Final Results of Expedited Sunset Review: Industrial Nitrocellulose From the Republic of Korea

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-805]

Final Results of Expedited Sunset Review: Industrial

Nitrocellulose From the Republic of Korea

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of expedited sunset review: Industrial

Nitrocellulose from the Republic of Korea.

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SUMMARY: On June 1, 1999, the Department of Commerce (``the

Department'') initiated a sunset review of the antidumping order on

industrial nitrocellulose from the Republic of Korea (64 FR 29261)

pursuant to section 751(c) of the Tariff Act of 1930, as amended (the

``Act''). On the basis of a notice of intent to participate and

adequate substantive response filed on behalf of a domestic interested

party and inadequate response (in this case, no response) from

respondent interested parties, the Department determined to conduct an

expedited review. As a result of this review, the Department finds that

revocation of the antidumping duty order would be likely to lead to

continuation or recurrence of dumping at the levels indicated in the

Final Results of Review section of this notice.

FOR FURTHER INFORMATION CONTACT: Eun W. Cho or Melissa G. Skinner,

Office of Policy for Import Administration, International Trade

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

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

1698 or (202) 482-1560, respectively.

EFFECTIVE DATE: October 27, 1999.

Statute and Regulations

This review was conducted pursuant to sections 751(c) and 752(c) of

the Act. The Department's procedures for the conduct of sunset reviews

are set forth in Procedures for Conducting Five-Year (``Sunset'')

Reviews of Antidumping and Countervailing duty Orders, 63 FR 13516

(March 20, 1998) (``Sunset Regulations'') and 19 CFR Part 351 (1998) in

general. Guidance on methodological or analytical issues relevant to

the Department's conduct of sunset reviews is set forth in the

Department's Policy Bulletin 98:3--Policies Regarding the Conduct of

Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty

Orders; Policy Bulletin, 63 FR 18871 (April 16, 1998) (``Sunset Policy

Bulletin'').

Scope

The product covered by this order is industrial nitrocellulose

(``nitrocellulose'') from the Republic of Korea. Industrial

nitrocellulose is a dry, white, amorphous synthetic chemical with a

nitrogen content between 10.8 and 12.2 percent, and is produced from

the reaction of cellulose with nitric acid. Industrial nitrocellulose

is used as a film-former in coatings, lacquers, furniture finishes, and

printing inks.

[[Page 57848]]

The scope of this order does not include explosive grade

nitrocellulose, which has a nitrogen content greater than 12.2 percent.

Industrial nitrocellulose is currently classifiable under Harmonized

Tariff Schedule (``HTS'') item number 3912.20.00. The HTS item number

is provided for convenience and customs purposes only. The written

description remains dispositive.

History of the Order

The antidumping duty order on nitrocellulose from the Republic of

Korea was published in the Federal Register on July 10, 1990 (55 FR

28266).1 In that order, the Department determined that the

weighted-average dumping margin for all entries of the subject

merchandise was 66.30 percent.2 Since that time, the

Department has completed one administrative review.3 We note

that, to date, the Department has not issued any duty absorption

findings in this case. The order remains in effect for all

manufacturers and exporters of the subject merchandise.

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\1\ See Antidumping Duty Order: Industrial Nitrocellulose from

the Republic of Korea, 55 FR 28266 (July 10, 1990).

\2\ However, the underlying investigation dealt with only one

Korean company, Miwon Company, Ltd. (``Miwon'').

\3\ See Industrial Nitrocellulose From the Republic of Korea;

Notice of Final Results of Antidumping Duty Administrative Review,

63 FR 60302 (November 9, 1998).

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Background

On June 1, 1999, the Department initiated a sunset review of the

antidumping duty order on nitrocellulose from the Republic of Korea

(``Korea'') (64 FR 29261), pursuant to section 751(c) of the Act. The

Department received a Notice of Intent to Participate on behalf of the

petitioner Hercules Incorporated (``Hercules''), on June 9, 1999,

within the deadline specified in section 351.218(d)(1)(i) of the Sunset

Regulations. Hercules asserts that it is not related to a foreign

producer, foreign exporter, or domestic importer of the subject

merchandise and that it is not an importer of the subject merchandise

except on an occasional spot basis. (See Hercules' June 9, 1999 Intent

to Participate at 2.)

We received a complete substantive response from Hercules on July

1, 1999, within the 30-day deadline specified in the Sunset Regulations

under section 351.218(d)(3)(i). Hercules claims interested party status

under section 771(9)(C) of the Act as a U.S. manufacturer, producer,

and wholesaler of the subject merchandise. In its substantive response,

Hercules indicates that it is the sole remaining U.S. producer of

nitrocellulose, was the petitioner in the original investigation, and

has participated in the administrative review proceeding. (See

Hercules' July 1, 1999 Substantive Response at 1-2.)

We did not receive a substantive response from any respondent

interested party to this proceeding. Consequently, pursuant to section

351.218(e)(1)(ii)(C) of the Sunset Regulations, the Department

determined to conduct an expedited, 120-day, review of this order.

