[Federal Register Volume 61, Number 39 (Tuesday, February 27, 1996)]
[Proposed Rules]
[Pages 7308-7392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4024]
[[Page 7307]]
_______________________________________________________________________
Part II
Department of Commerce
_______________________________________________________________________
International Trade Administration
_______________________________________________________________________
19 CFR Parts 351, 353, and 355
Antidumping Duties; Countervailing Duties; Proposed Rule
Federal Register / Vol. 61, No. 39 / Tuesday, February 27, 1996 /
Proposed Rules
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[[Page 7308]]
DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Parts 351, 353, and 355
[Docket No. 951122274-5274-01]
RIN 0625-AA45
Antidumping Duties; Countervailing Duties
AGENCY: International Trade Administration, Commerce.
ACTION: Notice of proposed rulemaking and request for Public Comments.
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SUMMARY: The Department of Commerce (``the Department'') proposes to
establish regulations to conform the Department's existing antidumping
duty and countervailing duty regulations to the Uruguay Round
Agreements Act, which implemented the results of the Uruguay Round
multilateral trade negotiations. In addition to conforming changes, the
Department has sought to issue regulations that: where appropriate and
feasible, translate the principles of the implementing legislation into
specific and predictable rules, thereby facilitating the administration
of these laws and providing greater predictability for private parties
affected by these laws; simplify and streamline the Department's
administration of antidumping and countervailing duty proceedings in a
manner consistent with the purpose of the statute and the President's
regulatory principles; and codify certain administrative practices
determined to be appropriate under the new statute and under the
President's Regulatory Reform Initiative.
DATES: Written comments will be due on April 29, 1996.
ADDRESSES: Address written comments to Susan G. Esserman, Assistant
Secretary for Import Administration, Central Records Unit, Room B-099,
U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW.,
Washington, D.C. 20230. Attention: Proposed Regulations/Uruguay Round
Agreements Act. Each person submitting a comment is requested to
include his or her name and address, and give reasons for any
recommendation.
FOR FURTHER INFORMATION CONTACT: William D. Hunter (202) 482-1930, or
Penelope Naas, (202) 482-3534.
SUPPLEMENTARY INFORMATION:
Background
In March, 1995, President Clinton issued a directive to Federal
agencies regarding their responsibilities under his Regulatory Reform
Initiative. This initiative is part of the National Performance review,
and calls for immediate, comprehensive regulatory reform. The President
directed all agencies to undertake an exhaustive review of all their
regulations, with an emphasis on eliminating or modifying those that
are obsolete or otherwise in need of reform. This proposed rule
represents one of the steps in the Import Administration's response to
the President's directive.
On January 3, 1995, the Department published an Advance Notice of
Proposed Rulemaking and Request for Comments in the Federal Register
(Antidumping Duties; Countervailing Duties; Article 1904 of the North
American Free Trade Agreement, 60 FR 80 (``Advance Notice'')), as the
first step in the process of developing regulations under the Uruguay
Round Agreements Act (``URAA'').1 The Department took the step of
requesting comments in advance of issuing a proposed rule in order to
ensure that, at the earliest possible stage, we could consider and take
account the views of the private sector entities that are subject to
the antidumping and countervailing duty laws.2
\1\ Among other things, the URAA amended the antidumping and
countervailing duty provisions of the Tariff Act of 1930 to conform
those provisions to the Agreement on Implementation of Article VI of
the General Agreement on Tariffs and Trade 1994 (``AD Agreement'')
and the Agreement on Subsidies and Countervailing Measures (``SCM
Agreement''), both of which are part of the Marrakesh Agreement
Establishing the World Trade Organization (``WTO Agreement'').
\2\ On February 22, 1995, the Department published in the
Federal Register (60 FR 9802) a notice extending until April 3,
1995, the deadline for filing final comments pursuant to the Advance
Notice. In addition, on May 11, 1995, the Department published in
the Federal Register (60 FR 25130) a Notice of Interim Regulations
and Request for Comments (``Interim Regulations''). The Interim
Regulations dealt with certain new or revised procedures resulting
from the URAA that would have an immediate impact on the orderly
administration of the antidumping and countervailing duty laws.
Although the Department invited immediate comments on the Interim
Regulations, it allowed the deadline for comments on the Interim
Regulations to coincide with the deadline for comments on this
proposed rulemaking.
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In these proposed regulations, the Department has been guided by
the following objectives. First, the Department is proposing to revise
the regulations to conform to the statutory amendments made by the
URAA. Second, consistent with the Administration's commitment in the
Statement of Administrative Action accompanying H.R. 5110 (H.R. Doc.
No. 316, Vol. 1, 103d Cong., 2d Sess. (1994) (``SAA''), the Department
has fleshed out through regulation certain statements contained in the
SAA. Under section 102(d) of the URAA, the SAA constitutes an
authoritative expression concerning the interpretation and application
of the provisions of the URAA, including those provisions relating to
antidumping and countervailing duties. Finally, the Department has
developed proposed regulations mindful of President Clinton's
Regulatory Reform Initiative and his directive to identify and either
eliminate or modify obsolete and burdensome regulations.
The Department has carefully reviewed its existing regulations, and
has taken several steps to enhance their effectiveness and make them
more accessible to the business community. We have consolidated the
antidumping and countervailing duty regulations (which currently are
contained in separate Parts 353 and 355) into a single Part 351.
Because, for the most part, antidumping and countervailing duty
procedures are identical, the consolidation of those portions of the
regulations dealing with procedures will make the regulations easier to
use, will make it easier to identify those instances where antidumping
and countervailing duty procedures differ, and, by reducing the sheer
size of the regulations, will make the regulations less burdensome to
the non-expert.
To the extent possible, we have proposed regulations that simplify
and streamline the antidumping/countervailing duty process. For
example, in the case of administrative reviews, we have added a new
provision which allows, under certain circumstances, the Department to
cover two review periods in a single review, an approach which should
be more efficient for all parties concerned. We have attempted to
harmonize, to the extent possible, the rules applicable to both the
investigation and review phases of antidumping and countervailing duty
proceedings. Because the maintenance of different rules for different
phases of antidumping and countervailing duty proceedings merely adds
another layer of complexity to an already complex area, we have
attempted to eliminate needless differences. For example, in the case
of correction of ministerial errors, we generally have made the
procedures identical for both investigations and reviews.
In addition, we have developed rules which reduce burdens and
facilitate the use of the regulations and administrative procedures.
For example, we have consolidated and harmonized the rules governing
the submission of information. We have reduced the
[[Page 7309]]
number of copies that parties must file when they make submissions to
the Department. We also have included charts which set forth in a
single place the various deadlines in antidumping and countervailing
duty investigations and reviews.
Further, where possible, we have proposed regulations that
supplement, rather than repeat, the statute. We have included narrative
explanations that put a particular regulation in context and explain
how the regulation fits in the administrative process. We have also
sought to use language that will be readily understood by members of
the business community.
Finally, where possible, we have tried to use these regulations as
a vehicle for enhancing the predictability of the antidumping and
countervailing duty laws. We recognize that there are many areas in
which the statute provides the Department with discretion, and we have
attempted to provide guidance as to how the Department will exercise
that discretion. For example, in the regulation that deals with so-
called ``price averaging'' in antidumping proceedings, we have
attempted to flesh out how the Department will apply this new
methodology added to the law by the URAA.
In this regard, however, there are limits as to the amount of
detail that the Department can provide in these regulations at this
time. In some instances, the statute or the SAA already provides
extremely detailed rules, thereby obviating the need for additional
regulatory guidance. In other instances, the SAA expressly directs the
Department to take a case-by-case approach and to eschew hard-and-fast
rules. Finally, in many instances, the URAA has created new procedural
and methodological issues on which the Department has little, if any,
experience. Absent such experience, the Department lacks a basis for
promulgating detailed rules.
Streamlining the regulations is only one part of a larger effort of
the Department to simplify its practices. For example, we have been
revising our standard questionnaires to make them more ``user
friendly'' and efficient. We have made significant changes to our
verification procedures in the interest of increased effectiveness. We
also will publicly announce the issuance of Policy Bulletins and ensure
that they are easily accessible to the public.
Timetable
Certain regulations dealing with the treatment of business
proprietary information and administrative protective order procedures
were the subject of a separate Notice of Proposed Rulemaking and
Request for Public Comment on [Insert date and citation when published]
(``APO Rule''). However, the Department intends that, when it publishes
final regulations, it will publish a single document that will include
the regulations contained in this proposed rule, as well as those
regulations contained in the APO Rule.
In addition, the Department intends to publish separately proposed
rules regarding countervailing duty methodology. When completed, these
rules will be included as subpart E of proposed Part 351.
The issuance of final regulations on this topic is a priority for
the Department. After reviewing and analyzing comments on this proposed
rule and the APO Rule, the Department intends to issue final
regulations as soon as possible.
