Leather From Argentina, Wool From Argentina, Oil Country Tubular Goods From Argentina, and Carbon Steel Cold-Rolled Flat Products From Argentina; Final Results of Changed Circumstances Countervailing Duty Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[C-357-803, C-357-403, C-357-002, C-357-005]

Leather From Argentina, Wool From Argentina, Oil Country Tubular

Goods From Argentina, and Carbon Steel Cold-Rolled Flat Products From

Argentina; Final Results of Changed Circumstances Countervailing Duty

Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of changed circumstances countervailing

duty reviews and revocation and amended revocation of countervailing

duty orders.

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SUMMARY: The Department of Commerce (the Department) has completed the

changed circumstances reviews of the countervailing duty orders on

Leather from Argentina (55 FR 40212), Wool from Argentina (48 FR

14423), Oil Country Tubular Goods from Argentina (OCTG) (49 FR 46564),

and Carbon Steel Cold-Rolled Flat Products from Argentina (Cold-Rolled)

(49 FR 18006). The Department initiated these reviews on April 2, 1996

to determine whether it has the authority to assess countervailing

duties on entries of merchandise covered by these orders occurring on

or after September 20, 1991--the date on which Argentina became a

``country under the Agreement'' within the meaning of 19 U.S.C.

Sec. 1303(a)(1) (1988) (repealed 1994). On May 2, 1997, the Department

published the preliminary results of these changed circumstances

reviews (65 FR 24085).

The Department determines that based upon the ruling of the U.S.

Court of Appeals for the Federal Circuit in Ceramica Regiomontana v.

United States, 64 F.3d 1579, 1582 (Fed. Cir. 1995), it does not have

the authority to assess countervailing duties on entries of merchandise

covered by these orders occurring on or after September 20, 1991. As a

result, we are revoking the orders on Wool, Leather, and OCTG with

respect to all unliquidated entries occurring on or after September 20,

1991. With respect to Cold-Rolled, the order was revoked effective

January 1, 1995; therefore, we are amending the effective date of the

revocation (with respect to all unliquidated entries) to September 20,

1991.

EFFECTIVE DATE: August 1, 1997.

FOR FURTHER INFORMATION CONTACT: Richard Herring, Office of AD/CVD

Enforcement VI, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-

2786.

SUPPLEMENTARY INFORMATION:

Scope of Reviews

The scope of each of the four countervailing duty orders is

detailed in the Appendix to this notice.

Background

I. The Orders

The countervailing duty orders on Leather, Wool, Cold-Rolled, and

OCTG from Argentina were issued pursuant to former section 303 of the

Tariff Act of 1930, as amended (the Act)(repealed, effective January 1,

1995, by the Uruguay Round Agreements Act). Under former section 303,

the Department could assess (or ``levy'') countervailing duties without

an injury determination on two types of imports: (i) Dutiable

merchandise from countries that were not signatories of the 1979

Subsidies Code or ``substantially equivalent'' agreements (otherwise

known as ``countries under the Agreement''), and (ii) duty-free

merchandise from countries that were not signatories of the 1947

General Agreement on Tariffs and Trade (1947 GATT). See S. Rep. No.

249, 96th Cong. 1st Sess. 103-06 (1979); H. Rep. No. 317, 96th Cong.

1st Sess. 43, 49-50 (1979).

When these countervailing duty orders were issued, Wool, Leather,

Cold-Rolled and OCTG, were dutiable. Also,

[[Page 41362]]

at that time, Argentina was not a ``country under the Agreement'' and,

therefore, U.S. law did not require injury determinations as a

prerequisite to the issuance of these orders.

II. Ruling by the Court of Appeals for the Federal Circuit on Ceramic

Tile From Mexico

On September 6, 1995, the Court of Appeals for the Federal Circuit

(``Federal Circuit'') held, in a case involving imports of dutiable

ceramic tile, that once Mexico became a ``country under the Agreement''

on April 23, 1985 pursuant to the Understanding between the United

States and Mexico Regarding Subsidies and Countervailing Duties (the

Mexican MOU), the Department could not assess countervailing duties on

ceramic tile from that country under former section 303(a)(1) of the

Act. Ceramica Regiomontana v. United States, 64 F.3d 1579, 1582 (Fed.