In accordance with section 751(c)(5)(C)(v) of the Act, the

Department may treat a review as extraordinarily complicated if it is a

review of a transition order--an order which was in effect on January

1, 1995. See section 751(c)(6)(C) of the Act. The Department determined

that the sunset review of the antidumping duty order on industrial

nitrocellulose from Korea is extraordinarily complicated. Therefore, on

October 12, 1999, the Department extended the time limit for completion

of the preliminary results of this review until not later than December

28, 1999, in accordance with section 751(c)(5)(B) of the

Act.4

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\4\ See Extension of Time Limit for Final Results of Five-Year

Reviews, 64 FR 55233 (October 12, 1999).

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Determination

In accordance with section 751(c)(1) of the Act, the Department

conducted this review to determine whether revocation of the

antidumping order would be likely to lead to continuation or recurrence

of dumping. Section 752(c) of the Act provides that, in making this

determination, the Department shall consider the weighted-average

dumping margins determined in the investigation and subsequent reviews

and the volume of imports of the subject merchandise for the period

before and the period after the issuance of the antidumping order, and

shall provide to the International Trade Commission (``the

Commission'') the magnitude of the margin of dumping likely to prevail

if the order is revoked.

The Department's determinations concerning continuation or

recurrence of dumping and the magnitude of the margins are discussed

below. In addition, Hercules' comments with respect to continuation or

recurrence of dumping and the magnitude of the margins are addressed

within the respective sections below.

Continuation or Recurrence of Dumping

Drawing on the guidance provided in the legislative history

accompanying the Uruguay Round Agreements Act (``URAA''), specifically

the Statement of Administrative Action (``the SAA''), H.R. Doc. No.

103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1

(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the

Department issued its Sunset Policy Bulletin providing guidance on

methodological and analytical issues, including the bases for

likelihood determinations. In its Sunset Policy Bulletin, the

Department indicated that determinations of likelihood will be made on

an order-wide basis (see section II.A.2). In addition, the Department

indicated that normally it will determine that revocation of an

antidumping order is likely to lead to continuation or recurrence of

dumping where (a) dumping continued at any level above de minimis after

the issuance of the order, (b) imports of the subject merchandise

ceased after the issuance of the order, or (c) dumping was eliminated

after the issuance of the order and import volumes for the subject

merchandise declined significantly (see section II.A.3).

In addition to considering the guidance on likelihood cited above,

section 751(c)(4)(B) of the Act provides that the Department shall

determine that revocation of an order is likely to lead to continuation

or recurrence of dumping where a respondent interested party waives its

participation in the sunset review. In the instant review, the

Department did not receive a response from any respondent interested

party. Pursuant to section 351.218(d)(2)(iii) of the Sunset

Regulations, this constitutes a waiver of participation.

In its substantive response, Hercules asserts that the likelihood

of continuation or recurrence of dumping is high if the order is

revoked. (See July 1, 1999 substantive response of Hercules at 3-6). To

support this argument, Hercules notes a drastic decline in import

volumes of the subject merchandise immediately after the issuance of

the order. According to Hercules, after the imposition of the

antidumping order, imports of the subject merchandise completely

stopped.5 Id. The cessation of imports in the years

immediately after the issuance of the order, Hercules further argues,

is

[[Page 57849]]

highly probative of the likelihood of future dumping. Id.

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\5\ The order was imposed on July 10, 1990. (See footnote 1,

supra.) In 1989 and 1990, imports of the subject merchandise were

147 and 58 metric tons, respectively; however, during the period

1991 through 1998, the import volumes were as follows: 1991--0;

1992--0; 1993--0; 1994--0; 1995--0; 1996--0; 1997--18; and 1998--0

metric tons. (See July 1, 1999 substantive response of the Hercules,

Attachment 2.)

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Hercules also indicates that, for the past five years, imports of

the subject merchandise have been mostly at zero or near

zero.6 Id. According to Hercules, the small amount of

imports of the subject merchandise in 1997 was the result of Korean

producers/exporters' attempt to attain a reduced cash deposit rate in a

pending administrative review.7 Id. To further illustrate

its contention, Hercules notes that after the weighted-average dumping

margin for the subject merchandise was reduced, Korean producers/

exporters still could not sustain the exports of the subject

merchandise.8 Id. In conclusion, Hercules argues that Korean

manufacturers/exporters of the subject merchandise could not sustain

their level of exports to the United States after the issuance of the

antidumping duty order; in other words, Korean manufacturers/exporters

have to dump in order to export the subject merchandise to the United

States.

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\6\ See footnote 5, supra. During 1994-1998, the average import

volume of the subject merchandise was only 3.6 metric tons, which is

about 3.51 percent of the average imports of 1989 and 1990, or 2.45

percent of 1989 imports alone.

\7\ See footnote 3, supra. In that review, the Department found

a 2.1 percent weighted-average dumping margin for one reviewed

company, Daesang Corporation (``Daesang'') while leaving all other

entries of nitrocellulose from Korea subject to the rate determined

in the original investigation: 66.30 percent.

\8\ See footnote 5, supra. The import level of the subject

merchandise in 1998 was zero.