Comments--In General
The Department wishes to emphasize that the regulations contained
in this proposed rule reflect our best judgment at this time regarding
the appropriate style and content of antidumping and countervailing
duty regulations. We have not foreclosed consideration of any issue
raised herein, and we would appreciate greatly public comment and
suggestions. In particular, while there are certain matters on which,
in our view, the statute and its legislative history give the
Department relatively little flexibility, there are other matters where
the Department has a much greater degree of discretion in interpreting
and applying the statute. With respect to this latter category of
matters, the fact that in these proposed regulations the Department has
exercised its discretion in a particular manner (or has declined to
exercise its discretion at all in the form of regulations) should not
be construed as an indication that the Department's position on these
matters is immutable. We welcome any and all suggestions.
Therefore, we are very interested in receiving public comment on
these proposed regulations. We have found the dialogue that commenced
with the Advance Notice to be extremely useful, and we hope and expect
that it will continue. We encourage the submission of new comments, as
well as the resubmission of old comments if commentators believe that
the Department did not fully understand or appreciate a comment the
first time around.
Comments--Format and Number of Copies
Each person submitting a comment should include his or her name and
address, and give reasons for any recommendation. To facilitate their
consideration by the Department, comments regarding these proposed
regulations should be submitted in the following format: (1) Number
each comment in accordance with the number designated for that issue as
indicated in the list of issues set forth below; (2) begin each comment
on a separate page; (3) concisely state the issue identified and
discussed in the comment; and (4) provide a brief summary of the
comment (a maximum of 3 sentences) and label this section ``summary of
the comment.''
To simplify the processing and distribution of comments, the
Department encourages the submission of documents in electronic form
accompanied by an original and two copies in paper form. We request
that documents filed in electronic form be on DOS formatted 3.5''
diskettes and prepared in either WordPerfect 5.1 format or a format
that the WordPerfect program can convert and import into WordPerfect
5.1. Please submit comments on a separate file on the diskette and
labeled by the number designated for that issue based upon the list of
issues set forth below.
Comments received on diskette will be made available to the public
on the Internet at the following addresses:
FTP://FWUX.FEDWORLD.GOV/PUB/IMPORT or
FTP://FTP.FEDWORLD.GOV/PUB/IMPORT/IMPORT.HTM
In addition, the Department will make comments available to the public
on 3.5'' diskettes, with specific instructions for accessing compressed
data, at cost, and paper copies will be available for reading and
photocopying in the Central Records Unit, Room B-099, U.S. Department
of Commerce, Pennsylvania Avenue and 14th Street, NW., Washington, D.C.
20230. Any questions concerning file formatting, document conversion,
access on the Internet, or other file requirements should be addressed
to Andrew Lee Beller, Director of Central Records, (202) 482-1248.
Classification of Issues for Comment
Antidumping Issues
11. Comparison Methodology:
a. Viability, third-country sales, intermediate country sales, and
tolling;
b. Constructed export price deductions and value-added deductions;
[[Page 7310]]
c. Normal value adjustments;
d. Level of trade matching, level of trade adjustments, and
constructed export price offset;
12. Start-up
13. Profit and selling, general and administrative expenses in
constructed value;
14. Sales below cost of production and constructed value generally;
15. Currency conversion;
16. Price averaging;
17. Anticircumvention;
18. Affiliated persons (address separately for AD and CVD);
19. AD methodology issues other than those outlined above;
Procedural issues
20. Initiation of petitions;
21. Evidence;
22. Facts available;
23. De Minimis (address separately for AD and CVD);
24. Reviews, other than five-year reviews (if specific to AD or
CVD, please specify);
25. Five-year reviews and revocation;
26. Repeal of Section 303;
27. Regional industries;
28. Critical circumstances;
29. Simplification;
30. Business proprietary information and administrative protective
orders;
31. Ministerial errors;
32. Procedural issues other than those outlined above;
33. Other issues.
Explanation of the Proposed Rules
General Background
Consolidation of Antidumping and Countervailing Duty Regulations
As discussed above, in response to the President's Regulatory
Reform Initiative, to reduce the amount of duplicative material in the
regulations, the Department has consolidated the antidumping and
countervailing duty regulations into a new Part 351, and is removing
Parts 353 and 355.
The structure of Part 351 is as follows. Subpart A (Scope and
Definitions) is based on existing subpart A of Parts 353 and 355. Among
other things, the regulations contained in subpart A deal with general
definitions applicable to antidumping and countervailing duty
proceedings, the record for such proceedings, and de minimis standards
for countervailable subsidies and dumping margins.
Subpart B (Antidumping and Countervailing Duty Procedures) is based
on existing subpart B of Parts 353 and 355. As suggested by the title,
subpart B deals with the procedural aspects of antidumping and
countervailing duty proceedings. Where the procedures for antidumping
and countervailing duty proceedings are different, the regulations in
subpart B so specify.
Subpart C (Information and Argument) is based on existing subpart C
of Parts 353 and 355. Subpart C establishes rules for antidumping and
countervailing proceedings regarding such matters as the submission of
information, the treatment of proprietary information, the verification
of information, and determinations based on the facts available. As
noted, certain portions of Subpart C were contained in the APO Notice.
Subpart D (Calculation of Export Price, Constructed Export Price,
Fair Value, and Normal Value) is based on existing subpart D of Part
353. Subpart D essentially deals with methodologies for identifying and
measure dumping.
Subpart E is designated ``[Reserved],'' but, as explained above,
eventually will include rules dealing with countervailing duty
methodology. Subpart E does not have a counterpart in existing Part
355, although proposed methodological regulations were published in
1989. 54 FR 23366 (1989).
Subpart F (Cheese Subject to In-Quota Rate of Duty) is based on
subpart D of existing Part 355, and implements section 702 of the Trade
Agreements Act of 1979, as amended by the URAA.
Explanation of Particular Provisions
Part 351, Subpart A--Scope and Definitions
Subpart A of Part 351 sets forth the scope of Part 351,
definitions, and other general matters applicable to antidumping and
countervailing duty proceedings.
Section 351.101
Section 351.101 deals with the scope of Part 351, countervailing
duty investigations involving imports from a country that is not a
Subsidies Agreement country, and the application of antidumping and
countervailing duties to importations by the United States Government.
Section 351.102
Section 351.102 sets forth the definition of terms that are used in
antidumping and countervailing duty proceedings, but that are not
defined in the statute or that warrant clarification. A few definitions
merit comment.
Affiliated persons (and affiliated parties) is a new term that
replaces prior definitions of ``related persons'' or ``related
parties'' (the latter term continues to be governed by section
771(4)(B)). Because the statute unintentionally uses inconsistent
terminology, the regulation makes clear that the terms ``affiliated
person'' and ``affiliated parties'' have the same meaning. The first
sentence of the definition merely refers to the definition of
``affiliated persons'' in section 771(33) of the Act. The second
sentence elaborates on the meaning of ``control,'' a key term in the
definition of ``affiliated persons'' under section 771(33). It reflects
the statements in the SAA, at 838, that one person may be in a position
to exercise restraint or direction over another person, and thus have
``control'' over that person, by such means as corporate or family
groupings, franchises or joint venture agreements, debt financing, or
close supplier relationships. The definition of affiliation will also
be applied for purposes of ``collapsing'' firms under section
351.401(f).
Several commentators suggested that the Department should specify
precise thresholds for these indicia of control in order to provide a
greater degree of predictability in the administration of the
antidumping law. The Department appreciates the parties' desire for
greater guidance concerning the definition of ``control.'' However, the
Department does not believe that it is now in a position to establish
such thresholds, but instead must develop thresholds, where
appropriate, as it gains experience in applying the concept of control.
``Affiliated persons'' is a new statutory term embodying new concepts,
and the complexity of the relationships potentially covered by this
term mitigate against the issuance of detailed regulations at this
time. Moreover, some indicia of the ability to exercise restraint or
direction over another party's pricing, cost, or production decisions
may not lend themselves to the use of simple, black-and-white
thresholds. Therefore, the Department intends to apply this new
definition on a case-by-case basis, considering all relevant factors,
including the indicia included in the regulatory definition. Mere
identification of the presence of one or more of these or other indicia
of control does not end our task. We will examine these indicia, in
light of business and economic reality, to determine whether they are,
in fact, evidence of control. Business and economic reality suggest
that these relationships must be significant and not easily replaced.
In addition, temporary market power, created by variations in supply
and demand conditions, would not suffice.
In addition, some commentators suggested that the Department should
define ``control'' as existing only where
[[Page 7311]]
there is evidence that control previously had been exercised. We have
not adopted this suggestion because the statute, by its use of the
phrase ``in a position to exercise restraint or direction,'' defines
``control'' in terms of the ability to exercise restraint and
direction. The actual exercise of restraint or direction would
constitute evidence as to the existence of such ability.
Finally, some commentators suggested that the Department establish
in the regulations that if one or more of the factors listed in section
771(33) is present, the Department should presume that the parties are
affiliated. Other commentators suggested, conversely, that if certain
factors are not present, the Department should presume that the parties
are not affiliated. With regard to the former suggestion, the statute
provides that if any one of the factors in section 771(33) is present,
the Department is required to find that persons are affiliated, not
merely presume that they are affiliated. With regard to the latter
suggestion, the Department is required to consider evidence of any one
of the factors. The only factor for which a presumption could be
developed is the factor of control. However, as explained above, the
Department is not yet in a position to develop such presumptions in
these regulations.
