Proposed Regulation Concerning the Revocation of Antidumping Duty Orders

DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 990521142-9142-01]

RIN 0625-AA54

Proposed Regulation Concerning the Revocation of Antidumping Duty

Orders

AGENCY: Import Administration, International Trade Administration,

Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Commerce (the ``Department'' or ``DOC'') is

proposing to amend 19 CFR 351.222(b), which governs the revocation of

antidumping duty orders, in whole or in part, based upon an absence of

dumping. The proposed regulation is intended to conform the existing

regulation to the United States' obligations under Article 11 of the

Agreement on the Implementation of Article VI of the General Agreement

on Tariffs and Trade 1994 (``Antidumping Agreement'' or ``AD

Agreement''). The proposed regulation, if adopted, would allow the

Secretary to revoke an antidumping duty order if the Secretary

concludes that producers or exporters did not sell subject merchandise

at less than normal value for at least three consecutive years and that

the continued application of the antidumping duty order as to those

producers or exporters is no longer necessary to offset dumping.

DATES: To be assured of consideration, written comments must be

received not later than July 6, 1999.

ADDRESSES: A signed original and two copies of each set of comments

including reasons for any recommendation, along with a cover letter

identifying the commenter's name and address, should be submitted to

Robert S. LaRussa, Assistant Secretary for Import Administration,

Central Records Unit, Room 1870, U.S. Department of Commerce,

Pennsylvania Avenue and 14th Street, NW, Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT: Melissa G. Skinner, Office of Policy,

Import Administration, U.S. Department of Commerce, at (202) 482-1560,

or Myles S. Getlan, Office of the Chief Counsel for Import

Administration, U.S. Department of Commerce, at (202) 482-5052.

SUPPLEMENTARY INFORMATION:

Background:

On July 24, 1997, the Department issued the final results of the

third administrative review of the antidumping duty order on Dynamic

Random Access Memory Semiconductors (DRAMs) Of One Megabit Or Above

From Korea (62 FR 39809)(``DRAMs From Korea''), in which the Department

considered the respondents'' request that the Department revoke the

order, in part, under 19 CFR 353.25(a)(1996) (the precursor to 19 CFR

351.222(b)). Pursuant to this regulation, the Department may revoke an

order, in whole or in part, if (1) producers and/or exporters have sold

subject merchandise at not less than normal value for three consecutive

years; and (2) the Secretary concludes that it is not likely that those

producers and/or exporters will in the future sell subject merchandise

at not less than normal value. Applying this regulation in DRAMs From

Korea, the Department did not revoke the order because the second

criterion had not been met.

On January 29, 1999, a panel established by the Dispute Settlement

Body (DSB) of the World Trade Organization (WTO) determined that the

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``not likely'' standard contained in 19 CFR 353.25(a)(2) was

inconsistent with the United States' obligations under Article 11.2 of

the WTO Antidumping Agreement. The panel recommended that the United

States ``bring section 353.25(a)(2)(ii) of the DOC regulations

. . . into conformity with its obligations under Article 11.2 of the AD

Agreement.'' The DSB adopted the panel report on March 19, 1999. On

April 15, 1999, the United States announced its intention to implement

the recommendations and rulings of the DSB. Consistent with section

123(g) of the Uruguay Round Agreements Act, which governs the

Department's implementation of adverse panel reports, the Department is

revising 19 CFR 351.222(b).

Explanation of the Proposed Regulation

Pursuant to 19 CFR Sec. 351.222(b)(1998), the Department may revoke

an antidumping duty order, in its entirety or with respect to certain

exporters or producers, if several criteria are met. In order to revoke

an order, the Secretary must conclude that the exporter or producer has

not sold subject merchandise at less than normal value for three

consecutive years and that ``[i]t is not likely that those persons will

in the future sell the subject merchandise at less than normal value.''

See 19 CFR 351.222(b)(1) and (2).

In its report to the DSB, the Panel considered the consistency of

the ``not likely'' standard described above with the obligations

contained in Article 11.2 of the Antidumping Agreement. See United

States--Anti-Dumping Duty On Dynamic Random Access Memory

Semiconductors (DRAMS) Of One Megabit Or Above From Korea, WT/DS99/R

(adopted March 19, 1999) (``Panel Report''). Article 11.2 of the

Antidumping Agreement provides:

The authorities shall review the need for the continued

imposition of the duty, where warranted, on their own initiative or,

provided that a reasonable period of time has elapsed since the

imposition of the definitive anti-dumping duty, upon request by any

interested party which submits positive information substantiating

the need for a review. Interested parties shall have the right to

request the authorities to examine whether the continued imposition

of the duty is necessary to offset dumping, whether the injury would

be likely to continue to recur if the duty were removed or varied,

or both. If, as a result of the review under this paragraph, the

authorities determine that the anti-dumping duty is no longer

warranted, it shall be terminated immediately.

