[Congressional Record Volume 140, Number 150 (Tuesday, December 20, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: December 20, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                      URUGUAY ROUND AGREEMENTS ACT

                                 ______


                               speech of

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                       Tuesday, November 29, 1994

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 5110) to 
     approve and implement the trade agreements concluded in the 
     Uruguay round of multilateral trade negotiations:

  Mr. CRANE. Mr. Chairman, I believe it is necessary to provide further 
clarification regarding the antidumping provisions contained in title 
II of H.R. 5110, the Uruguay Round Agreements Act. I fully expect that 
the Commerce Department will implement the antidumping provisions of 
H.R. 5110 in a manner which is consistent with both the letter and 
spirit of our obligations under the WTO Agreement. I expect that 
Commerce will implement the following provisions in full compliance 
with our antidumping agreement obligations, and in a fair manner that 
the United States would have no objection to if used by foreign 
governments against U.S. exporters:


                     evaluation of industry support

  Section 212 of H.R. 5110 establishes procedures for determining 
industry support, and provides conditions under which the petition may 
establish adequate support. Section 212 provides that the Commerce 
Department may, in appropriate circumstances, exclude a domestic 
producer of a like product from the industry where the producer is 
itself related to exporters or importers. As a general rule, Commerce 
should not include members of the domestic industry those domestic 
producers who oppose the petition, but are related to exporters, unless 
such producers demonstrate that their interests as domestic producers 
would be adversely affected by the imposition of an order. It is 
expected that related domestic producers must demonstrate to the 
Commerce Department how an order resulting from an investigation would 
adversely affect their interests, for example, by showing that their 
domestic production operations would be damaged. In addition, section 
231 provides for termination of a case if Commerce determines that 
producers accounting for substantially all of the production of a 
product lack interest in the case. It is expected that Commerce will 
interpret this standard to be the same as that set forth in court 
decisions such as Gilmore Steel Corp. versus U.S., in which the 
standard is described as an overwhelming majority.


                           captive production

  Section 222 of H.R. 5110 provides for the treatment of captive 
production in an injury inquiry. It is expected that the Commission, in 
implementing the captive production provision, will fully comply with 
article 3.5 and 4.1 of the antidumping agreement and articles 15.5 and 
16.1 of the subsidies agreement, which require a finding that the 
dumped or subsidized imports are causing material injury to the 
domestic industry as a whole. It is my understanding that when 
examining a captive production situation, the ITC will focus primarily, 
but not exclusively, on the factors provided in the bill. However, the 
captive production provision does not limit the Commission to analyzing 
the merchant market, and an affirmative injury finding not based on an 
analysis of the industry as a whole, including captive production, 
would be inconsistent with the agreement. In addition, to the extent 
the Commission focuses its inquiry on noncaptive production in 
the domestic industry, it must also focus on noncaptive imports. It is 
expected that the Commission will apply the same criteria in its 
determination of whether to focus primarily on noncaptive imports as it 
applies in its determination of whether to focus primarily on 
noncaptive domestic production. It is also recognized that, by the 
nature of the fact that captive imports are internally consumed, such 
imports generally do not compete with the domestic like product. I 
expect that it will be very difficult to establish that captive imports 
compete with domestic production in a particular investigation. 
Accordingly, only rarely, if ever, should the ITC find that captive 
imports compete with the domestic like product.


                           Negligible Imports

  In preliminary determinations, section 212 of the new legislation 
requires the Commission to base its finding on a determination as to 
whether there is a reasonable indication that imports are not 
negligible. It is expected that the Commission will, when necessary, 
use reasonable estimates when calculating import volumes. It is further 
expected that the Commission will normally terminate an investigation 
when import levels are below the statutory threshold, except when 
import volumes are extremely close to the statutory threshold and 
reliable data obtained in a final investigation establishes that 
imports exceed the statutory threshold.