Domestic interested party is a new term intended to serve as a
convenient, shorthand substitute for the more lengthy phrase used in
the statute (``an interested party described in paragraph (C), (D),
(E), (F), or (G) of section 771(9) of the Act'') and its existing
regulatory counterpart (e.g., ``an interested party, as defined in
paragraph (k)(3), (k)(4), (k)(5), or (k)(6) of Sec. 353.2''). In
addition, the definition of ``domestic interested party'' reflects the
creation of a new category of interested party relating to processed
agricultural products. Omnibus Trade and Competitiveness Act of 1988,
Public Law 100-418, section 1326(c).
The definition of fair value is based on existing section
353.42(a). The courts have long recognized that the Secretary possesses
additional methodological flexibility in an antidumping investigation,
see, e.g., Southwest Fla. Winter Veg. Growers Ass'n v. United States,
584 F. Supp. 10, 17 (Ct. Int'l Trade 1984), and the definition of fair
value is intended to reflect this fact.
With respect to the definition of ordinary course of trade,
generally, in calculating normal value, the Department must rely on
sales and transactions that are in the ordinary course of trade. The
first sentence of the definition refers to section 771(15) of the Act.
The second sentence draws on the SAA, at 834, to elaborate on this
definition, and contains examples of the types of sales or transactions
that might be considered as outside the ordinary course of trade.
Some commentators urged the Department to refrain from specifying
criteria to be used in determining whether sales or transactions are
outside the ordinary course of trade. We agree that it would be
inappropriate to include in regulations a detailed list of criteria
that the Department might consider, but we also believe that there
should be some guidance to the public as to how the Department will
analyze ``ordinary course of trade'' issues. Accordingly, as noted
above, we have incorporated the relevant language from the SAA, which
provides a general description of the standard to be applied.
One commentator suggested that the Department clarify that the
addition in the statute of two specific types of transactions deemed to
be outside the ordinary course of trade does not affect the criteria
the Department traditionally has used to determine whether other types
of transactions are outside the ordinary course of trade. The second
sentence of the regulatory definition addresses this concern.
Two commentators suggested that the Department identify examples of
the types of sales that would be considered as being outside the
ordinary course of trade, including sales at aberrational prices. The
second sentence of the regulatory definition responds to these
comments, although we emphasize that the second sentence is not an
exhaustive list of all of the possible types of sales or transactions
that might be considered as being outside the ordinary course of trade.
One commentator requested that the Department clarify that below-
cost sales and affiliated transactions are not always outside the
ordinary course of trade. Further clarification is not needed, because
section 771(15) of the Act is clear that not all sales below cost or
affiliated transactions will be deemed automatically to be outside the
ordinary course of trade. Instead, only sales or transactions that are
disregarded under the pertinent statutory and regulatory provisions
automatically will be deemed to be outside the ordinary course of
trade. Of course, the fact that such sales or transactions are not
automatically considered to be outside the ordinary course of trade
does not mean that they never could be considered to be outside the
ordinary course of trade. For example, in the case of a below-cost sale
of an ``off-spec'' product, even if the sale is not disregarded as a
below-cost sale under section 773(b) of the Act, it might be
disregarded as not in the ordinary course of trade due to the ``off-
spec'' nature of the product.
Rates is used in these regulations as a single shorthand expression
for the various terms used in the Act. In addition, the second sentence
of the definition clarifies that in an antidumping proceeding involving
imports from a nonmarket economy (``NME'') country, the Secretary may
calculate a single dumping margin applicable to all exporters and
producers. Because the government of an NME country may control export
activities, the Department currently presumes that a single rate will
apply, but allows individual exporters or producers to receive their
own separate rates if they can demonstrate independence from the NME
government. See, e.g., Silicon Carbide from the People's Republic of
China, 59 FR 22585 (1994).
We have decided not to codify the current presumption in favor of a
single rate or the so-called ``separate rates test,'' which outlines
the type of information that an exporter or producer must present to
obtain a separate rate. Because of the changing conditions in those NME
countries most frequently subject to antidumping proceedings, this test
(and the assumptions underlying the test) must be allowed to adjust to
such changes on a case-by-case basis.
The Department received comments proposing changes to the separate
rates test, as well as objections to the proposed changes. Because we
are codifying neither the single rate presumption nor the separate
rates test, we are not addressing these comments at this time. However,
we will take the comments into consideration as our policy in this area
evolves.
In addition, the Department is considering whether to promulgate
special rules regarding the rates that should be applied to exporters
that are not also producers, such as trading companies. In this
situation, one alternative would be to calculate a separate rate for
each exporter/producer combination, so that the rate to be applied to
an exporter would depend upon the producer of the particular
merchandise in question. However, before proceeding further, the
Department would like to receive additional public comment on this
issue.
Respondent interested party is a counterpart to, and is intended to
serve
[[Page 7312]]
the same function as the term ``domestic interested party.'' A
respondent interested party is an interested party described in
paragraph (A) or (B) of section 771(9) of the Act.
The term segment of the proceeding refers to discrete portions of
the proceeding which are separately reviewable under section 516A of
the Act. Thus, for example, an investigation and an administrative
review are separate segments of a proceeding.
The term third country applies in antidumping proceedings, and is
intended to be a shorthand expression for the more lengthy statutory
phrase ``a country other than the exporting country or the United
States.''
Section 351.103
Section 351.103
Section 351.103 describes the location and function of Import
Administration's Central Records Unit, provides that documents must be
filed with the Central Records Unit, and indicates that the Central
Records Unit is responsible for maintaining the service list for each
antidumping and countervailing duty proceeding.
Section 351.104
Section 351.104 defines what constitutes the official and public
records of an antidumping or countervailing duty proceeding, and
prohibits the removal of a record or any portion thereof unless ordered
by the Secretary or required by law.
One change warranting discussion is the treatment of material
returned by the Department to the submitter. The existing regulations
provide that material which is not timely filed or which is returned to
the submitter for some other reason shall not be retained in the
official record. However, because parties have a right to seek judicial
or binational panel review of a decision to reject a submission, as a
matter of practice the Department has found it necessary to retain a
copy of the returned materials in order to be able to document for the
court or binational panel the reasons for the Department's decision to
reject the submission. Therefore, paragraph (a)(2) conforms to current
practice. Under paragraph (a)(2), the Department will include in the
official record material that has been returned to the submitter for
reasons other than untimeliness, but the Department will not use such
material in its determinations. In the case of a submission rejected as
untimely, it is unnecessary to retain a copy of the submission in the
official record, because the timeliness/untimeliness of the submission
can be documented by means other than retention of the submission.
Section 351.105
Section 351.105 defines the four categories of information
applicable to antidumping and countervailing duty proceedings: public,
business proprietary, privileged, and classified. One change from the
existing regulations is that paragraph (c)(10) provides that the
position of domestic producers or workers regarding a petition may be
treated as business proprietary information. The new statute requires
that the Department make an affirmative determination of domestic
industry support for a petition before initiating an antidumping or
countervailing duty investigation. Some domestic producers or workers
might be reluctant to communicate their positions regarding a petition
for fear that their positions might become public information, thereby
potentially subjecting them to commercial retaliation. Accordingly, it
is essential that domestic producers and workers have the option of
communicating their positions to the Department on a confidential
basis.
Section 351.106
Section 351.106 deals with the de minimis standard, and implements
section 703(b)(4) and section 733(b)(3) of the Act. The Department has
long applied a de minimis standard under which it treated net
countervailable subsidies and weighted-average dumping margins that
were less than 0.5 percent ad valorem (or the equivalent specific rate)
as zero. The URAA incorporated the de minimis standards of the AD
Agreement and the SCM Agreement into the statute, thereby modifying the
prior Department standard in antidumping and countervailing duty
investigations.
Consistent with the statute and the SAA, paragraph (b)(1) provides
that the de minimis standards set forth in section 703(b)(4) and
section 733(b)(3) of the Act will apply to the investigatory segment of
an antidumping or countervailing duty proceeding. Although not restated
in paragraph (b)(1), these statutory standards are 2 percent ad valorem
(or the equivalent specific rate) for antidumping duty investigations,
and normally 1 percent ad valorem (or the equivalent specific rate) for
countervailing duty investigations. However, the de minimis standard in
a countervailing duty investigation may be 2 percent if the
investigated merchandise is from a developing country, or 3 percent if
the investigated merchandise is from a ``least developed country'' or
from a country which has phased out its export subsidies prior to the
deadline established in the SCM Agreement.
Paragraph (b)(2) provides a transition rule for investigations that
were initiated under pre-URAA law, suspended, and then later resumed
due to a cancellation of the suspension agreement. Paragraph (b)(2)
provides that in making a final determination in this situation, the
Department will apply the de minimis standard which it would have used
if the investigation never had been suspended (i.e., the old law
standard for investigations of 0.5 percent). However, paragraph (b)(2)
has no effect on the standard which the Department may apply in
determining that a suspension agreement has been violated or that a
violation is ``inadvertent or inconsequential'' within the meaning of
section 351.209.