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Consistent with section 752(c) of the Act, the Department considers

the import volumes of the subject merchandise before and after the

issuance of the order. The data supplied by Hercules and those of the

United States Census Bureau IM146s and the United States International

Trade Commission indicate that, since the imposition of the order, the

import volumes of the subject merchandise have declined

substantially.9 Moreover, for the period 1994-1998, the

United States International Trade Commission Data shows rather

insignificant import volumes for the subject merchandise.10

Therefore, the Department determines that the import volumes of the

subject merchandise decreased significantly after the issuance of the

order.

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\9\ See footnote 5, supra. The numbers supplied by Hercules

exactly correspond with those of the U.S. International Trade

Commission Data.

\10\ See footnote 6, supra.

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As indicated in section II.A.3 of the Sunset Policy Bulletin, the

SAA at 890, and House Report at 63-64, the Department also considers

whether dumping continued at any level above de minimis after the

issuance of the order. If companies continue dumping with the

discipline of an order in place, the Department may reasonably infer

that dumping would continue were the discipline removed. After

examining the published findings with respect to weighted-average

dumping margins in the original investigation and from the previous

administrative review,11 the Department determines that,

since the issuance of the order, weighted-average dumping margins for

the subject merchandise have continued at above the de minimis level.

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\11\ See footnote 7, supra.

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Given that dumping of the subject merchandise continued above the

de minimis level after the issuance of the order, that the import

volumes of the subject merchandise decreased substantially after the

issuance of the order, and that respondent interested parties have

waived their right to participate in this review, the Department agrees

with Hercules' contention that dumping is likely to continue if the

order is revoked.

Magnitude of the Margin

In the Sunset Policy Bulletin, the Department stated that it will

normally provide to the Commission the margin that was determined in

the final determination in the original investigation. Further, for

companies not specifically investigated or for companies that did not

begin shipping until after the order was issued, the Department

normally will provide a margin based on the ``all others'' rate from

the investigation. (See section II.B.1 of the Sunset Policy Bulletin.)

Exceptions to this policy include the use of a more recently calculated

margin, where appropriate, and consideration of duty absorption

determinations. (See sections II.B.2 and 3 of the Sunset Policy

Bulletin.)

The Department, in its final determination of sales at less-than-

fair-value, published a weighted-average dumping margin for Miwon and

all-others: 66.30 percent.12 We note that, to date, the

Department has not issued any duty absorption findings in this case.

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\12\ See Final Determination of Sales at Less Than Fair Value:

Industrial Nitrocellulose from the Republic of Korea, 55 FR 21054

(May 22, 1990).

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In its substantive response, Hercules urges the Department to

report to the Commission the dumping margins from the original

investigation as the margins likely to prevail if the order were

revoked. (See the July 1, 1999 Substantive Response of Hercules at 6.)

Although the Department found a substantially reduced 2.10 percent

dumping margin for a Korean producer in its administrative review,

Hercules contends that the reduced dumping margin coincided with

greatly declined import volumes of the subject

merchandise.13 Id. Moreover, Hercules notes that a year

after the administrative review, in 1998, imports of the subject

merchandise again returned to zero indicating that Korean producers/

exporters were unable to increase their exports of the subject

merchandise to the United States at the reduced antidumping margin. Id.

Therefore, Hercules concludes, the 2.1 percent margin achieved by a

Korean producer was clearly the result of a small test shipment and

does not reflect commercial reality. Id. In other words, the best and

only possible recommendation the Department can make, regarding the

margins that are likely to prevail, is to rely upon the rates from the

original investigation.

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\13\ See footnote 3, supra. In its only administrative review,

the Department found that Daesang Corporation, which was not subject

of the original investigation, was dumping at the rate of 2.10

percent during the period July 1, 1996 through June 30, 1997. At the

same time, the Department indicated that cash deposit rate for Miwon

and all-others was the original, less-than-fair-value rate of 66.30

percent.

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The Department agrees with Hercules' suggestion pertaining to the

margin that is likely to prevail if the order were revoked. Because the

margins from the original investigation reflect the behavior of Korean

producers/exporters without the discipline of an order in place, the

Department will provide to the Commission the margins found in the

original investigation. Absent argument and evidence to the contrary,

the Department sees no reason to change its usual practice of selecting

the rate from the original investigation. We will report to the

Commission the company-specific and all-others rate contained in the

Final Results of Review section of this notice.

Final Results of Review

As a result of this review, the Department finds that revocation of

the antidumping order would likely lead to continuation or recurrence

of dumping at the margins listed below:

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Margin

Manufacturer/exporter (percent)

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Miwon Corporation.......................................... 66.30

All Others (including Daesang)............................. 66.30

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This notice serves as the only reminder to parties subject to

administrative protective order (``APO'') of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance

[[Page 57850]]

with 19 CFR 351.305 of the Department's regulations. Timely

notification of return/destruction of APO materials or conversion to

judicial protective order is hereby requested. Failure to comply with

the regulations and the terms of an APO is a sanctionable violation.

This five-year (``sunset'') review and notice are in accordance

with sections 751(c), 752, and 777(i)(1) of the Act.

Dated: October 21, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-28064 Filed 10-26-99; 8:45 am]

BILLING CODE 3510-DS-P