Cir. 1995) (Ceramica). ``After Mexico became a `country under the

Agreement,' the only provision under which ITA could continue to impose

countervailing duties was section 1671.'' Id. One of the prerequisites

to the assessment of countervailing duties under 19 U.S.C. Sec. 1671

(1988), according to the court, is an affirmative injury determination.

See also Id. at Sec. 1671e. However, at the time the countervailing

duty order on ceramic tile was issued, the requirement of an

affirmative injury determination under U.S. law was not applicable.

Therefore, the court looked to see whether the statute contained any

transition rules when Mexico became a country under the Agreement which

might provide the order on tile with the required injury test.

Specifically, the court looked at section 104(b) of the Trade

Agreements Act of 1979, Pub. L. No. 96-39 (July 20, 1979) (1979 Act).

Section 104(b) was designed to provide an injury test for certain

countervailing duty orders issued under former section 303 prior to the

effective date of the 1979 Act (which established Title VII and, in

particular, section 701 of the Act). However, in order to induce other

countries to accede to the 1979 Subsidies Code (or substantially

equivalent agreements), the window of opportunity was intentionally

limited. In order to qualify (i) the exporting nation had to be a

country under the Agreement (e.g., a signatory of the Subsidies Code)

by January 1, 1980, (ii) the order had to be in existence on January 1,

1980 (i.e., the effective date of Title VII), and (iii) the exporting

country (or in some instances its exporters) had to request the injury

test on or before January 2, 1983.

In Ceramica, however, the countervailing duty order on ceramic tile

was issued in 1982 and Mexico did not become a country under the

Agreement until April 23, 1985. Therefore, the court held that in the

absence of an injury test and the statutory means to provide an injury

test, the Department could not assess countervailing duties on ceramic

tile and the court ordered the Department to revoke the order effective

April 23, 1985 (i.e., the date Mexico became a country under the

Agreement). Ceramica, 64 F.3d at 1583. As the court stated, once Mexico

became a ``country under the Agreement,'' ``[t]he only statutory

authority upon which Congress could impose duties was section 1671.

Without the required injury determination, Commerce lacked authority to

impose duties under section 1671.''

III. The Issue

On September 20, 1991, the United States and Argentina signed the

Understanding Between the United States of America and the Republic of

Argentina Regarding Subsidies and Countervailing Duties (Argentine

MOU). Section III of the Argentine MOU contains provisions

substantially equivalent to the provisions in the Mexican MOU that were

before the court in Ceramica. Therefore, on April 2, 1996, the

Department initiated the instant changed circumstances reviews in order

to determine whether it has the authority, in light of the Ceramica

decision, to assess countervailing duties on unliquidated entries of

merchandise made on or after September 20, 1991 (i.e., the effective

date of the Argentine MOU) which are covered by the orders on Leather

from Argentina, Wool from Argentina, OCTG from Argentina, and Cold-

Rolled from Argentina. See Initiation of Changed Circumstances

Countervailing Duty Administrative Reviews: Leather from Argentina,

Wool from Argentina, Oil Country Tubular Goods from Argentina, and

Cold-Rolled Carbon Steel Flat Products from Argentina, 61 FR 14553

(Apr. 2, 1996).

Final Results of Changed Circumstances Countervailing Duty Reviews and

Revocation or Amended Revocation of Countervailing Duty Orders

The orders on Leather, Wool, OCTG, and Cold-Rolled from Argentina

involve the same set of pertinent facts as the Department faced in

connection with the countervailing duty order on ceramic tile from

Mexico. For this reason, the Federal Circuit's decision in Ceramica

applies to the orders against Argentina, and requires the Department to

revoke these orders as of the date Argentina became a ``country under

the Agreement.''

First, at the time the countervailing duty orders on Mexico and

Argentina were issued, the requirement of an affirmative injury

determination under U.S. law was not applicable. Second, both countries

subsequently entered into substantially equivalent agreements with the

United States and, hence, became ``countries under the Agreement''

within the meaning of former section 303(a)(1) of the Act. Third, once

Mexico and Argentina qualified as countries under the Agreement, the

assessment of countervailing duties on subsequent entries of dutiable

merchandise became dependent upon a finding of subsidization and injury

in accordance with section 701 of the Act (i.e., section 1671). See

Ceramica, 64 F.3d at 1582. Fourth, none of the transition rules in

effect when both countries attained this status afforded the statutory

means of providing an injury test. Specifically, section 104 of the

1979 Act only applies to countervailing duty orders issued before

January 1, 1980 and section 753 did not exist on September 20, 1991.