The de minimis standards set forth in paragraph (b)(1) will apply
only in antidumping or countervailing duty investigations. Paragraph
(c)(1) provides that for all other antidumping or countervailing duty
determinations, the de minimis standard will be 0.5 percent ad valorem,
the standard set forth in existing sections 353.6 and 355.7. Several
commentators suggested that the new de minimis standards set forth in
paragraph (b)(1) should not be limited to the investigatory segment.
The Department has not adopted these suggestions, because, as a matter
of domestic law, the statute and the SAA are very clear that the new
standards apply only to investigations. Moreover, as a matter of
international law, neither the AD Agreement nor the SCM Agreement
require that the new standards be applied outside of the investigatory
segment.
In this regard, several commentators suggested that the Department
should abandon its practice of assessing antidumping duties even when
the weighted-average dumping margin was de minimis, arguing that (1)
this practice is in conflict with the statement in the SAA, at 844,
that ``de minimis margins are regarded as zero margins,'' and (2) a
failure to apply the de minimis standard to assessment effectively
would negate that standard. The Department agrees that the language of
the SAA suggests that the de minimis standard should not be applied
solely to cash deposits, but to assessment of duties as well. The 0.5
percent de minimis standard will apply to the assessment of both
antidumping and countervailing duties, but, in the case of antidumping
duties, the Department will apply this standard to the
[[Page 7313]]
``assessment rate'' calculated under new section 351.212(b)(1). As
discussed in more detail below, the Department will calculate the
assessment rate on an importer-by-importer basis. In situations where
an exporter sells to one importer at dumped prices and to another
importer at non-dumped prices, the application of the de minimis
standard to these importer-specific assessment rates will prevent the
dumped transactions from escaping the assessment of duties. With
respect to the assessment of countervailing duties, the Department will
continue to refrain from assessing duties where the countervailable
subsidy rate (or the all-others or country-wide subsidy rate) is de
minimis.
Subpart B--Antidumping Duty and Countervailing Duty Procedures
Subpart B deals with antidumping duty and countervailing duty
procedures and is based on subpart B of Part 353 and Part 355 of the
Department's existing regulations.
Section 351.201
Section 351.201 deals with the self-initiation of investigations by
the Department, and is based on existing sections 353.11 and 355.11.
Section 351.202
Section 351.202 deals with the contents of, and filing requirements
for, antidumping and countervailing duty petitions, and is based on
existing sections 353.12 and 355.12.
Paragraph (b) is based on existing sections 353.12(b) and
355.12(b), and retains the standard that a petition need only contain
information that is reasonably available to the petitioner. The
following changes in paragraph (b) merit comment.
Paragraph (b)(3) is new and reflects the requirement that, before
initiating an investigation, the Department must make an affirmative
determination that the domestic industry supports the petition.
Paragraph (b)(3) does not prescribe a single method by which a
petitioner may seek to establish industry support, because the type of
information establishing industry support may vary from industry to
industry. However, as provided in the SAA, at 861, the petitioner must
provide the volume and value of its own production of the domestic like
product, as well as the production of that product by each member of
the industry, to the extent that such information is reasonably
available to the petitioner. In addition, the petitioner must provide
information on the total volume and value of U.S. production of the
domestic like product, to the extent that such information is
reasonably available to the petitioner.
In paragraph (b)(7)(ii)(C)(1), which deals with upstream subsidy
allegations, the phrase ``Countervailable subsidies, other than an
export subsidy'' replaces the phrase in existing Sec. 355.12(b)(8)(i),
``Domestic subsidies described in section 771(5). * * *'' This change
reflects the URAA amendment to section 771A of the Act, which, in turn,
was due to the URAA's creation of a third category of subsidies, so-
called ``import substitution subsidies,'' in section 771(5)(C) of the
Act.
In paragraph (b)(10), the phrase ``and causation'' has been added.
Petitioners always have been required to submit information indicating
that dumped or subsidized imports cause, or threaten to cause, material
injury to a domestic industry. The addition of this phrase is intended
simply to document this requirement.
Paragraph (b)(11), which deals with critical circumstances
allegations, has been revised from existing Sec. 353.12(b)(12) to
reflect the statutory amendments regarding the elements necessary for a
finding of critical circumstances.
Paragraph (e) deals with amendments to petitions, and is based on
existing Secs. 353.12(e) and 355.12(e). In the first sentence, ``may''
has been substituted for ``will'' in order to more accurately reflect
the discretion that the statute confers on the Department regarding the
acceptance of amendments to petitions.
Paragraph (i) is based on existing Secs. 353.12(i) and 355.12(j),
but has been revised to reference sections 702(b)(4)(B) and
733(b)(3)(B) of the Act, which now deal expressly with the issue of
pre-initiation communications between the Department and outside
parties. The last sentence of paragraph (i)(1) clarifies that the
Department will not consider the filing of a notice of appearance in an
antidumping or countervailing duty proceeding to constitute a
communication. However, if any communication is appended to a notice of
appearance on any subject other than industry support, the Department
will consider the entire document to be prematurely filed. In addition,
paragraph (i)(2) provides that, in a countervailing duty proceeding,
the Department will take the initiative and ``invite'' the government
of the exporting country involved for consultations, instead of taking
a more passive approach and merely providing an opportunity for
consultations.
Several commentators suggested that the Department should solicit
comments regarding the petition, such as comments concerning the
accuracy of the information contained in the petition. However, the
SAA, at 863-64, states that ``the pre-initiation right to comment will
be limited solely to the issue of industry support for the petition.''
Thus, the legislative intent was to prohibit the type of communication
contemplated by these commentators, and it would contravene this intent
if the Department were to allow parties to submit such information by
``requesting'' parties to provide it.
Section 351.203
Section 351.203 deals with determinations regarding the sufficiency
of a petition, and implements sections 702(c) and 732(c) of the Act.
While based on existing Secs. 353.13 and 355.13, Sec. 351.203 contains
several changes that reflect amendments to the statute.
Paragraph (b)(1) provides that the Department normally will make
the determination regarding the sufficiency of a petition within 20
days of the date on which the petition is filed. In this regard,
paragraph (b)(1) repeats the language of the statute with respect to
the determination concerning the ``accuracy and adequacy'' of a
petition. The Department does not believe that the new statutory
standard constitutes a significant departure from past Department
practice.
Paragraph (b)(1) reflects the new statutory requirement that the
Department examine sources readily available to it in determining the
sufficiency of a petition. In the past, it was the Department's
practice, in reviewing a petition, to note information that lacked
sufficient support or that appeared aberrational, and to ask the
petitioner to provide additional information. This practice is
consistent with the type of review contemplated by the new statute.
Under paragraph (b)(1), the Department will seek information from
sources other than the petitioner where: (1) Support for a particular
allegation is weak, but better information is unavailable to the
petitioner, particularly where the allegation is central to the
adequacy of the petition or has a significant impact on the alleged
rates, or (2) the information, although supported, appears aberrational
and is central to the adequacy of the petition or has a significant
impact on the alleged rates. The Department will give the petitioner an
opportunity to comment on any such information acquired by the
Department.
In this regard, the use of information ``readily available'' is
intended to mean information that does not require extensive research
by the Department to
[[Page 7314]]
obtain. An example of such information would be the replacement of a
significant factor of production value in a nonmarket economy
antidumping petition with non-proprietary information used in a
recently completed investigation or review.
With respect to injury and causation, given the bifurcated
responsibilities of the Department and the Commission under the Act,
the Department will continue to work in cooperation with Commission
staff in evaluating a petition.
Paragraph (b)(2) deals with situations in which the Department
extends the period for determining the sufficiency of a petition in
order to poll or otherwise determine industry support for a petition.
Under paragraph (b)(2), the Department will extend the period only by
the amount of time required to gather and analyze information relevant
to the question of industry support, and in no case will the Department
exceed the maximum period of 40 days authorized by the statute.
Paragraph (c)(2) is new and incorporates the requirements of the
SAA, at 867, regarding the distribution of a public version of a
petition once the Department has made a determination to initiate an
investigation. Normally, the Department will provide a public version
of the petition to all known exporters. However, in accordance with the
SAA, at 867, where the number of exporters is very large, the
Department may provide a copy of the petition to a trade association,
with instructions to provide copies to all exporters. Alternatively,
the Department may consider this obligation to have been satisfied by
the delivery of a public version of the petition to the government of
the exporting country under Sec. 351.202(f). In the latter case, the
Department will notify the government in question that its obligation
has been met through such delivery. In addition, to conserve resources,
the Department is looking into the feasibility of making the petition
available on computer diskette.
Paragraph (e) is new and deals with the new statutory requirements
regarding determinations of industry support for a petition. Paragraph
(e)(1) deals with the measurement of domestic production, an important
issue in light of the fact that expressions of support or opposition
for a petition are weighted according to production. Consistent with
the SAA, at 862, paragraph (e)(1) provides that the Department may
measure production on the basis of volume or value. In addition, in
order to provide a degree of predictability, paragraph (e)(1) also
provides that the Department normally will measure production over a
twelve-month period. Because in certain cases some period other than
twelve months may be more appropriate, the Secretary retains the
discretion to prescribe the precise period on a case-by-case basis.