                             Sunset Reviews

  Section 220 of the legislation establishes that Commerce and the 
Commission will make their determinations concerning termination of an 
order based on the facts available if responses by the parties are 
inadequate. In judging the adequacy of responses, it is expected that 
Commerce and the Commission shall apply the same standard as that 
applied in other contexts of the antidumping and countervailing duty 
laws, such as Commerce's use of best information available.
  Article 11.3 of the antidumping agreement permits antidumping duties 
to remain in force pending the outcome of a sunset review, even if the 
review is not completed until after the 5-year deadline. The agreement 
thus authorizes the continued collection of duty deposits, but only up 
to the point that a sunset determination is made to revoke the order. 
In order to comply with our agreement obligations in cases where the 
determination is made to revoke the order, it is expected that, 
pursuant to section 751(d(3), Commerce will determine that the 
revocation will apply to entries on or after the date of the 5-year 
anniversary, and that Commerce will direct Customs to refund 
antidumping duty deposits on merchandise entered after the 5-year 
anniversary of the order.
  Section 221 of H.R. 5110 states that the Commission, in making its 
sunset determination, ``shall consider that the effects of revocation 
may not be imminent, but may manifest themselves only over a longer 
period of time.'' Although a sunset review is necessarily prospective 
in nature, it is not intended that Commerce or the Commission use this 
fact to extend orders indefinitely. It is not expected that the 
Commission will find that injury is likely to continue or recur based 
on uncertainty over the possible conditions at a point in time well 
beyond the time of the determination. It is expected that the order 
will be extended only in those cases where there is substantial 
evidence on the record that material injury is likely to continue or 
recur within a reasonable period of time.


                     Duty Absorption/Duty as a Cost

  Sections 221 and 222 of H.R. 5110 provide for Commerce and the 
Commission to consider the issue of duty absorption. It is expected 
that before initiating a duty absorption inquiry, Commerce shall ensure 
that there is a reasonable basis to believe that duty absorption has 
occurred. The statement of administrative action makes clear that 
``during an administrative review initiated 2 or 4 years after the 
issuance of an order, Commerce will examine, if requested, whether 
absorption has taken place by reviewing the data on the volume of 
dumped imports and dumping margins.'' Therefore, Commerce's inquiry 
will result in either an affirmative or negative finding of duty 
absorption. Nothing in the statement of administrative action or 
legislative language provides that Commerce would determine or compute 
the extent of duty absorption, or the magnitude of duty absorption. 
Therefore, it is expected that Commerce will not quantify the level of 
duty absorption, and that an affirmative finding will have no effect on 
the dumping margins calculated. In making its determination, Commerce 
should give less probative weight to dumping marging and data based on 
best information available, as these may be a poor indicator of whether 
a company is actually absorbing duties.
  Commerce will notify the International Trade Commission of its 
findings made during the 4-year review. The Commission should take 
these findings into account in determining the likelihood of 
continuation or recurrence of material injury in the sunset review. It 
is expected that the Commission will not consider duty absorption to 
the exclusion of other statutory factors. Further, it is expected that 
the weight accorded by the Commission to Commerce's duty absorption 
finding will depend on the extent to which it bears on the issue of the 
likelihood of continuation or recurrence of material injury in light of 
the facts of each case.
  Finally, the duty absorption provision in no way permits the 
treatment of antidumping duties as a cost to be deducted from the U.S. 
price. The treatment of antidumping duties as a cost has been 
repeatedly rejected by Commerce and U.S. reviewing courts. Moreover, in 
the U.S. retrospective duty assessment system, treatment of duties as a 
cost would violate the WTO Antidumping Agreement, result in the over-
assessment of antidumping duties, and serve as a disincentive to 
investment in the United States.


              basis for determination of threat of injury

  Article 3.7 of the antidumping agreement, regarding the determination 
of threat of material injury, is unchanged from the 1979 antidumping 
code. It is expected that, as provided in the statement of 
administrative action at page 184, the Commission's practice in threat 
determinations will remain unchanged from current practice. As noted in 
the statement of administrative action, revision of the threat language 
of the statute in section 771(7)(F)(ii) in no way change Commission 
practice or judicial interpretations of the statute.


         export price and constructed export price definitions

  The statement of administrative action at page 152 states that the 
change in terminology from ``purchase price'' and ``exporter's sales 
price'' to ``export price'' and ``constructed export price'' will in no 
way change the criteria now used to categorize U.S. sales as one or the 
other. Commerce's decisions will be monitored closely to ensure that no 
change is, in fact, made in the Department's methodology for 
categorizing U.S. sales.


                  reimbursement of antidumping duties

  The statement of administrative action expresses the administration's 
intent to continue to apply, when appropriate, the current regulation 
[19 C.F.R. Sec. 353.26] providing for antidumping duties to be 
increased when Commerce finds that an exporter has directly paid the 
antidumping duties due, or has reimbursed the importer for the 
importer's payment of the antidumping duties. The legislation makes no 
change in this regulation. It is not intended that this provision be 
extended to apply to countervailing duties. Countervailing duties 
differ from antidumping duties, and it is not intended that Commerce 
will deduct countervailing duties from export price or constructed 
export price when calculating the margin of dumping.


