[Congressional Record Volume 141, Number 64 (Thursday, April 6, 1995)]
[Senate]
[Pages S5514-S5516]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                      URUGUAY ROUND AGREEMENTS ACT

 Mr. ROCKEFELLER. Mr. President, following the approval of the 
Uruguay Round implementing legislation, statements have been placed in 
the Congressional Record providing individual interpretations of the 
antidumping and countervailing duty provisions contained in title II of 
that Act. As one who was also deeply involved in the development and 
passage of that legislation, I, of course, respect the right to make 
those statements, but I would like to offer some further clarification.
  Initially, it is important to emphasize that it is the statutory 
language that Congress enacted which must guide the implementation and 
interpretation of this legislation by the International Trade 
Commission, the Department of Commerce and their reviewing courts. To 
the extent that the statutory language is considered ambiguous, it is 
the Statement of Administrative Action, as well as the Senate and House 
committee reports--not the statements of individual Senators--which 
provide the primary sources of interpretation of H.R. 5110.
  Given the representations that have been made, I also believe that it 
is important to provide the following clarification with respect to 
specific aspects of the antidumping and countervailing duty provisions 
contained in the Uruguay Round Agreements Act H.R. 5110.
  International Trade Commission's determination of injury and threat. 
Several statements have addressed the Commission's implementation of 
H.R. 5110: Captive Production. I am the author of the Senate provision 
dealing with situations in which a captive production consideration 
should be used. Section 222 of H.R. 5110 was adopted to make clear to 
the Commission that, in certain captive production situations, it 
should consider primarily the data relating to competition in the 
merchant market, rather than data for the industry as a whole. Despite 
this language and clearly expressed legislative intent, it has been 
suggested that the Commission should continue to base its conclusions 
on an analysis of the industry as a whole, rather than of the merchant 
market. This suggestion is clearly contrary to the explicit language of 
section 222, as well as the intent expressed in the Statement of 
Administrative Action and the House and Senate committee reports.
  Statements have also been made indicating that the Commission should 
apply the same criteria used in evaluating the domestic like product to 
evaluate whether it is appropriate to focus on noncaptive imports. 
These statements are also inconsistent with the plain language of 
section 222, which contains no restriction or direction as to how the 
Commission should analyze imports, whether captive or not. While there 
may be circumstances under which captive imports should be analyzed in 
a similar manner as captive domestic production, this should only be 
done after the Commission determines that captive imports do not 
compete with the relevant domestic like product--as was made explicitly 
clear in the implementing legislation that I authored.
  Negligible Imports. It also has been suggested that the Commission 
must terminate an investigation unless import levels are found to be 
very close to the statutory negligibility threshold at the time of the 
preliminary determination and above that threshold at the time of the 
final determination. This suggestion is contrary to the unambiguous 
statutory language, which provides that the Commission may treat such 
imports as non-negligible in the threat context whenever it determines 
that there is a potential for such imports to increase to non-
negligible levels. Thus, the Commission is under no obligation, and 
indeed would be acting contrary to the statute, to automatically 
terminate an investigation merely because imports are below the 
statutory negligibility threshold at the time of either the preliminary 
or final investigations. This is particularly true given that, as the 
Commission's practice and section 222 recognize, the filing of a 
petition may itself have a dampening effect on import levels. As a 
result, it is expected that the Commission will consider the 
negligibility provision carefully and that it will only find imports to 
be negligible in the context of threat where there is no potential for 
an imminent increase in imports.


                           anticircumvention

  Statements have been made suggesting that section 230 of H.R. 5110 
should be interpreted to limit Commerce's ability to apply the 
anticircumvention provisions and that, before Commerce enlarges the 
scope of an order, the Commission may be required to make an additional 
injury finding regarding that enlarged scope.
  These statements, however, are contrary to the statute and the 
Statement of Administrative Action. As explained in the Statement of 
Administrative Action, this amendment was adopted because the former 
statute failed to provide a full or adequate remedy for the 
circumvention occurring in the marketplace. As a result, section 230 
clearly provides Commerce with broad discretion in its application of 
the anticircumvention provisions, so that it can address the different 
types of
 circumvention encountered. Further, neither the statute nor the 
Statement of Administration Action require the Commission to issue a 
new injury determination before Commerce enlarges the scope of an 
order, although the two agencies will engage in consultations before 
Commerce makes its final determination.


