in its preliminary
determination; and (2) consult extensively with the Commission prior to
initiation regarding the adequacy of the regional industry allegation
and, if the Commission's advice is that the alleged region is
questionable, advise the petitioner to withdraw the petition and refile
it as a national case or with a more properly defined region. According
to the commenter, such an approach is necessary (1) to address the
``anomaly'' in the statute that arises when the Commission rejects a
regional industry alleged in a petition; and (2) to ensure that
allegations of regional industry in a petition are not used to
circumvent the industry support requirements.
A second commenter opposed these suggestions. First, this commenter
noted, the statute addresses this very situation, because the statute
expressly states that (1) the Department shall determine industry
support based on production in the region alleged in the petition, and
(2) the Department shall not reconsider a determination of industry
support once it is made. Second, there is no ``anomaly'' limited to
regional industry cases, because in any case, including a case in which
the petitioner alleges a national industry, the Commission may define
the relevant product in such a way that the scope of the relevant
industry analyzed for injury purposes differs from the scope of the
industry analyzed for purposes of determining industry support. Third,
there is no basis for the Department to revisit its industry support
determination based on the Commission's preliminary determination,
because in its final determination the Commission may change the
definition of the industry at issue yet again, or even revert back to
the definition originally alleged in the petition. Finally, the second
commenter suggested that the first commenter's concerns about
circumvention were overblown, stating that the first commenter did not
understand the difficulties involved in bringing a regional industry
case.
In light of these comments, and because the SAA is clear on this
point, we have deleted paragraph (e)(5).
Other comments: One commenter submitted a comment concerning
proposed Sec. 351.203(c)(2), which requires that, after initiation of
an investigation, the Secretary provide a public version of the
petition to all known exporters who sell for export to the United
States. Section 351.203(c)(2) makes an exception for situations where
the number of exporters is ``particularly large.'' The commenter
suggested that the Department should invoke the exception only in
situations where the number of exporters is ``exceptionally large.'' We
have not adopted this suggestion, because the phrase ``particularly
large'' tracks the language of the SAA and the relevant provisions of
the AD Agreement and the SCM Agreement.
The same commenter also suggested that Sec. 351.203(c)(2) provide
that, upon request, any exporter, producer, or importer of subject
merchandise be provided, free of charge, with a public version of the
petition. We have not adopted this suggestion, because Sec. 351.104(b)
adequately deals with matters relating to access to the public record,
including the public version of a petition.

Section 351.204

Section 351.204 deals with issues relating to the time period and
persons to be examined in an investigation, voluntary respondents, and
exclusions. In the section title, we have substituted ``Time periods''
for ``Transactions'' to reflect more accurately the contents of
Sec. 351.204.
Period of investigation in AD investigations: In proposed

[[Page 27309]]