As demonstrated by the language of Article 11.2, in reviewing the

need for the continued application of an antidumping duty, the

Department is obligated to terminate the duty if the Department

concludes ``that the anti-dumping duty is no longer warranted.'' In

interpreting the obligations contained in Article 11.2, the Panel

concluded that an absence of dumping does not, in and of itself,

require the revocation of an antidumping duty order. See Panel Report

at para. 6.34. Thus, insofar as the Department's regulation requires

exporters or producers requesting revocation to have sold subject

merchandise at not less than normal value for at least three

consecutive years prior to revocation, the Panel concluded that the

Department's regulation is consistent with the United States' WTO

obligations.

The Panel then considered whether requiring a finding that a

recurrence of dumping is ``not likely'' before revoking an order was

consistent with Article 11.2. In this regard, the Panel noted that

Article 11.2 requires authorities ``to examine whether the continued

imposition of the duty is necessary to offset dumping.'' The Panel

described this obligation as follows:

We note that the necessity of the measure is a function of

certain objective conditions being in place, i.e. whether

circumstances require continued imposition of the anti-dumping duty.

That being so, such continued imposition must, in our view, be

essentially dependent on, and therefore assignable to, a foundation

of positive evidence that circumstances demand it. In other words,

the need for the continued imposition of the duty must be

demonstrable on the basis of the evidence adduced.

Panel Report at para. 6.42.

As noted above, the Panel affirmed the Department's ability to

maintain an antidumping duty order in the absence of present dumping,

thus validating the Department's prospective analysis in determining

the need for the continued application of an order. In addition, the

Panel recognized that such a prospective analysis is inherently

uncertain. However, while ``[m]athematical certainty is not required, .

. . the conclusions should be demonstrable on the basis of the evidence

adduced.'' Panel Report at para. 6.43. In this regard, the Panel

determined that the Department's ``not likely'' standard does not

provide a requisite degree of predictive assurance in performing a

prospective analysis nor does it provide ``any demonstrable basis on

which to reliably conclude that the continued imposition of the duty is

necessary to offset dumping.'' Id. at para. 6.50. Thus, the Panel

concluded that the ``not likely'' criterion contained in 19 CFR

353.25(a)(2)(ii) (currently 19 CFR 351.222(b)) is inconsistent with

Article 11.2 of the Antidumping Agreement.

In implementing the Panel's findings with respect to the revocation

regulation, we sought to reform the regulation in a manner that will

require the Department's determination of whether to revoke an order to

be based upon positive evidence. In adopting the Panel Report, we

recognize the Panel's conclusion that the ``not likely'' standard may,

on its face, allow the Department in certain cases to maintain an order

in the absence of positive evidence suggesting the necessity of

maintaining the order to offset dumping. In this regard, we are

confident that the revised standard provides the appropriate degree of

predictive assurance required in a prospective analysis and provides a

demonstrable basis upon which to reliably conclude whether maintaining

the antidumping duty order is warranted.

While the Panel interpreted ``not likely'' on the basis of its

common meaning and usage, the Panel's ruling was not based upon the

Department's application of the standard in DRAMs from Korea or any

other prior case in which the standard was applied. In addition, the

Panel affirmed the Department's prospective analysis in considering

whether to revoke an antidumping duty order. We took these factors into

account in revising the revocation regulation.

The Department's analysis of whether to revoke antidumping duty

orders based upon an absence of dumping has always implicitly addressed

whether the continued application of an antidumping duty order is

necessary to offset dumping. Therefore, since Article 11.2 itself

provides a standard by which to measure the continued applicability of

an antidumping duty order, promulgating an additional standard is not

necessary to fulfill the United States' international obligations.

Stated differently, the requirement contained in Article 11.2 that

authorities examine the necessity of maintaining an antidumping duty

constitutes a transparent, meaningful standard that can be incorporated

into the Department's current statutory and regulatory scheme.

In previous cases, the Department has applied 19 CFR 353.25(a)(2),

now Sec. 351.222(b), in administrative reviews where an exporter or

producer requested revocation and established that it had sold subject

merchandise at not less than normal value for at least three

consecutive years. The Department has consistently considered that an

absence of dumping for three consecutive years was indicative that a

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foreign respondent was ``not likely'' to sell at less than normal value

in the future. Thus, the absence of dumping for three consecutive years

served as a presumption in favor of revoking the order, which could be

rebutted by positive evidence indicating that dumping may recur if the

order were revoked. Such evidence reflected the likelihood that

respondents would dump in the future. In this regard, we note that the

Panel considered that evidence of likelihood of future dumping was

relevant to a determination under Article 11.2, and suggested that one

way to meet the requirements of the Antidumping Agreement would be to

promulgate a standard which required a finding that respondents are

likely to dump in the future before maintaining an order. See Panel

Report at para. 6.48 n. 494.