                             SUNSET REVIEWS

  Several statements have been made with respect to different aspects 
of Commerce's and the Commission's application of the new sunset 
provisions, [[Page S5515]] particularly with respect to short supply, 
the extension of orders and duty absorption.
  Short Supply. Both the House Committee on Ways and Means and the 
Senate Committee on Finance affirmatively rejected so-called short 
supply proposals during consideration of the Uruguay Round implementing 
legislation. Statements have been made, however, suggesting that the 
Commission and Commerce should use their authority under the sunset 
provisions to revoke orders where merchandise is not available from 
domestic sources. Further, it has been suggested that the Commission 
should find no adverse impact from imports where petitioning companies 
are not producing a competing product.
  The newly adopted sunset provisions require both Commerce and the 
Commission to consider a multitude of factors in determining whether 
orders will be revoked. Consequently, it is expected that the 
Commission will continue to consider all aspects of this issue in 
reaching a final determination. Given that the lack of current domestic 
production may oftentimes be a symptom of the injury sought to be 
remedied, that factor in particular does not alone warrant revocation, 
even with respect to the product for which there is a lack of 
production. Finally, the Commission is expected to continue to consider 
all domestic production in its analysis, not just the production of the 
petitioning companies alone.
  Extension of Orders. It also has been suggested that the sunset 
review provisions create a presumption against the extension of orders. 
This is, however, inconsistent with both the statute and the Statement 
of Administrative Action, which create no such presumption. Nor, as 
some statements have suggested, is the substantial evidence standard 
appropriate for all sunset reviews; where responses have not been filed 
or are inadequate, Commerce's and the Commission's final determinations 
are, by the express terms of the implementing legislation, reviewable 
under the arbitrary and capricious standard, and not the substantial 
evidence standard.
  Duty Absorption. Pursuant to section 221 of the Uruguay Round 
legislation, Commerce and the Commission are authorized to consider the 
issue of duty absorption in the course of their sunset reviews. Some 
statements have suggested incorrectly, however, that (1) Commerce may 
not quantify the level of duty absorption or initiate a duty absorption 
investigation without evidence that duty absorption is occurring, and 
(2) the Commission must give less weight to duty absorption findings 
based on best information available.
  None of these issues are addressed by the statute. While Commerce is 
not expressly required to quantify the level of duty absorption, it 
obviously retains the authority to do so and it is expected that 
Commerce will quantify duty absorption where circumstances so warrant. 
Given the difficulty in obtaining information on duty absorption, the 
Statement of Administrative Action makes it clear that Commerce must 
initiate a duty absorption review whenever it is requested to do so; 
thus, there is no additional evidentiary hurdle prior to initiation. 
Finally, the Commission is required to consider the issue of duty 
absorption whenever Commerce has made a duty absorption finding. It is 
within the Commission's discretion, however, to determine the weight to 
be given to this issue, including the significance of a respondent's 
failure to cooperate with Commerce's investigation and Commerce's use 
of best information available. There is simply no basis for the 
suggestion that less weight be given to Commerce's findings when they 
are based on best information available. In fact, such a requirement 
would create a significant incentive for foreign companies not to 
cooperate with Commerce so that best information available would be 
used and the Commission would give less weight to the issue of duty 
absorption. Clearly this is not what Congress or the statute intended.


                   CALCULATION OF ANTIDUMPING DUTIES

  Several statements have also been made regarding specific aspects of 
Commerce's calculation of antidumping duties, as addressed below.
  Fair comparison/normal value adjustments. Pursuant to Section 224 of 
the implementing legislation, Commerce is required to make a fair 
comparison between export price and normal value. Statements have been 
made, however, suggesting that this provision generally requires 
Commerce to adjust normal value and export price (or constructed export 
price) for the same costs and
 expenses and to make either a level of trade adjustment or a 
constructed export price offset adjustment to normal value whenever 
constructed export price is used.

  This is not, however, what the statute or Statement of Administrative 
Action requires. Although expenses may be nominally the same in both 
markets, the actual circumstances surrounding the relationship between 
such expenses and claimed adjustments often differ. As a result, 
Commerce clearly has the authority to treat expenses differently in the 
U.S. and foreign markets. In fact, Commerce is expected to continue its 
practice of closely assessing all potential adjustments on a case-by-
case basis and not mechanically making adjustments without an analysis 
of the circumstances involved.
  Moreover, there is no requirement for Commerce to make a level of 
trade or offset adjustment in every case. Indeed, the express language 
of the statute and Statement of Administrative Action indicate that 
there are circumstances where neither adjustment is appropriate or 
permissible. For example, Commerce may only make a level of trade 
adjustment where there are different levels of trade and where that 
difference is shown to affect price comparability. Commerce's analysis 
of these issues must be based on the actual circumstances involved.
  Constructed export price profit deduction. Section 223 of H.R. 5110 
provides for the deduction of profit from constructed export price. It, 
however, has been incorrectly suggested that this provision only 
authorizes Commerce to base its calculation on data for the subject 
merchandise in the U.S. and foreign markets.
  While the statute and Statement of Administrative Action indicate 
that the use of data specific to the costs of the subject merchandise 
is appropriate, they also allow for the use of alternative 
methodologies when full cost of production information is not on the 
record. In particular, it is expected that, if the necessary profit 
data for the subject merchandise is unavailable, Commerce will use the 
next broader category of merchandise to calculate this deduction.
  Startup costs. Section 224 of the implementing legislation governs 
Commerce's treatment of start-up operations. In considering the 
circumstances surrounding start-up operations, Commerce should apply 
this provision strictly to prevent foreign producers from using it as a 
loophole to evade the application of antidumping duties in the early 
stages of a product's life-cycle. In particular, Commerce should 
carefully review the claimed duration of start-up periods so that they 
are not improperly expanded.
  Export price and constructed export price definitions. Renaming 
``purchase price'' to ``export price'' and ``exporter's sales price'' 
to ``constructed export price'' should not affect the ``criteria'' used 
to categorize U.S. sales as one or the other. The Statement of 
Administrative Action indicates that ``no change is intended in the 
circumstances'' under which a sale would be characterized as one or the 
other. Commerce continues to retain the authority to alter or augment 
the particular factors that it considers in making its determinations.
  Reimbursement of antidumping duties. In the antidumping duty context, 
Commerce will increase the amount of antidumping duties when it finds 
that the exporter has reimbursed the importer for payment of such 
duties. Although there has been no change in the law, statements have 
been made suggesting that Commerce is expected not to treat reimbursed 
countervailing duties the same way that it treats reimbursed 
antidumping duties.
  There is no such expectation. The Senate report language, written 
with the acquiescence of the administration, states that Commerce 
should promulgate a regulation to make an adjustment to U.S. price in 
antidumping cases for the amount of any countervailing duty which is 
reimbursed by the exporter to the importer. Since [[Page S5516]] this 
reimbursement represents a reduction in price to the importer, the 
regulation suggested by the Senate report language is clearly an 
appropriate and equitable way to address the reimbursement of 
countervailing duties.


                          ____________________