Hence, as the Court stated in Ceramica, ``[W]ithout the required injury

determination, Commerce lacked authority to impose duties under section

1671.''

Pursuant to section 751(d) of the Act, the Department may revoke,

in whole or in part, a countervailing duty order if the Department

determines, based on a review under section 751(b)(1) of the Act, that

changed circumstances exist sufficient to warrant revocation. For the

foregoing reasons, and consistent with our determinations in Ceramic

Tile from Mexico, 61 FR 6630 (Feb. 21, 1996) and Leather Wearing

Apparel from Mexico, 61 FR 26163 (May 24, 1996), the Department has

determined that the Ceramica ruling requires revocation of these orders

and, therefore, the requirement for revocation based upon changed

circumstances has been met. Accordingly, we hereby amend our earlier

revocation of the order on Cold-Rolled steel by changing the effective

date from January 1, 1995 to September 20, 1991. For the orders on

Wool, Leather, and OCTG from Argentina, we are revoking these measures

effective September 20, 1991. These revocations will apply to all

unliquidated entries of subject merchandise entered or withdrawn from

warehouse for consumption on or after September 20, 1991.

[[Page 41363]]

Comments From Interested Parties

In our preliminary results, we invited interested parties to submit

comments on our intent to revoke the orders on Leather, Wool and OCTG,

and on our intention to amend the revocation of Cold-Rolled. With

respect to the countervailing duty orders on Leather and Wool, we

received written comments in opposition to our preliminary results from

a coalition of U.S. leather manufacturers consisting of Hermann-Oak

Leather Co., Howes Leather Co., Inc., Irving Tanning Co., Prime Tanning

Co., Inc., Salz Leather Co., S.B. Foot Tanning Co., Suncook Tanning

Corp., United Tanners, Inc., Westfield Tanning Co., and Wickett & Craig

of America, Inc. (the Coalition), and the American Sheep Industry

Association, Inc. (``ASI''), an association of U.S. wool producers

(hereinafter the Coalition and ASI will jointly be referred to as

``petitioners''). We also received written comments in support of our

preliminary results from the Government of Argentina (``GOA'') with

respect to all four countervailing duty orders. In connection with the

order on Leather, the Department received written (rebuttal) comments

from several importers that supported the preliminary results--

Leather's Best, Inc., Leather's Best, L.P., Salco Leather, Inc., and

Edsim Leather Company, Inc. (hereinafter collectively referred to as

``Edsim''). Finally, the American Textile Manufacturers Institute

(``ATMI'') also submitted written (rebuttal) comments in support of the

preliminary results on behalf of its member companies, some of which

are importers of wool.

Comment 1: While petitioners concede that the Federal Circuit's

decision in Ceramica applies to the orders against Argentina, they

argue that the Department has misconstrued the court's decision.

Contrary to what they assert is the Department's view, the petitioners

contend that the court did not mandate the revocation of the

countervailing duty order on ceramic tile because ``there was no

affirmative injury finding at * * * [the] precise time'' that Mexico

became a ``country under the Agreement.'' Rather, they assert, the

court ordered revocation because the domestic ceramic tile industry did

not request an injury test under section 753 of the Act and, therefore,

``there could never be an affirmative injury finding'' in connection

with the entries subject to the contested administrative review.

This situation, the petitioners argue, is quite different from the

situation the Department confronts in connection with the

countervailing duty orders on Wool and Leather from Argentina. Here,

they maintain, the domestic industries have requested an injury test

under section 753(a) for entries of Argentine wool and leather

occurring after January 1, 1995.

The GOA contends that the petitioners stretch the holding in the

Ceramica case ``beyond recognition.'' According to the GOA, the

Department's preliminary results fit squarely with the court's decision

that in the absence of statutory authority to maintain the orders under

section 303 of the Act, ``the Department's actions under section 701

were illegal.''