Sec. 351.204(b)(1), the Department revised the period of investigation
(``POI'') for antidumping investigations. In the past, the Department
normally used a six-month POI that ended with the month in which the
petition was filed. 19 CFR Sec. 353.42(b)(1) (1995). In
Sec. 351.204(b)(1), the Department expanded the POI from six months to
four fiscal quarters (twelve months), with the exception of nonmarket
economy cases. In addition, the Department provided that the POI would
consist of the four most recently completed fiscal quarters as of the
month preceding, instead of including, the month in which the petition
was filed or in which the Secretary self-initiated an investigation.
Finally, the Department preserved its discretion to use a different POI
in appropriate circumstances.
We received several comments concerning this change in the standard
AD POI. One commenter, while approving the expansion of the POI to
twelve months, objected to reliance upon fiscal quarters completed as
of the month preceding the month in which a petition was filed.
According to this commenter, domestic industries are badly buffeted by
dumped imports at least up to the date of the filing of a petition. If
the Department relied on completed fiscal quarters, however, it would
ignore at least two months worth of dumping activity, activity that was
automatically covered by the Department's former POI. In addition, this
commenter asserted, the use of months, rather than fiscal quarters,
``has worked well generally in the past and has not demonstrably been
an impediment to verification.'' Therefore, this commenter proposed
that the standard AD POI be the twelve-month period ending in the month
of filing or self-initiation, and that respondents should have the
burden of proving that a different POI is appropriate.
A second commenter, on the other hand, generally supported the use
of fiscal quarters, but believed that the Department should rely on
completed quarters as of the end of the month of filing or self-
initiation. In addition, this commenter objected to the expansion of
the POI from six months to twelve months, arguing that the Department
had not explained the reasons for this expansion and that it appeared
to be inconsistent with the Department's stated goal of easing
reporting requirements and permitting more efficient verification.
With respect to the expansion of the POI to twelve months, we
believe that this expansion is required by Article 2.2.1, note 4 of the
AD Agreement. Note 4 states: ``The extended period of time should
normally be one year but shall in no case be less than six months.''
Although this statement is made in the context of analyzing sales below
the cost of production, implicit in the statement is the assumption
that the POI in an AD investigation normally will be one year.
Therefore, we have not adopted the suggestion of the second commenter
that we revert to a normal POI of six months.
With respect to the use of completed fiscal quarters rather than
months, while we do not dispute the first commenter's assertion that
domestic industries may be buffeted by dumped imports in the months
immediately preceding the filing of a petition, these imports would not
be subject to antidumping duties, regardless of whether they were
covered by the POI. Moreover, the timing of a petition filing often can
address such concerns. In addition, we continue to believe that
defining the POI in terms of completed fiscal quarters, rather than
calendar months running from the date of filing, will generate
considerable savings in time and money for both the Department and the
parties involved in AD proceedings. Our experience is that a
considerable amount of time is spent in reconciling AD submissions
(that until now have been based on calendar months) to a firm's
accounting records (that typically are based on fiscal quarters).
However, we should emphasize that Sec. 204(b)(1) refers to the POI that
the Secretary ``normally'' will use. Therefore, the Department retains
the discretion to depart from its standard POI where warranted by the
circumstances of a case.
Finally, we are not adopting the suggestion that we base our POI on
completed fiscal quarters as of the end of the month of filing or self-
initiation. In general, we believe that it is more appropriate to
investigate only sales made prior to the filing of a petition to
alleviate concerns about the effect of the petition on pricing
practices.
Period of investigation in CVD investigations: One commenter
suggested that we retain the modifier ``normally'' in the second
sentence of proposed Sec. 351.204(b)(2). According to this commenter,
the Department should retain the flexibility to adopt as the POI the
fiscal year of the foreign government or the main responding company.
We have retained the word ``normally'' in the second sentence.
However, we have changed the second sentence of Sec. 351.204(b)(2).
Originally, this sentence would have required the Secretary to set the
POI as the most recently completed calendar year, if the fiscal years
of the government and the exporters or producers differed. This
language did not correctly reflect our past practice, a practice that
we do not wish to change. The new language simply deletes the reference
to the government's fiscal year. Thus, the Department normally will set
the POI according to the fiscal year of the individual exporters or
producers. Only if the fiscal years of the exporters or producers
differ, will the POI be the most recently completed calendar year. In
the case of investigations conducted on an aggregate basis, the
Department's normal POI will continue to be based on the most recently
completed fiscal year for the government in question.
Acceptance of voluntary respondents: Two commenters submitted
virtually identical comments objecting to the requirement in proposed
Sec. 351.204(d)(2) that a voluntary respondent submit a questionnaire
response before the Department decides whether to examine the voluntary
respondent individually. Citing the Department's AD investigation on
Pasta from Italy, these commenters claimed that an exporter will not be
willing to expend the time and financial resources required to prepare
a questionnaire response without some prior assurance by the Department
that it will conduct an individual examination of the firm. Therefore,
they concluded, this requirement discourages voluntary responses and,
thus, violates Article 6.10.2 of the AD Agreement.
To remedy this alleged violation of international law, the
commenters proposed that the Department require only that any exporter
not selected as a mandatory respondent submit a letter if it is
interested in submitting a voluntary response. Based on these letters,
the Department would decide which, if any, voluntary respondents it
would examine. Only after being selected would voluntary respondents be
required to submit questionnaire responses.
We have not adopted this suggestion, because the approach that the
commenters objected to is made necessary by the requirements of
sections 777A(c)(2)(B) and 782(a) of the Act. Where the Department does
not examine all known producers and exporters, it often selects for
examination all producers or exporters ``that can be reasonably
examined'' in accordance with the requirements of section 777A(c)(2)(B)
of the Act. The selected producers and exporters in this group normally
represent the largest number of respondents the Department believes it
can examine at that time. The Department normally will decide the
number of selected respondents very early in the proceeding; i.e.,
before it

[[Page 27310]]