However, normally the Secretary will use the most recent twelve-month
period for which data are available.
The second sentence of paragraph (e)(1) provides that where the
Department is satisfied that actual production data for the relevant
period is not available, production levels may be established on the
basis of alternative data that the Department determines to be
indicative of production levels. For example, for some industries or
firms, shipment data may correspond directly with production data, and,
thus, be a reliable alternative. However, because of the vast array of
industries that appear before it, the Department has not attempted to
specify data that would be an acceptable surrogate in all cases for
production data.
Paragraph (e)(2) provides that the expression of a position
regarding a petition may be treated as business proprietary information
under Sec. 351.105(c)(10), discussed above. Several commentators
expressed concern that, if parties were required to state publicly
their position regarding a petition, they could face commercial
retaliation. Therefore, business proprietary treatment may be necessary
in order to encourage domestic producers and workers to present their
candid views regarding a petition.
Paragraph (e)(3) sets forth rules regarding the weight accorded to
the positions of workers and management regarding a petition.
Consistent with the SAA, at 862, an opinion expressed by workers will
be considered to be of equal weight to an opinion expressed by
management. Thus, for example, if a union expressed support for a
petition, the Department would consider that support to be equal to the
production of all of the firms that employ workers belonging to the
union. On the other hand, if management and workers at a particular
firm expressed opposite views with respect to a petition, the
production of that firm would be treated as representing neither
support for, nor opposition to, the petition.
Paragraph (e)(4) reflects sections 702(c)(4)(B) and 734(c)(4)(B) of
the Act and the SAA, at 858-859, which allow the Department to
disregard, in certain situations, opposition to a petition by certain
domestic producers. Paragraph (e)(4)(i) clarifies that a ``related''
domestic producer includes a domestic producer related to a foreign
exporter, as well as a domestic producer related to a foreign producer.
In this regard, the Department believes that the statutory requirement
that the Department ``shall'' ignore the opposition of related domestic
producers ``unless such domestic producers demonstrate that their
interests as domestic producers would be adversely affected'' puts the
burden of demonstrating such an effect on those producers. Paragraph
(e)(4)(ii) clarifies that the Department may disregard the views of
domestic producers who are also importers of the subject merchandise
and domestic producers who are related to such importers within the
meaning of section 771(4)(B)(ii) of the Act. In evaluating whether to
disregard such producers, the Department may consider the import levels
and percentage of ownership common to other members of the domestic
industry.
Paragraph (e)(5) deals with the question of industry support where
the petition alleges the existence of a regional industry under section
771(4)(C) of the Act. The SAA, at 863, states that industry support
shall be assessed ``on the basis of production in the alleged region.''
Consistent with this statement, paragraph (e)(5) provides that, for
purposes of assessing industry support, the applicable region will be
the region specified in the petition.
Paragraph (e)(6) deals with situations in which the Department may
have to poll the industry in order to determine whether the industry
supports a petition. Paragraph (e)(6) clarifies that in conducting such
a poll, the Department will include in the poll unions, groups of
workers, and trade and business associations.
Paragraph (f) interprets sections 702(c)(1)(C) and 732(c)(1)(C) of
the Act, which provide for expeditious investigations involving subject
merchandise that previously was covered by an order that was revoked or
a suspended investigation that was terminated. Paragraph (f) clarifies
that these provisions of the Act apply if the revocation or termination
occurred under a pre-URAA version of the statute.
Section 351.204
Section 351.204 deals with issues relating to the transactions and
persons to be examined in an investigation, voluntary respondents and
exclusions. Paragraph (b) deals with the period of time covered by an
investigation (``POI''). In a departure from existing Sec. 353.42(b),
paragraph (b)(1) provides that the POI in an antidumping investigation
normally will be the four most recently completed fiscal quarters (or,
in a case involving a nonmarket
[[Page 7315]]
economy, the two most recently completed fiscal quarters) as of the
month preceding the month in which a petition is filed or in which the
Department self-initiated an investigation. The use of fiscal quarters
is intended to ease reporting requirements and permit more efficient
verification of submitted information. However, paragraph (b)(1) would
permit the Department to use an additional or alternative period in
appropriate circumstances. Paragraph (b)(2) codifies existing practice
regarding the POI in countervailing duty investigations.
Paragraph (c) deals with the selection of the exporters and
producers to be examined. In light of section 777A(c) of the Act,
paragraph (c) does not retain the 60 and 85 percent thresholds of
existing Sec. 353.42(b). Additionally, paragraph (c) permits the
Department to decline to examine a particular exporter or producer
where all parties agree. Such exporter or producer will be subject to
the all-others rate, where such a rate is calculated.
Paragraph (d) deals with the treatment of voluntary respondents
under section 782(a) of the Act. Through its reference to section
777A(e)(2)(A) of the Act, paragraph (d)(1) provides that the Department
will not consider voluntary respondents in investigations conducted on
an aggregate basis under section 777A(e)(2)(B) of the Act. As discussed
below, however, in so-called ``aggregate cases,'' the Department will
consider requests for exclusion under paragraph (e)(3) by individual
exporters or producers. Paragraph (d)(2) provides that if the
Department accepts a voluntary response, the voluntary respondent will
be subject to the same requirements as those firms initially selected
by the Department for individual examination, including, where
applicable, the use of the facts available. The purpose of this
provision is to ensure that the Department is not burdened with
frivolous voluntary responses from parties that wish to see the
preliminary all-others rate before deciding whether to withdraw their
request to be investigated. Finally, paragraph (d)(3) provides for the
exclusion of voluntary respondents from the calculation of the all-
others rate. The purpose of this provision is to prevent manipulation
and to maintain the integrity of the all-others rate.
Paragraph (e) deals with exclusions and constitutes a significant
change from prior practice, as reflected in Secs. 353.14 and 355.14.
With the exception of countervailing duty investigations conducted on
an aggregate basis, paragraph (e)(1) eliminates the various
certification requirements of the prior regulations and, instead,
provides that any exporter or producer that is individually examined
and that receives an individual weighted-average dumping margin or
countervailable subsidy rate of zero or de minimis will be excluded
from an order.
In this regard, the Department is considering whether there should
be separate exclusion rules for firms, such as trading companies, that
sell, but do not produce, subject merchandise. For example, one
alternative would be to limit the exclusion of a non-producing exporter
to subject merchandise produced by those producers that supplied the
exporter during the period of investigation. However, before issuing
final rules, the Department is interested in receiving additional
public comments regarding this issue.
Paragraph (e)(2) clarifies that, while no exporter will be excluded
from an investigation as a result of a preliminary determination, those
found to have zero or de minimis rates will not be subject to
provisional measures.
Paragraph (e)(3) explains that, where a countervailing duty
investigation is conducted on an aggregate basis under section
777A(e)(2)(B) of the Act, individual responses will be accepted for
purposes of establishing exclusion. However, consistent with section
782(a)(2) of the Act, the number of such responses must not be so large
that individual examination of such exporters or producers would be
unduly burdensome and inhibit the timely completion of the
investigation. Responses submitted in support of a request for
exclusion must include a certification that the party received zero or
de minimis net countervailable subsidies and a calculation
demonstrating the basis for that conclusion. Additionally, because the
countervailable subsidy rate for a reseller normally is based on the
producer's rate, an exporter that is not the producer of subject
merchandise must provide a certification from the suppliers or
producers of the merchandise that the exporter sold during the period
of investigation, stating that those persons also received zero or de
minimis net countervailable subsidies. Finally, an exporter or producer
seeking exclusion also must submit a certification from the government
that the government did not provide the firm with net countervailable
subsidies above de minimis. An exporter or producer requesting
exclusion may be required to provide more detailed information
regarding the nature and amount of any countervailable subsidies
received. If the Department determines that an exporter or producer
seeking exclusion has received net countervailable subsidies above de
minimis, that firm will not be excluded from a countervailing duty
order and will be subject to the country-wide subsidy rate.
Section 351.205
Section 351.205 deals with preliminary antidumping and
countervailing duty determinations, and is based on existing sections
353.15 and 355.15.
Section 351.206
Section 351.206 deals with critical circumstances findings, and is
little changed from existing Secs. 353.16 and 355.15. However, the
reader should note that the statutory prerequisites for a finding of
critical circumstances have changed. See sections 705(a)(2) and
735(a)(3) of the Act.
Section 351.207
Section 351.207 deals with the termination of investigations,
something that typically occurs through a withdrawal of the petition.
Section 351.207 is based on existing Secs. 353.17 and 355.17, and the
principal changes are: (1) the last sentence of paragraph (b)(1)
contains a cross-reference to the statutory and regulatory provisions
that deal with the treatment in a subsequent investigation of records
compiled in an investigation in which the petition is withdrawn; and
(2) paragraph (c) references the Department's authority, pursuant to
section 782(h)(1) of the Act, to terminate an investigation due to lack
of interest. As the SAA, at 864, makes clear, the Department's
authority to carry out a no-interest termination is unaffected by those
provisions of the statute prohibiting the post-initiation
reconsideration of industry support for a petition.