While Edsim generally supports the GOA's position, it has a

slightly different view of the Ceramica case. Edsim argues that the

central teaching of the Ceramica decision is that a countervailing duty

order is only viable if the Department has the statutory authority to

maintain it under either section 303 or 701 of the Act. If an order--

such as the one covering Leather from Argentina--``changes status so

that it does not satisfy the prerequisites of either statutory section,

then it becomes inoperative as of the date of the status change.''

Viewed in this light, Edsim argues, it is ``absurd'' to claim that

section 753, which did not take effect until January 1, 1995, could

apply to orders which were inoperative as of September 20, 1991.

Finally, the ATMI, which supports revocation of the order on Wool,

accuses petitioners of attempting to ``rewrite'' the Ceramica decision.

First, they claim that the decision does not turn on the absence of a

procedure (or mechanism) for providing an injury determination at some

future point in time. Second, they reject the claim made by petitioners

that the absence of a request for a section 753 injury investigation

was a key underpinning to the court's decision. ``If this were a basis

for the decision,'' the ATMI asserts, ``the majority or at least the

dissenting opinion certainly would have mentioned it * * *''

Department's Position: We disagree with petitioners. First, the

preliminary results do not rest on the belief that once Argentina

became a ``country under the Agreement,'' it was incumbent upon the

United States to provide an injury test in connection with the subject

orders ``at that precise time.'' Congress has never structured

transition rules, such as section 104(b) of the 1979 Act or section 753

of the Act, so that they provide an (affirmative or negative) injury

determination at the very moment when the status of the country covered

by an order changes.

Second, the failure of the domestic ceramic tile industry to

request an injury test under section 753 of the Act was not a

significant aspect of the court's decision. If it had been, presumably

the court would have discussed this fact in its opinion. What was

important to the court, as we explain above, was the absence of any

statutory authority to provide an injury test at the time Mexico became

entitled to such a test (i.e., when Mexico became a ``country under the

Agreement'').

When viewed in this, its proper light, the Ceramica decision

compels the revocation of the orders covering Leather, Wool, OCTG, and

Cold-Rolled from Argentina. In both situations, once Mexico and

Argentina qualified as countries under the Agreement, the assessment of

countervailing duties on subsequent entries of dutiable merchandise

became dependent upon a finding of subsidization and injury in

accordance with section 701 of the Act. See Ceramica, 64 F.3d at 1582.

However, none of the transition rules in effect when both countries

attained this status afforded the statutory means of providing an

injury test. Specifically, section 104 of the 1979 Act only applies to

countervailing duty orders issued before January 1, 1980, and section

753 did not come into effect until January 1, 1995.

Comment 2: Petitioners assert that the Department's preliminary

results read section 753 out of existence. According to the

petitioners, section 753 was designed to remedy the very problem (i.e.,

absence of an injury test) that arose in Ceramica. By stating in its

preliminary results that section 753 is not applicable to the orders

against Argentina, the Department, asserts petitioners, has violated a

fundamental principle of statutory construction that requires statutes

to be read so as to render all of their provisions meaningful.

Department's Position: The Department's position on section 753's

applicability to the Argentine orders is not based upon an

interpretation of the statute that is disputed by petitioners.

Petitioners concede that section 753 did not come into effect until

January 1, 1995, long after Argentina became a ``country under the

Agreement'' and the obligation to provide an injury test arose. As

explained above, the applicability of 753 to these orders turns on our

understanding of the holding in Ceramica. Therefore, the suggestion

that we are ``imputing a useless act to Congress'' is unfounded.

Section 753 is an important statutory provision which the

Department is committed to applying and, indeed, currently is applying

with respect to several outstanding countervailing duty

[[Page 41364]]

orders (i.e., Extruded Rubber Thread from Malaysia and Steel Wire Rope

from Thailand). However, it was not enacted into law until January 1,

1995. Therefore, consistent with the court's reasoning in Ceramica,

section 753 is not applicable to the Argentine orders under these

circumstances.

Comment 3: Petitioners maintain that revocation of the orders

against Argentina is contrary to the purpose of the unfair trade laws.

In particular, petitioners assert, it improperly and unnecessarily

harms them because the Department has not determined that the relevant

foreign producers are no longer being subsidized.