                fair comparison/normal value adjustments

  Section 224 of H.R. 5110 implements the requirement in antidumping 
agreement article 2.4 that ``a fair comparison shall be made between 
export price and normal value.'' It is expected that Commerce will 
ensure that a fair, apples-to-apples comparison is made in all cases. 
In particular, a fair comparison requires that, as a general rule, 
normal value shall be adjusted for the same costs and expenses for 
which adjustments are made to the export price or constructed export 
price. When U.S. price is based on constructed export price, it is 
expected that Commerce will make either a level of trade adjustment or 
a CEP offset adjustment to normal value. It is my understanding that an 
adjustment will be made to normal value in order to ensure a fair 
comparison to the export price or constructed export price, as the case 
may be.
  In measuring the effect on price comparability and interpreting the 
statutory requirement that a pattern of consistent price differences be 
shown, it is expected that Commerce will follow the statement of 
administrative action, which states that ``while the pattern of pricing 
at the two levels of trade under section 773(a)(7)(A) must be 
different, the prices at the levels need not be mutually exclusive; 
there may be some overlap between prices at the different levels of 
trade.''


              Initiation of Cost Investigations in Reviews

  As noted in the statement of administrative action [page 163], 
section 224 amends section 773(b) to provide that Commerce must have 
reasonable grounds to initiate a cost of production investigation in an 
administrative review, if Commerce excluded below-cost sales of a 
particular exporter or producer from the determination of normal value 
``in the most recently completed segment of the antidumping 
proceeding.'' Thus, in an administrative review, Commerce may initiate 
a cost investigation if it has excluded below cost sales in the most 
recently completed administrative review, or, if no review has been 
completed, in the original investigation.


                           Anticircumvention

  Section 230 of H.R. 5110 amends the anticircumvention provision of 
the law, which currently provides for a test of whether the difference 
between the value of parts imported from the subject country and the 
value of the finished product is small. The legislation replaces this 
test with two inquiries: whether minor or insignificant assembly or 
completion is occurring in the United States or the third country, and 
whether the value of parts imported to the United States or third 
country from the country subject to the order is a significant 
proportion of the total value of the finished product. The structure of 
the statute is based on the anticircumvention provisions of the 
``Dunkel Text.'' It is expected that Commerce will adhere to the 
statutory requirement that the value of the parts is a significant 
proportion of the value of the finished product. For example, the value 
of a flat panel display in relation to the value of a finished laptop 
computer would not be significant, and thus would not be found to 
circumvent an antidumping order on laptops. Further, it is expected 
that only in very rare instances would Commerce find circumvention to 
be occurring between unrelated parties.
  It is expected that Commerce will not interpret these criteria such 
that the value added in the United States becomes the essential 
determinant of whether circumvention is occurring. The 
anticircumvention rules must not operate as a domestic content rule, or 
as a critical component rule. Moreover, in order to comply with the 
antidumping agreement and article VI of the GATT 1994, Commerce must 
only apply antidumping duties to merchandise for which a final 
determination of dumping and injury has been made.


                             Start-Up Costs

  Section 224 of H.R. 5110 implements the adjustment for startup 
operations provided for in article 2.2.1.1 of the antidumping 
agreement. This provision was one of the agreement's most important 
accomplishments on behalf of U.S. exports, in particular, high-
technology exports. Commerce must not undercut this accomplishment by 
prematurely ending the start-up period or by limiting the start-up 
adjustment. It is expected that Commerce will determine the start-up 
period to end at the point at which commercial production levels 
characteristic of the product, producer or industry under investigation 
are achieved, based on production of merchandise of quality levels 
sufficient for sale. Further, when making the start-up adjustment, 
Commerce is expected to amortize all start-up costs only after the end 
of the start-up period and over the life of the product or equipment.


                              Short Supply

  While I continue to support separate short supply legislation, the 
administration has stated that there are mechanisms under current law 
to address short supply situations. Specifically, the fact that a 
product is not being produced in the United States should be reflected 
in the ITC's determination of whether the imports are a cause of injury 
to the domestic industry. That is, if petitioning companies are not 
producing a competing product, there will be no adverse effect with 
respect to the imported merchandise, and the ITC must take this into 
account in its injury determination. After an order is in effect, 
Commerce can declare a product outside the scope of an order if it has 
substantially different characteristics or uses than the subject 
merchandise, or if it is unclear whether the order included the 
specific product. It is my expectation that Commerce and the ITC will 
actively use their existing authority to address short supply 
situations.

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