Section 351.208
Section 351.208 deals with suspension agreements and suspended
investigations, and is based on existing Secs. 353.18 and 355.18. The
most significant changes reflected in Sec. 351.208 relate to the new
statutory provisions regarding suspension agreements in regional
industry cases (paragraphs (f)(1)(ii), (f)(2)(ii), and (f)(3)). In this
regard, paragraphs (f)(1)(ii) and (f)(2)(ii) address situations in
which the Commission finds a regional industry in its final
determination, but not in its preliminary determination. If the
Commission finds a regional industry in its preliminary determination,
the Secretary still could accept a regional industry suspension
[[Page 7316]]
agreement under section 704(l) and section 734(m) of the Act, but the
procedures and deadlines in paragraphs (f)(1)(i) and (f)(2)(i) would
apply. In addition, it should be noted that paragraph (f)(2) lists
some, but not all, of the procedural steps required by the Act with
respect to the suspension of an investigation.
In addition, the deadlines for initialling and signing suspension
agreements have been advanced. Under current practice, consideration of
a suspension agreement and briefing and drafting of comments in
preparation for a final determination occur simultaneously, thereby
creating an enormous burden on parties and on the Department. The
proposed rule allows parties to propose a suspension agreement within
15 days of a preliminary antidumping determination, or within 5 days of
a preliminary countervailing duty determination. In an antidumping
investigation, parties may also request an extension of the final
determination. An extension will not affect the time allotted for
consideration of a suspension agreement, only the time allotted for
preparation of the final determination. In a countervailing duty
investigation, the period for consideration of a suspension agreement
would be expedited because no extension of the final determination is
possible, unless the investigation is aligned with a companion
antidumping investigation or an upstream investigation is initiated.
While the suspension agreement is under consideration, the briefing and
hearing schedule would be postponed. The proposed timeline will reduce
burdens on all parties by eliminating the need to file case briefs,
rebuttal briefs, and to participate in a hearing, if a suspension
agreement is accepted.
Section 351.209
Section 351.209 deals with the violation of suspension agreements.
Although Sec. 351.209 is largely identical to existing Secs. 353.19 and
355.19, there are a few changes worth noting. First, in several places,
the term ``a signatory'' has been substituted for ``exporters.'' This
change from the plural to the singular is intended to clarify that the
actions of a single signatory can constitute a violation of a
suspension agreement.
Second, paragraph (b)(2) provides that if, as a result of a
violation, the Department resumes a suspended investigation that had
not been completed under sections 704(g) or 734(g) of the Act, the
Department may update previously submitted information, where
appropriate, for purposes of making a final determination. For example,
if a considerable amount of time has passed since the POI of the
original investigation or if there have been significant changes in
market circumstances, it might be inappropriate to make a final
determination on the basis of dated information. This issue has arisen
in prior cases, and paragraph (b)(2) is intended to clarify the
Department's authority to seek updated information in these types of
situations.
Section 351.210
Section 351.210 deals with final determinations in investigations,
and is little changed from existing Secs. 353.20 and 355.20. One change
worth noting is that because the URAA eliminated the preference for a
country-wide rate in countervailing duty investigations, Sec. 351.210
lacks a provision comparable to existing Sec. 355.20(d).
Section 351.211
Section 351.211 deals with the issuance of antidumping duty and
countervailing duty orders, and is based on existing Secs. 353.21 and
355.21. The most significant new provision is paragraph (c), which
implements sections 706(c) and 736(d) of the Act regarding the coverage
of orders issued in investigations where the Commission has identified
a regional industry. Paragraph (c) establishes procedures by which an
exporter or producer that did not supply the region during the POI may
be excepted from the assessment of duties.
Section 351.212
Section 351.212 is new, and deals with matters related to the
assessment of antidumping and countervailing duties. Although portions
of Sec. 351.212 are based on provisions of the Department's current
regulations, other portions are entirely new.
Paragraph (b) deals with the assessment of duties as the result of
a review. Paragraph (b)(1) establishes rules regarding the assessment
of antidumping duties. By way of background, when the Department
assumed responsibility for the administration of the antidumping law in
1980, it inherited from its predecessor, the U.S. Customs Service, the
practice of issuing assessment instructions in the form of so-called
``master lists.'' Typically, a master list would list each entry (or
each shipment). Over time, the Department encountered numerous problems
in creating master lists. For example, because dumping margins are
calculated on the basis of sales, the creation of a master list
requires the ability to link each U.S. sale to a corresponding customs
entry. Frequently, this is an impractical task for both the Department
and exporters and importers. For example, if sales are made after
importation, the U.S. affiliate (or consignee) of the foreign exporter
usually will not maintain records that link each sale to an
unaffiliated customer to a corresponding customs entry. Similarly, when
the Department examines sales by a foreign producer to intermediaries
outside the United States, such as foreign trading companies, the
producer normally does not have the information that would allow the
Department to identify the specific customs entries that correspond to
specific sales to the intermediaries.
This inability to link sales to entries also has prevented the
Department from conducting reviews on the basis of merchandise entered
during a particular review period. Where this type of problem exists,
the Department has been forced to define review periods on the basis of
shipments or sales during the period.
One method of dealing with this problem would be to require
respondents to maintain records in such a way that sales can be linked
to entries. However, such a requirement would impose a burden on
respondents that would be disproportionate to the minor gains in the
precision of duty assessments, and simply would render an already
complex process even more complex. Therefore, commercial reality and
the need to streamline the administration of the antidumping law have
caused the Department to rely on the use of duty assessment rates
instead of entry-by-entry master lists. In the interests of clarity and
predictability, we believe that this practice should be codified in the
regulations.
With respect to the use of duty assessment rates, the Department
believes that, except in unusual situations, we should assess duties on
subject merchandise entered during each review period. Therefore,
paragraph (b)(1) provides that the Department normally will calculate a
duty assessment rate based on sales reviewed, and will apply those
rates to entries made during the review period. In all cases, this will
result in the assessment of duties on merchandise entered during the
review period. To the extent possible, these assessment rates will be
specific to each importer, because the amount of duties assessed should
correspond to the degree of dumping reflected in the price paid by each
importer. Where possible, we will
[[Page 7317]]
base assessment rates on the entered value of the sales examined in the
review. If entered values are not available, it may be necessary to use
unit rates.
For example, assume that a U.S. importer (affiliated with the
foreign exporter) sells after importation two different products, A and
B, both of which are subject to an antidumping order. The Department
reviews sales totalling 100 tons of product A and 200 tons of product
B. The entered value of the merchandise during the review period was
$40 per ton for product A and $30 per ton for product B. The absolute
dumping margin found for all of the sales was $100. In this example,
the assessment rate would be 10 percent [($100/($40x100 + $30x100) = 10
percent]. Put differently, it is the rate of dumping reflected in these
sales relative to the entered value of the merchandise. We would
collect antidumping duties on merchandise entered during the review
period by applying this 10 percent rate to the entered value of each of
those entries.
The Department believes that, except in unusual situations, it
should not abandon the objective of assessing duties on the basis of
entries, even when it is not possible to precisely link sales to
entries. In most antidumping proceedings, it is necessary to assess
duties on the basis of entries in order to maintain continuity with
periods of no review and to avoid the over- or undercollection of
duties. Moreover, because we typically cannot link sales to entries, we
currently have no means of collecting precisely an amount of duties
equal to the total absolute dumping margin calculated for the sale
reviewed. This would require exact knowledge, for each importer, as to
the total quantity or value of unliquidated entries during the review
period, information that often is difficult or impossible to obtain.
The Department intends to continue to use master lists in
situations where there are few shipments, and to assess duties on the
basis of merchandise sold or shipped if warranted by the pattern of
imports and sales. We also will evaluate the effect of reconciliation
entries, which are authorized by the Customs Modernization Act, on the
duty assessment process, and we may collect duties on the basis of
merchandise sold or shipped if a reconciliation entry is used.
Paragraph (b)(2) deals with the assessment of countervailing
duties, and is consistent with current practice.
Paragraph (c) deals with the automatic assessment of duties in
situations where an administrative review of an order under
Sec. 351.213 is not requested, and is based on existing Secs. 353.22(e)
and 355.22(g). Paragraph (c)(3) is new, and provides that automatic
assessment will not occur, even though an administrative review is not
requested, if the merchandise in question is subject to a new shipper
review under Sec. 351.214 or an expedited antidumping review under
Sec. 351.215.
Paragraph (d) deals with the provisional measures deposit cap, and
is based on existing Secs. 353.23 and 355.23. The language of paragraph
(d) has been revised to reflect the new concept of assessment rates in
paragraph (b). Finally, paragraph (e) deals with interest on over- and
underpayments of estimated duties, and is little changed from existing
Secs. 353.24 and 355.24.
Section 351.213
Section 351.213 deals with administrative reviews under section
751(a)(1) of the Act. Section 351.213 is based largely on existing
Secs. 353.22 and 355.22, but certain changes are worth noting.
