Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties

DEPARTMENT OF COMMERCE

International Trade Administration

Antidumping and Countervailing Duty Proceedings: Assessment of

Antidumping Duties

AGENCY: International Trade Administration/Import Administration,

Department of Commerce.

ACTION: Notice and request for comment on policy concerning assessment

of antidumping duties and request for comment.

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SUMMARY: The Department of Commerce (the Department) has observed that

there is confusion among parties importing merchandise into the United

States subject to an antidumping duty order about the application of

the Department's regulation on automatic liquidation where a reseller

has been involved in the chain of commerce for merchandise. This notice

clarifies the Department's interpretation of its automatic-liquidation

regulation and requests public comment before it adopts a final

interpretation.

FOR FURTHER INFORMATION CONTACT: Joan L. MacKenzie, Senior Attorney,

Office of the Chief Counsel for Import Administration, (202) 482-1310,

or Laurie Parkhill, Director, Office 3, Import Administration, (202)

482-4733.

SUPPLEMENTARY INFORMATION: This notice proposes to clarify the

Department's regulation on automatic liquidation at 19 CFR 351.212(c).

At issue is whether a producer's company-specific cash deposit rate can

serve as

[[Page 55362]]

the basis for automatic liquidation under section 351.212(c) where an

intermediary (e.g., a reseller, a trading company, an exporter) exports

the merchandise and where the entries are suspended at the producer's

cash-deposit rate. This notice uses the term ``reseller'' to apply to

any intermediary that could be an interested party as defined in

section 771(9)(A) of the Tariff Act of 1930, as amended (the Act).

Summary of Proposed Clarification

As discussed in detail below, the Department's position is that

automatic liquidation at the cash deposit rate required at the time of

entry can only apply to a reseller if no administrative review has been

requested, either of the reseller or of any producer of the merchandise

the reseller exported to the United States, and the reseller does not

have its own cash deposit rate. If the Department conducts a review of

a producer of the reseller's merchandise where entries of the

merchandise were suspended at the producer's rate, automatic

liquidation will not apply to the reseller's sales. If, in the course

of an administrative review, the Department determines that the

producer knew that the merchandise it sold to the reseller was destined

for the United States, the reseller's merchandise will be liquidated at

the producer's assessment rate which the Department calculates for the

producer in the review. If, on the other hand, the Department

determines in the administrative review that the producer did not know

that the merchandise it sold to the reseller was destined for the

United States, the reseller's merchandise will not be liquidated at the

assessment rate the Department determines for the producer or

automatically at the rate required as a deposit at the time of entry.

In that situation, the entries of merchandise from the reseller during

the period of review will be liquidated at the all-others rate if there

was no company-specific review of the reseller for that review period.

Effective Date

The Department proposes that this clarification apply to all

entries for which the anniversary date for requesting an administrative

review is on or after the date of publication of a final notice on this

issue.

Discussion

The longstanding principle behind the Department's assessment

policy is that company-specific assessment rates must be based on the

sales information of the first company in the commercial chain that

knew, at the time the merchandise was sold, that the merchandise was

destined for the United States. See, e.g., Stainless Steel Sheet and

Strip Products from the Federal Republic of Germany, 48 FR 20459, 20460

(1983); Small Business Telephone Systems and Subassemblies from Korea,

54 FR 53141, 53147-48 (1989); Oil County Tubular Goods from Canada, 55

FR 50739, 50740 (1990); Chrome-Plated Lug Nuts from Taiwan, 56 FR 36130

(1991); Antifriction Bearings (Except Tapered Roller Bearings) and

Parts Thereof from Japan, 56 FR 31754, 31756 (1991); Television

Receivers from Japan, 58 FR 11211, 11216 (1993). If dumping is

occurring, the company that sets the price of the merchandise sold in

the United States is responsible for the dumping, and any company-

specific assessment rate must reflect that company's sales prices to

the United States.

The existence of dumping is initially determined in a less-than-

fair-value investigation. The Department investigates all producers,

where practicable (19 CFR 351.204(c)). It also investigates other

foreign interested parties, if there are resources to do so, although

it is seldom possible to investigate resellers in an antidumping

investigation (19 CFR 351.204(d)). If the Department makes a

preliminary affirmative determination that dumping is occurring, it

calculates company-specific weighted-average dumping margins for

investigated companies (19 CFR 351.204(c)). These dumping margins are

estimates of dumping activity. The Department also calculates an ``all-

others'' dumping margin, which is the simple average of the calculated

company-specific margins. This rate applies to entries of merchandise

from producers and exporters for which the Department has not

established a company-specific rate.