Department's Position: This comment reflects a criticism more

properly directed at the court's ruling in Ceramica, not the

Department's administration of the unfair trade laws as interpreted by

the judiciary. As we explain above, the Federal Circuit's decision in

Ceramica applies to the orders against Argentina, and requires the

Department to revoke these orders as of the date Argentina became a

``country under the Agreement.''

Comment 4: Petitioners argue that the instant changed circumstances

review is not applicable to entries that occurred before January 1,

1995 because the Department has already issued liquidation instructions

covering these entries. One year after entries are liquidated,

petitioners assert, they are ``deemed liquidated as a matter of law''

in accordance with 19 U.S.C. Sec. 1504(a). As such, these pre-1995

entries are ``no longer subject to the Commerce Department's

authority,'' and the Department has no authority to ``alter its

liquidation instructions.''

Edsim disagrees. First, it argues that the Department has not lost

jurisdiction over any of the subject entries. Therefore, Edsim asserts,

it is entirely proper for the Department to amend its previous

instructions to Customs. Second, Edsim claims that section 1504(a) does

not apply to the subject entries because their liquidation was

suspended pursuant to section 751(a) of the Act.

Department's Position: Edsim misconstrues both the language of

section 1504(a), and the interplay between this statutory provision and

19 CFR 355.22(g), the Department's regulation on automatic assessment.

When the Department does not receive a timely request for an

administrative review, it instructs Customs under the authority of 19

CFR 355.22(g) to assess countervailing duties on the entered

merchandise in question at rates equal to the cash deposit or bond

required on that merchandise at the time of entry or withdrawal from

warehouse for consumption. At that same time, because the statutory

assessment scheme is retroactive, the Department will also instruct

Customs to continue to suspend liquidation of covered merchandise which

enters during the following period of review and to collect the cash

deposit from importer(s) on all such merchandise.

Thus, merchandise entered into the United States covered by a

countervailing duty order is only subject to suspension of liquidation

until the time within which to request an administrative review has

passed. Thereafter, entered merchandise covered by the review period is

subject to automatic liquidation under 19 CFR 355.22(g) if no review

has been requested. Stated differently, unless an interested party

requests an administrative review of entered merchandise covered by a

specific period of review, the suspension of liquidation will be

terminated, and the Department will instruct Customs to liquidate the

merchandise pursuant to the regulation on automatic assessment. Customs

is then required, as a matter of law under 19 U.S.C.

Sec. 1675(a)(3)(B), to liquidate in accordance with our instructions.

Consequently, liquidation with regard to countervailing duties will be

carried out by Customs where no timely request for an administrative

review has been made regarding merchandise subject to a countervailing

duty order entered during a specific period of review, and Customs

receives instructions to liquidate from the Department.

With regard to subject merchandise imported by Edsim, the

Department received no request for an administrative review after the

countervailing duty order on Leather from Argentina was issued.

Therefore, the Department was required under 19 CFR 355.22(g), after

each review period where no timely request for an administrative review

was received, to instruct Customs to assess countervailing duties on

the imports which were entered or withdrawn during each applicable

period of review. In turn, Customs, pursuant to 19 U.S.C.

Sec. 1675(a)(3)(B), is to liquidate within 90 days after the Department

sends liquidation instructions, and under section 1504(d), any entry

covered by the instructions not liquidated within six months will be

deemed liquidated at the rate of duty asserted at the time of entry.

In sum, the Department no longer has jurisdiction over liquidated

entries and cannot amend its liquidation instructions, as Edsim

requests. See, e.g., Zenith Radio Corp. v. United States, 710 F.2d 806

(Fed. Cir. 1983). For this reason, the Department expressly limited its

preliminary results to all unliquidated entries occurring on or after

September 20, 1991.

Instructions to U.S. Customs Service

We are instructing the U.S. Customs Service to terminate the

suspension of liquidation and liquidate all unliquidated entries of the

subject merchandise entered or withdrawn from warehouse for consumption

on or after September 20, 1991, without regard to countervailing

duties. We are also instructing the U.S. Customs Service to refund with

interest any estimated countervailing duties collected with respect to

those entries. We note that the requirements for a cash deposit of

estimated countervailing duties were previously terminated in

conjunction with the section 753 determination covering cold-rolled

steel.