It is the Department's view that the Panel's findings with respect

to the ``not likely'' standard does not necessitate a wholesale change

in the practice described above. When requested to revoke an

antidumping duty order based upon an absence of dumping for three

consecutive years, the Department intends to continue its practice of

revoking orders in the absence of any other record evidence indicating

that the continued application of the order is necessary to offset

dumping. When additional evidence is placed on the record, the

Department will fully consider all relevant factors as to whether the

continued application of the order is necessary to offset dumping.

Factors considered in prior cases relating to the likelihood of future

dumping would still be deemed relevant under the ``necessary'' standard

derived from Article 11.2 of the Antidumping Agreement. That is, the

Department may consider trends in prices and costs, investment,

currency movements, production capacity, as well as all other market

and economic factors relevant to a particular case. An analysis of this

evidence, we believe, provides a demonstrable basis upon which to

reliably conclude whether the continued application of an antidumping

duty order is necessary to offset dumping and provides the appropriate

degree of predictive assurance required in a prospective analysis.

Effective Date

Pursuant to section 123(g)(2) of the Uruguay Round Agreements Act

(``URAA'')(19 U.S.C. 3533(g)(2)), the final amended regulation may not

become effective until the end of the 60-day period beginning on the

date on which the Department and the Office of the U.S. Trade

Representative undertake consultations with the appropriate

congressional committees concerning the proposed contents of the final

rule. Since the date of consultations has not yet been determined, we

are unable to determine the effective date at this time. If the

proposed regulation is adopted, we will publish the effective date in

the notice of final rulemaking based upon the date on which the Office

of the U.S. Trade Representative and the Department consults with

Congress.

Classification

E.O. 12866

This proposed rule has been determined to be not significant under

E.O. 12866.

Paperwork Reduction Act

This proposed rule contains no new collection of information

subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

E.O. 12612

This proposed rule does not contain federalism implications

warranting the preparation of a Federalism Assessment.

Regulatory Flexibility Act

The Chief Counsel for Regulation of the Department of Commerce has

certified to the Chief Counsel for Advocacy of the Small Business

Administration that this proposed rule, if adopted, would not have a

significant economic impact on a substantial number of small entities.

The Department's existing regulations provide a procedural and

substantive process by which the Secretary considers whether to revoke

an antidumping duty order. The proposed rule retains the current

procedural process and revises the substantive standard used by the

Secretary to make the appropriate revocation determination. As

discussed above, the proposed regulation would not significantly change

the Department's practice in determining whether to maintain an

antidumping duty order. Moreover, as the proposed regulation only

changes the standard by which the Department considers whether to

revoke an antidumping duty order, this action, in and of itself, will

not have a significant economic impact. Therefore, the Chief Counsel

concluded that the proposed rule would not have a significant impact on

a substantial number of small business entities, and a regulatory

flexibility analysis was not prepared.

List of Subjects in 19 CFR Part 351

Administrative practice and procedure, Antidumping duties, Business

and industry, Cheese, Confidential business information, Countervailing

duties, Investigations, Reporting and recordkeeping requirements.

Dated: May 27, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

For the reasons stated, it is proposed that 19 CFR Sec. 351.222(b)

is amended to read as follows:

PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES

Subpart A--Scope and Definitions

1. The authority citation for part 351 continues to read as

follows:

Authority: 5 U.S.C. 301, 19 U.S.C. 1202 note; 19 U.S.C. 1303

note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.

Subpart B--Antidumping and Countervailing Duty Procedures

2. Section 351.222 is amended by revising paragraph (b) to read as

follows:

Sec. 351.222 Revocation of orders; termination of suspended

investigations

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(b) Revocation or termination based on absence of dumping. (1) The

Secretary may revoke an antidumping order or terminate a suspended

antidumping investigation if the Secretary concludes that:

(i) All exporters and producers covered at the time of revocation

by the order or the suspension agreement have sold the subject

merchandise at not less than normal value for a period of at least

three consecutive years; and

(ii) The continued application of the antidumping duty order is no

longer necessary to offset dumping.

(2) The Secretary may revoke an antidumping order in part if the

Secretary concludes that:

(i) One or more exporters or producers covered by the order have

sold the merchandise at not less than normal value for a period of at

least three consecutive years;

(ii) The continued application of the antidumping duty order as to

those persons is no longer necessary to offset dumping; and

(iii) Provided that, for any exporter or producer that the

Secretary previously has determined to have sold the subject

merchandise at less than normal value, the exporter or producer agrees

in writing to its immediate reinstatement

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in the order, as long as any exporter or producer is subject to the

order, if the Secretary concludes that the exporter or producer,

subsequent to the revocation, sold the subject merchandise at less than

normal value.

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[FR Doc. 99-14098 Filed 6-2-99; 8:45 am]

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