The Department publishes a notice in the Federal Register of its

preliminary determination and orders the U.S. Customs Service to

collect a bond or cash deposit at the time the merchandise subject to

the investigation enters the United States (19 CFR 351.205(d)). The

bond/cash deposits serve as security for the final amount of dumping

liability. The estimated dumping margins the Department determines in

the investigation set the bond/cash deposit rate; in other words, the

producer's company-specific dumping margin which the Department

determines is the bond/cash deposit rate for merchandise produced by

that producer and imported into the United States.

After notice and opportunity for comment, the Department calculates

final dumping margins. If the International Trade Commission makes a

final affirmative determination that the dumping is causing injury to

the U.S. industry, the Department publishes an antidumping duty order

and instructs the Customs Service to continue to collect a cash deposit

at the time the merchandise subject to the order enters the United

States; bonds are no longer an option for importers to post as security

(19 CFR 351.211).

The Department instructs Customs to apply any reseller's company-

specific cash deposit rate to entries of merchandise sold by that

reseller. If there is no company-specific reseller cash deposit rate

and the importer identifies the producer, the Department instructs

Customs to apply the producer's cash deposit rate to the entry. This

logic stems from the fact that, when subject merchandise enters the

United States through a reseller, the Department does not know who set

the price of the subject merchandise to the United States. The

Department instructs Customs to apply the producer's cash deposit rate

where the producer of the merchandise is identified on the assumption

that the producer knew that the merchandise was destined for the United

States. This assumption is more often true than not. Subject

merchandise sold through a reseller and imported where there is no

company-specific reseller rate or where the importer did not identify

the producer of the merchandise is subject to the all-others cash

deposit rate.

After the passage of a year from the month the antidumping duty

order was published (called the anniversary month) and annually

thereafter, interested parties must decide whether to ask the

Department to conduct an administrative review of sales for the past

year under section 751(a)(1) of the Act. Reasons for such requests will

vary; generally, a party will request a review of a producer or of an

exporter with its own rate because the party believes the actual

dumping liability is higher or lower than the cash deposit. Parties may

decide to request a review of a reseller which does not have its own

rate because they believe the actual dumping liability is higher or

lower than the cash deposit or, if the producer which supplied the

reseller is reviewed, the all-others rate.

During the anniversary month, a domestic interested party or an

interested party described in section 771(9)(B) of the Act may request

in writing that the Secretary conduct an administrative review of

specified

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individual exporters or producers covered by an order if the requesting

person states why the person desires the Secretary to review those

particular exporters or producers (19 CFR 351.213). During the same

month, an exporter or producer covered by an order may request that the

Secretary conduct an administrative review of only that person. Also

during the anniversary month, an importer of the merchandise may

request that the Secretary conduct an administrative review of only an

exporter or producer of the subject merchandise which that importer

imported into the United States.

If no interested party requests a review of a producer's sales,

automatic liquidation applies to entries of merchandise exported by

that producer (19 CFR 351.212(b)). Because no review has been

requested, there is no reason to continue to suspend liquidation of the

entries. The producer's cash deposit rate at the time of entry serves

as the assessment rate for the entries during that period. Likewise,

entries of a producer's merchandise sold to the United States by a

reseller will be liquidated at the producer's cash deposit rate (if

there is no company-specific rate for the reseller at the time of entry

and no review of the reseller or the producer has been requested).

Because no review has been requested for either the producer or the

reseller, no one is challenging the assumption, which the Department

made when it assigned the producer's cash deposit rate to the entries

from the reseller, that the producer set the price of the merchandise

which the reseller sold to the United States.

If, however, an interested party requests the Department to conduct

a review of the producer's sales, the review applies to all sales of

the producer, including any sales to resellers of the producer's

merchandise, unless the reseller had its own company-specific rate at

the time of entry and the producer did not know that the sales to the

reseller were destined for the United States. In conducting the review

the Department will determine whether the producer or the reseller set

the price of the merchandise to the United States, based on evidence

submitted on the record of the review.