This notice is published in accordance with section 751(b)(1) of

the Act (19 U.S.C. 1675(b)(1)) and 19 C.F.R. Sec. 355.22(h).

Dated: July 25, 1997.

Jeffrey P. Bialos,

Acting Assistant Secretary for Import Administration.

Appendix--Scope of the Reviews

I. OCTG From Argentina

Imports covered by this review include shipments of Argentine

OCTG. OCTG include hollow steel products of circular cross-section

intended for use in the drilling of oil or gas and oil well casing,

tubing and drill pipe or carbon or alloy steel, whether welded or

seamless, manufactured to either American Petroleum Institute or

proprietary specifications. The scope covers both finished and

unfinished OCTG. The products covered in this review are provided

for under item numbers of the Harmonized Tariff Schedule (HTS):

7304.20.20, 7304.20.40, 7304.20.50, 7304.20.60, 7304.20.80,

7304.39.00, 7304.51.50, 7304.20.70, 7304.59.60, 7304.59.80,

7304.90.70, 7305.20.40, 7305.20.60, 7305.20.80, 7305.31.40,

7305.31.60, 7305.39.10, 7305.39.50, 7305.90.10, 7305.90.50,

7306.20.20, 7306.20.30, 7306.20.40, 7306.20.60, 7306.20.80,

7306.30.50, 7306.50.50, 7306.60.70, 7306.90.10. The HTS subheadings

are provided for convenience and Customs purposes. The written

description remains dispositive.

II. Wool From Argentina

Imports covered by this review include shipments of Argentine

wool finer than 44s and not on the skin. These products are provided

for under HTS item numbers: 5101.11.60, 5101.19.60, 5101.21.40, and

5101.29.40. The HTS subheadings are provided for convenience and

Customs purposes. The written description remains dispositive.

[[Page 41365]]

III. Leather From Argentina

Imports covered by this review include shipments of Argentine

leather. The types of leather that are covered include bovine

(excluding upper and lining leather not exceeding 28 square feet,

buffalo leather, and upholstery leather), sheep (excluding vegetable

pretanned sheep and lambskin leather), swine, reptile (excluding

vegetable pretanned and not fancy reptile leather), patent leather,

calf and kip patent laminated, and metalized leather. Leather is an

animal skin that has been subjected to certain treatment to make it

serviceable and resistant to decomposition. It is used in the

footwear, clothing, furniture and other industries. The types of

leather included within the scope are currently classified under HTS

item numbers 4104.10.60, 4104.10.80, 4104.21.00, 4104.22.00,

4104.29.50, 4104.29.90, 4104.31.50, 4104.31.60, 4104.31.80,

4104.39.50, 4104.39.60, 4104.39.80, 4105.12.00, 4105.19.00,

4105.20.30, 4105.20.60, 4107.10.00, 4107.29.60, 4107.90.30,

4107.90.60, 4109.00.30, 4109.00.40, and 4109.00.70. The HTS

subheadings are provided for convenience and Customs purposes. The

written description remains dispositive.

IV. Cold-Rolled From Argentina

Imports covered by this review include shipments of Argentine

cold-rolled carbon steel flat products, whether or not corrugated or

crimped; whether or not painted or varnished and whether or not

pickled; not cut, not pressed, and not stamped to non-rectangular

shape; not coated or plated with metal; over 12 inches in width and

under 0.1875 inches in thickness whether or not in coils; as

currently provided for under the following item numbers of the HTS:

7209.11.00, 7209.12.00, 7209.13.00, 7209.14.00, 7209.21.00,

7209.22.00, 7209.23.00, 7209.24.00, 7209.31.00, 7209.32.00,

7209.33.00, 7209.34.00, 7209.41.00, 7209.42.00, 7209.43.00,

7209.44.00, 7209.90.00, 7210.70.00, 7211.30.50, 7211.41.70,

7211.49.50, 7211.90.00, 7212.40.50. The HTS item numbers are

provided for convenience and Customs purposes. The written

description remains dispositive.

[FR Doc. 97-20379 Filed 7-31-97; 8:45 am]

BILLING CODE 3510-DS-P