Paragraph (c) establishes a new procedure by which the Secretary,
upon request, may defer the initiation of an administrative review for
one year. The purpose of this provision is to simplify the review
process and reduce the burden on all concerned by allowing the
Department, in effect, to cover two review periods in a single review.
However, the Secretary will not defer an administrative review if one
of the parties identified in the regulation objects to deferral.
Paragraph (d) deals with the rescission (previously referred to as
``termination'') of administrative reviews, and clarifies that the
Department may rescind a review that the Secretary self-initiated or in
which there are no entries, exports, or sales to be reviewed.
Paragraph (e)(2) codifies existing practice regarding the period of
review for countervailing duty administrative reviews, and is similar,
but not identical, to the period covered by investigations under
Sec. 351.204(b)(2).
Paragraph (f) deals with the treatment of voluntary respondents in
administrative reviews, and provides that voluntary respondents will be
treated in the same manner as in an investigation.
Paragraph (g) cross-references new Sec. 351.221, a new provision
which consolidates in one place the procedures to be applied in the
different types of reviews provided for by the Act.
Paragraph (h) sets forth deadlines for issuing preliminary and
final results of administrative reviews, and also provides for
extensions to those deadlines.
Paragraph (j) establishes procedures for the analysis of the
absorption of antidumping duties under section 751(a)(4) of the Act.
The Department will make a determination regarding duty absorption in
administrative reviews initiated in the second and fourth years after
the issuance of an antidumping order. In addition, if an order remains
in existence following a sunset review under section 751(c) of the Act,
the Department will make a duty absorption determination in the second
and fourth years following the Department's determination in the sunset
review. However, the Department will make a determination regarding
duty absorption only if a request for such a determination is made
within 30 days of the initiation of the administrative review. For
transition orders, reviews initiated in 1996 will be considered
initiated in the second year and reviews initiated in 1998 will be
considered initiated in the fourth year.
Paragraph (k) deals with administrative reviews of countervailing
duty orders that are conducted on an aggregate basis. Paragraph (k)(1)
establishes a procedure under which an individual exporter or producer
may seek a zero rate. This procedure is modeled on Sec. 351.204(e)(3),
discussed above, which deals with requests for exclusion in
countervailing duty investigations conducted on an aggregate basis. As
with requests for exclusion, the Secretary will consider requests for
zero rates to the extent practicable. Paragraph (k)(2) provides that,
where an administrative review of a countervailing duty order is
conducted on an aggregate basis, the country-wide rate calculated in
such a review, if any, will supersede, for cash-deposit purposes, rates
calculated in a prior segment of the proceeding, with the exception of
zero rates determined under paragraph (k)(1).
Section 351.214
Section 351.214 sets forth the procedures for conducting new
shipper reviews, a new procedure contained in section 751(a)(2) of the
Act. This section also establishes a procedure for conducting an
expedited review of exporters that are not individually examined in
countervailing duty investigations. Certain features of Sec. 351.214
merit discussion.
Paragraph (b) sets forth the procedures for requesting a new
shipper review. Under paragraphs (b)(1), (b)(2), and (b)(3), the
requester must provide certifications demonstrating that the
[[Page 7318]]
party is a bona fide new shipper. The purpose of these certifications
is to ensure that new shipper status is not achieved through mere
restructuring of corporate organizations or channels of distribution.
In accordance with the SAA, at 875, this provision also makes clear
that parties will not be granted new shipper status merely because they
were not individually examined during the investigation.
Paragraph (b)(4) requires the requesting party to document the
entry date of the shipment which establishes the basis for the new
shipper review, as well as the date of the first sale to an
unaffiliated customer in the United States. If the requesting party
cannot provide such information it may, in the alternative, provide
documentation establishing the date on which the merchandise was
shipped. The date of first entry (or the date of shipment) will be used
to establish the timeliness of the request for a new shipper review
under Sec. 351.214(c).
In the case of a countervailing duty order, paragraph (b)(5)
requires the requesting party to certify that it has informed the
government of the exporting country that the government will be
required to provide a full questionnaire response. This requirement is
intended to put parties on notice that, in a review of a countervailing
duty order, the party will have to have the cooperation of the
government. By requiring at the outset a certification that the
government has been put on notice of the review, the Department hopes
to minimize situations in which it will be forced to rely upon the
facts available.
Paragraph (c) clarifies that a request for a new shipper review
must be submitted no later than one year after the date of the first
shipment to the United States. By setting this deadline, the Department
clarifies that the statute is intended to provide a new shipper an
opportunity to obtain its own rate on an expedited basis, and not to
permit shippers to request expedited reviews long after the first
shipment has taken place.
Paragraph (d) deals with the time for initiating new shipper
reviews, and provides an illustrative example. Paragraph (f) permits
the Secretary to rescind a new shipper review upon the request of the
new shipper made within 60 days of the initiation of the review. In
addition, the Secretary may rescind a new shipper review if the
Secretary concludes that: (i) There were no entries, exports, or sales
(as appropriate) during the standard period of review for a new shipper
review, and (ii) an expansion of the standard period to include
entries, exports, or sales would prevent the timely completion of the
new shipper review. This might occur, for example, in an antidumping
proceeding where a new shipper exports merchandise to an affiliated
U.S. importer, but the importer does not resell the merchandise to an
unaffiliated U.S. purchaser within the standard period of review.
Although the Secretary would have the discretion to expand the period
of review to cover a subsequent resale, if the merchandise has not been
resold within a reasonable period of time following the end of the
standard review period, the Secretary could rescind the new shipper
review. The new shipper still would have the option of requesting a new
shipper review if and when the merchandise was resold.
Paragraph (g) deals with the period of review. New shipper reviews
in antidumping proceedings normally will cover a period of six months
or one year, depending on whether the review was initiated following
the anniversary month or the semiannual anniversary month. In a
countervailing duty proceeding, the period of review will be the same
as in an administrative review. However, because of the novelty of the
new shipper review procedure, the period of review may change as the
Department gains experience in this area. It is the Department's intent
to apply paragraph (g) in a flexible manner so that the Department may
expand the standard period of review to cover the first exportation of
a new shipper, provided that any such expansion of the period of review
does not prevent the completion of the review within the statutory time
limits.
Because new shipper reviews may be requested at any time, but are
initiated only at six-month intervals, the Department may find that the
Customs Service has liquidated the relevant entries based upon
instructions issued under the automatic assessment provisions of
Sec. 351.212(c). Although the Department may be forced to review
entries that already have been liquidated, this should not be
interpreted as a change in the Department's general policy of refusing
to conduct administrative reviews of liquidated entries.
Paragraph (h) cross-references section 351.221, which, as discussed
above, contains procedural rules for the various types of reviews
conducted by the Department. Here, we should note that under
Sec. 351.221(b)(6), the results of review will form the basis for the
assessment of duties on unliquidated entries. Some commentators have
argued that the Department should exclude a new shipper from an order
if the Department determines in a new shipper review a zero or de
minimis rate. The Department has not adopted this suggestion for the
following reasons. Section 751(a)(2) implements obligations arising
under both the AD Agreement and the SCM Agreement, but during the
Uruguay Round negotiations, the subject of new shippers was negotiated
primarily in connection with the AD Agreement. The negotiating history
of the AD Agreement indicates that while a proposal was made regarding
the exclusion from an order of new shippers found to be selling at non-
dumped prices, this proposal was not included in the final AD
Agreement. Thus, the purpose of the new shipper review procedure merely
was to provide an expedited review of imports already considered to be
subject to an order. We note that we invite comment on our proposal to
change the rules governing revocation, Sec. 351.222, and that these
rules apply to new shippers.
Finally, paragraph (j) addresses situations in which a new shipper
may be subject to more than one review or more than one request for
review. For example, a new shipper might request a new shipper review
notwithstanding the fact that the new shipper is already subject to an
administrative review under Sec. 351.213. To minimize the potential for
confusion and to conserve administrative resources, paragraph (j)
permits the Department to terminate a review, in whole or in part,
including a new shipper review. Paragraph (j) also would permit the
Department to conduct an administrative review under Sec. 351.213 of
less than the normal one year review period. Paragraph (j) also permits
the Department to conduct a new shipper review concurrently with an
administrative review under section 351.213, if the new shipper is
willing to waive the time limits for a new shipper review set forth in
paragraph (i). If a new shipper waives the time limits, all other
provisions of Sec. 351.214, including the bonding provision of
paragraph (e), will continue to apply for the duration of the new
shipper review.
To implement Article 19.3 of the SCM Agreement, paragraph (k)
expands the new shipper review procedure to cover exporters that were
not individually examined in a countervailing duty investigation where
the Secretary limited the investigation under section 777A(e)(2)(A) of
the Act. There are a few important differences between this procedure
and the procedure for a regular new shipper review. First, to allow the
Department to manage its limited resources efficiently, a
noninvestigated exporter desiring an
[[Page 7319]]
expedited review must file a request within 30 days of the publication
of a countervailing duty order. This is a reasonable time limit,
because a noninvestigated exporter will be aware of its status long
before an order is published. Second, because the noninvestigated
exporter does not qualify as a new shipper, the Secretary will not
permit a bond to be substituted for a cash deposit of estimated duties.