During the course of any administrative review, the Department

sends questionnaires to the foreign companies for which reviews have

been initiated, seeking extensive information on the companies' sales

to the United States and foreign market sales. A company reports sales

that it knew at the time of the sale were destined for the United

States as its U.S. sales. At the conclusion of the review the

Department instructs Customs to assess antidumping duties at the

producer's company-specific (or, as applicable, customer-specific)

assessment rate which the Department determined in conducting the

review.

The producer will report sales of the subject merchandise for which

it did not know the destination of the merchandise as foreign market

sales. These may include sales to resellers of merchandise that

ultimately came to the United States without the producer's knowledge

where the entries of the merchandise were suspended at the producer's

cash deposit rate. Because the producer did not set the price to the

United States for these sales, these entries of this merchandise will

not be assessed final antidumping duties at the producer's rate at the

conclusion of the review. The rate instead will be based on the

interested party in the chain of commerce that actually set the price

to the United States. If the Department did not conduct a review of

that party, however, there is no company-specific rate applicable to

these entries. In the absence of a company-specific rate, the

Department will base the assessment rate on the ``all-others'' rate.

Confusion has arisen because of the Department's practice of

assigning the producer's cash deposit rate to resellers' merchandise

that identifies the producer at the time of entry. Resellers have

asserted that, if the Department determined during the review that the

producer did not set the price of the reseller's merchandise to the

United States, entries of such merchandise are subject to automatic

liquidation at the rate required at the time of entry because no one

requested a review of the reseller. This is inconsistent with the

Department's assessment policy, however, that company-specific

assessment rates must be based on the sales information of the first

company in the commercial chain that knew, at the time the merchandise

was sold, that the merchandise was destined for the United States.

Since the evidence in the record of the administrative review shows

that the producer did not set the price of those sales, the assessment

of duties on merchandise exported by the resellers cannot be based on

the producer's rate. As no review of the reseller's sales was

conducted, there is no company-specific data on which to base a

company-specific reseller rate. Therefore, the only appropriate

assessment rate is the all-others rate.

This practice has been upheld by the Court of International Trade

(CIT). A similar issue arose in litigation involving televisions from

Japan (ABC International v. United States, 19 C.I.T. 787 (1995)). In

this case ABC imported televisions from Japan, identifying the

producers as Sharp, Toshiba, and JVC. The cash deposit rates for

merchandise produced by these producers were zero at the time of entry.

Because the importer identified the producer at the time of entry, the

Department required the importer to deposit estimated antidumping

duties at the producer's cash deposit rate. The Department then

conducted an administrative review of the producers. Liquidation of

ABC's entries was suspended during the conduct of the review, since the

producers identified at the time of entry were subject to review. The

review resulted in margins for the producers that ranged from 20 to 40

percent, and the Department ordered liquidation of all entries of

merchandise produced by these firms (including ABC's entries) at the

producers' rates determined in the administrative review. ABC did not

participate in the review.

After the entries were liquidated, ABC sued the Department,

alleging that its entries should have been liquidated automatically at

the zero cash deposit rate because its entries were not reviewed. The

Department took the position that, because the review was closed and

because ABC did not either participate in the review of the producers

or request a review of the exporter/reseller, it was foreclosed from

raising the issue in a protest. The CIT upheld the Department, noting

that automatic liquidation applies only where there was no review of

the reseller or the producer of the reseller's merchandise.

The Department recognizes that this policy will increase the need

of resellers to participate in the Department's proceedings. If a

reseller believes that the producer is not setting the price to the

United States, it should participate in the administrative review on

this issue. The only way that reseller or exporter can have its own

company-specific rate is to have an administrative review of its own.

The Department invites comments on this clarification. Written

comments are due October 30, 1998. Address written comments to Robert

S. LaRussa, Assistant Secretary for Import Administration, Dockets

Center, Room 1870, Pennsylvania Avenue and 14th Street , N.W.,

Washington, D.C. 20230. Attention: Laurie Parkhill, Comment on

Automatic Liquidation.

[[Page 55364]]

Dated: October 8, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-27729 Filed 10-14-98; 8:45 am]

BILLING CODE 3510-DS-P