[Congressional Record Volume 140, Number 150 (Tuesday, December 20, 1994)]
[Senate]
[Page S]
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 ANTIDUMPING AND COUNTERVAILING PROVISIONS

 Mr. PACKWOOD. Mr. President, I would like to provide further 
clarification of the antidumping and countervailing duty provisions 
contained in title II of H.R. 5110, the Uruguay Round Agreements Act.
  Evaluation of industry support: Section 212 establishes procedures 
for determining industry support and provides conditions under which 
the petition may establish adequate support. Section 212 provides that 
the International Trade Commission 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 as 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.
  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 articles 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 
Commission will focus primarily, but not exclusively, on the factors 
provided in the legislation. 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.
  Negligible imports: In preliminary determinations, section 212 of the 
new legislation requires the Commission to base its finding on a 
determination 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.
  Consideration of duty absorption in sunset reviews: Section 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 the 
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 margins 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. An examination of duty 
absorption in the second-year review is intended only to have a 
deterrent effect on continued duty absorption by affiliated importers. 
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 does not permit 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 Uruguay Round 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 changes 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 CFR 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.
  Constructed export price profit deduction: Section 223 of H.R. 5110 
provides for a deduction of profit from constructed export price. The 
deduction is to be calculated based on the total profit realized on all 
sales of the subject merchandise in the U.S. market and the foreign 
like product in the foreign market. It is expected that the total 
profit will be equal to the sum of the profit realized in the home 
market--or the third country market--and the profit realized in the 
United States. If the sum is equal to zero or less, no profit will be 
deducted from constructed export price.
  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 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. For example, 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 constructed 
export price offset adjustment to normal value.
  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.
  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.
  Startup 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 startup period or by limiting the startup 
adjustment. It is expected that Commerce will determine the startup 
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.
  Short supply: Imports of merchandise not produced in the United 
States cannot injure a U.S. petitioning industry. On the other hand, 
antidumping duties on such imports may in some circumstances injure 
domestic users of those products. 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 Commission'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 Commission must take this into 
account in its injury determination. After an order is in effect, 
Commerce has the authority to 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 expected that Commerce and the Commission 
will actively use their existing authority to address short supply 
situations. It is expected that Commerce and the Commission will also 
use this authority at the time of the sunset review, and will revoke 
the order with respect to merchandise not available from domestic 
sources.

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