issues questionnaires to the selected respondents. Therefore, it
frequently is the case that the Department cannot make a determination
as to whether additional voluntary respondents can be reasonably
examined until after the deadline for questionnaire responses has
passed (e.g., one or more selected respondents have not responded). If
the additional voluntary respondents did not begin to prepare their
questionnaire responses until after the Department received
questionnaire responses from the selected respondents, the Department
would not be able to complete the investigation or review within the
statutory deadlines. Therefore, additional voluntary respondents must
submit the complete questionnaire response by the deadlines in
accordance with section 782(a) of the Act. In addition, we do not
believe that section 782(a) ``discourages'' voluntary responses within
the meaning of Article 6.10.2. Instead, it simply recognizes the
constraints on the Department's resources that must be taken into
account in determining whether we can accept a voluntary response. In
order to help potential voluntary respondents decide, prior to
acceptance as a respondent, whether to submit a questionnaire response,
we intend to accept voluntary responses based on the order in which
written requests to be accepted as voluntary respondents are submitted.
In those instances where we can make earlier determinations to accept
voluntary responses, we will do so.
One commenter submitted a comment suggesting that Sec. 351.204 be
amended to incorporate requests by voluntary respondents to be included
in the pool of companies investigated in cases conducted on an
``aggregate'' basis. We have not adopted this suggestion, because under
the statute, only CVD investigations are to be conducted on an
``aggregate basis,'' and it is clear from the comment that the
commenter was addressing AD investigations.
Voluntary respondents and the all-others rate: Proposed
Sec. 351.204(d)(3) provided that in calculating an all-others rate, the
Secretary will exclude weighted-average dumping margins or
countervailable subsidy rates calculated for voluntary respondents. In
the preamble to the AD Proposed Regulations, the Department explained
that the purpose of this provision was to prevent manipulation and to
maintain the integrity of the all-others rate. One commenter argued
that this provision is inconsistent with the statute and should be
deleted.
We do not agree with this comment, and have retained the rule as
drafted. The statute does not define the term ``investigated'' and does
not directly address the question of whether voluntary respondents
should be considered to be part of the Department's investigation.
Because the statute does not resolve the issue, we look to the AD
Agreement for guidance as to the best interpretation of the Act, in
keeping with the requirement that, to the extent possible, a statute be
interpreted in a manner consistent with the international obligations
of the United States.
Article 9.4 of the AD Agreement provides that the duties applied to
``exporters or producers not included in the examination'' (i.e.,
``all-others'') may not exceed the weighted-average margin for the
``selected exporters or producers.'' This implies that those exporters
or producers not ``selected'' are not considered to be included in the
``examination.'' Therefore, the better interpretation of section
735(c)(5) is that producers who are not ``selected'' by the Department
(i.e., voluntary respondents) are not considered to have been
``examined'' (i.e., investigated), so that their margins should not
contribute to the ``all-others'' rate. In effect, the Department
conducts parallel proceedings for voluntary respondents.
As we noted in the preamble to the AD Proposed Regulations,
exclusion of voluntary respondents from the determination of the all-
others rate serves the obvious purpose of preventing distortion or
outright manipulation of the all-others rate. The producers or
exporters most likely to submit voluntary responses are those with
reason to believe that they will obtain a lower margin by volunteering
than they would obtain by being subject to the all-others rate.
Inclusion of rates determined for voluntary respondents thus would be
expected to distort the weighted-average for the respondents selected
by the Department on a neutral basis.
Exclusions: In the AD Proposed Regulations, 61 FR at 7315, the
Department requested additional public comment on the issue of whether
there should be special exclusion rules for firms, such as trading
companies, that export, but do not produce, subject merchandise. We
noted that one alternative would be to limit the exclusion of a
nonproducing exporter to the subject merchandise produced by those
producers that supplied the exporter during the period of
investigation. Several commenters supported this approach, citing the
potential for other producers to avoid the imposition of duties by
selling through an excluded exporter. Other commenters argued that if
an exporter is excluded, the exclusion should apply to all exports by
that exporter, regardless of the producer.
The Department agrees with the first group of commenters that
normally the exclusion of a nonproducing exporter should be limited.
Therefore, we have added a new paragraph (e)(3) to provide that the
exclusion of a nonproducing exporter normally will be limited to
subject merchandise produced or supplied by those companies that
supplied the exporter during the period of investigation.
In an AD investigation, the Secretary may grant an exclusion to a
nonproducing exporter if the Secretary investigates the exporter's
sales and determines that the dumping margins on those sales are not
greater than de minimis. However, to prevent other producers from
selling through an excluded exporter in order to avoid the imposition
of duties, the Secretary normally will apply the exclusion only to the
exporter's exports of subject merchandise purchased from those
producer(s) found by the Secretary to lack knowledge of the exportation
of the merchandise to the United States. This limitation is
appropriate, because the lack of knowledge by these producers provided
the basis for investigating and establishing a rate for the exporter.
In a CVD investigation, the basis for the exclusion of a
nonproducing exporter is that neither the exporter nor the producers or
suppliers of subject merchandise sold by the exporter received more
than de minimis net countervailable subsidies. Therefore, it is
appropriate to limit the exclusion to merchandise purchased from the
same suppliers and producers.
With respect to requests for exclusion in a CVD investigation
conducted on an aggregate basis, we have renumbered paragraph (e)(3) as
paragraph (e)(4), and we have revised paragraph (e)(4)(iv) to clarify
that in the case of a non-producing exporter, the foreign government
must certify that neither the exporter nor the exporter's supplier
received more than de minimis countervailable subsidies during the
review period.
One commenter proposed that (1) the regulations make clear that the
Department has the authority to ``bring back'' under an order an
excluded company if the Department subsequently finds in a review that
the company is dumping, and (2) the regulations retain the requirements
of Secs. 353.14 and 355.14 of the Department's prior regulations.
According to the commenter, the Department required a company with a

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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

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foreign government's agreement to limit the volume of imports of
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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-12201. Public record. Not legal advice.