Section 351.215
Section 351.215 deals with expedited antidumping reviews under
section 736(c) of the Act. But for stylistic and formatting changes,
section 351.215 is unchanged from existing Sec. 353.22(g).
Section 351.216
Section 351.216 deals with changed circumstances reviews under
section 751(b) of the Act. Again, except for stylistic and formatting
changes, this provision is unchanged from existing Secs. 353.22(f) and
355.22(h).
Section 351.217
Section 351.217 deals with reviews under section 751(g) of the Act.
Section 751(g) establishes a mechanism for reviewing a countervailing
duty order to take account of the outcome of a subsidies-related WTO
dispute.
Section 351.218
Section 351.218 deals with sunset reviews under section 751(c) of
the Act. In accordance with section 751(c), paragraph (c) provides that
the Department will publish a notice of initiation no later than 30
days before the fifth anniversary date of an order or suspended
investigation. As described in the SAA, at 882, the Department may
initiate a sunset review at an earlier date, at the request of a
domestic interested party. The purpose of this provision is to enable
the Commission to conduct a cumulative injury analysis. However, if the
Department determines that the party requesting an early sunset review
is related to a foreign exporter or producer or is an importer (or is
related to an importer) within the meaning of section 771(4)(B) of the
Act and Sec. 351.203(e)(4), the Department may decline such a request.
With respect to sunset reviews, the Department would like to remind
parties that section 751(c)(3)(A) of the Act requires the Department to
make a final sunset determination within 90 days of the notice of
initiation if no domestic interested party responds to the notice of
initiation. Therefore, once the Department publishes a notice of
initiation of a sunset review, parties will receive no further notice
of the review unless and until they provide such information.
Section 351.219
Section 351.219 deals with section 753 of the Act. In general,
section 753 of the Act provides a mechanism for providing an injury
test in the case of countervailing duty orders that (i) pertain to a
Subsidies Agreement country, and (ii) were issued under section 303 of
the Act without an injury test. Under section 753, upon request, the
Commission will conduct an investigation to determine if a U.S.
industry is likely to be materially injured if a countervailing duty
order is revoked. If the Commission's determination is negative, or if
no request for an investigation is received, the Department will revoke
the order.
Section 351.219 differs from Sec. 355.40, which the Department
issued as an interim-final rule on May 11, 1995 (60 FR 25130, 25139).
The principal change is that we have eliminated provisions that merely
repeated the language of section 753. However, consistent with the SAA,
at 942-943, paragraph (b) continues to provide that the Secretary will
notify domestic interested parties as soon as possible after the
opportunity for requesting a section 753 investigation arises.
Section 351.220
Section 351.220 deals with reviews conducted at the request of the
President under section 762 of the Act. But for stylistic and
formatting changes, Sec. 351.220 is unchanged from existing
Sec. 355.22(i).
Section 351.221
Section 351.221 consolidates in one section the procedural actions
that the Department will take with respect to the various types of
reviews provided for under the Act. Paragraph (b) is in the nature of a
generic provision, and is based on existing Secs. 353.22(c) and
355.22(c). Paragraph (c) contains special rules for particular types of
reviews.
Section 351.222
Section 351.222 deals with the revocation of orders and termination
of suspended investigations.
Paragraph (b), which deals with revocation or termination based on
the absence of dumping, is substantively unchanged from existing
Sec. 353.25(a). Paragraph (c) retains the current requirements (found
in Sec. 355.25(a)) for revocation or termination based on the absence
of countervailable subsidies. As provided in Sec. 351.213(e) and
Sec. 351.204(d), the Department generally will not consider voluntary
respondents in an administrative review of a countervailing duty order
that is conducted on an aggregate basis under section 777A(e)(2)(B) of
the Act. However, the requirements for a company-specific revocation
set forth in paragraph (c)(3) may be satisfied in a proceeding
conducted on an aggregate basis by the submission of certifications
that the company received zero or de minimis countervailable subsidies.
See Sec. 351.222(e)(2)(iii). As in the case of exclusions, the
Department is considering whether there should be separate revocation
rules for firms, such as trading companies, that sell, but do not
produce, subject merchandise. One alternative would be to limit the
revocation of a non-producing exporter to subject merchandise produced
by those producers that supplied the exporter prior to revocation.
However, before issuing final rules, the Department is interested in
receiving additional public comments regarding this issue.
Under the current regulations, a company must have been the subject
of three (or, in a countervailing duty proceeding, five) consecutive
administrative reviews in order to qualify for a company-specific
revocation. One consequence of this policy is that it forces companies
to request administrative reviews that they might not otherwise
request, thereby needlessly adding to the Department's workload.
In an attempt to reduce the administrative burden on parties and
Department personnel, while at the same time maintaining our current
policy that there must be a consistent pattern of no dumping or
subsidization before we will consider revocation, paragraph (d)
eliminates the requirement that the Department actually conduct a
review in each of the three (or five) years before revocation. Instead,
the Department will require that reviews of the first and last years of
the three- or five-year period demonstrate an absence of dumping or
subsidization. In other words, the Department would be able to revoke
an order (or terminate a suspended investigation), despite the fact
that an administrative review may not have been conducted for one or
more of the intervening years, as long as the cash deposit rate in the
end review years was zero. The Department reasons that if a review of
the first year establishes an absence of dumping or countervailable
subsidies, the lack of a request for reviews of subsequent years by
domestic interested parties is sufficient to establish the continued
absence of dumping or countervailable subsidies
[[Page 7320]]
during those years. However, to ensure that the lack of requests for
reviews is not simply due to the absence of imports in commercial
quantities, the Department will require a certification from a company
seeking revocation (or each signatory in the case of a suspended
investigation) that it sold subject merchandise to the United States in
commercial quantities in each of the three (or five) years, including
any unreviewed intervening years. The Department will establish whether
sales were made in commercial quantities based upon examination of the
normal sizes of sales by the producer/exporter and other producers of
subject merchandise. In deciding commercial quantities, the Department
will consider natural disasters and other unusual occurrences which
might affect the potential for production or exportation.
Paragraph (e) retains the procedures currently found in
Secs. 353.25(b) and 355.25(b) regarding requests for revocation and
termination based on the results of administrative reviews. One change
is that in a countervailing duty proceeding, paragraph (e)(2)(iii)
requires that, along with the certification that the person has
received no net countervailable subsidy for five consecutive years, the
person must submit a calculation demonstrating the basis for the
conclusion that the person received no net countervailable subsidy in
the fifth year. This calculation should be based on methodologies used
by the Department in the most recently completed segment of a
proceeding. The Department will review this calculation, and will
notify the person if the Department identifies a methodological or
other error, the correction of which may reveal a net countervailable
subsidy that is above de minimis for that year. In addition, to conform
to the changes in paragraph (d) regarding unreviewed intervening years,
the requester must provide certifications regarding sales to the United
States in commercial quantities.
Paragraph (g) deals with revocations and terminations based on
changed circumstances reviews, and is almost identical to prior
sections 353.25(d) and 355.25(d). The one substantive change is that,
in light of the new sunset review procedure under section 751(c) of the
Act, we have eliminated the prior ``sunset revocation'' procedure based
on the absence of requests for administrative reviews.
Paragraphs (h) through (i) deal with revocations and terminations
based on other review procedures, such as changed circumstances reviews
by the Commission and sunset reviews by the Department and the
Commission.
Paragraph (m) is a transition rule designed to account for the fact
that the URAA altered the substantive rules for determining when
merchandise is fairly traded under the Act. Essentially, for purposes
of satisfying the three- and five-year requirements for revocation or
termination, paragraph (m) gives a company or foreign government credit
for the absence of dumping or countervailable subsidies during years to
which the pre-URAA version of the Act applies. For example, in the case
of a particular company, if, under the transition rules of section
291(a)(2) of the URAA, there were two administrative reviews showing
two years of no sales at less than foreign market value (under the pre-
URAA version of the Act) and one year of no sales at less than normal
value (under the Act as amended by the URAA), the company would be
deemed to have satisfied the three-year requirement for revocation.
Section 351.223
Section 351.223 deals with the procedures for requesting and
initiating a downstream product monitoring program under section 780 of
the Act. There are no substantive changes from existing Sec. 353.27.
Section 351.224
Section 351.224 deals with the disclosure of calculations and
procedures for the correction of ministerial errors. Section 351.224 is
based on existing Secs. 353.20(e), 355.20(h), 353.28, and 355.28, and
on proposed regulations concerning the correction of significant
ministerial errors in preliminary determinations in antidumping and
countervailing duty investigations (see Notice of Proposed Rulemaking
and Request for Public Comments, 57 FR 1131 (January 10, 1992)
(Proposed Regulations)). However, section 351.224 contains numerous
changes intended to streamline the disclosure and ministerial error
correction process.
The principal goal of these changes is to provide for the issuance
of a correction notice normally within 30 days after the date of public
announcement of the preliminary or final determination or final results
of review. The date of public announcement is the date on which the
signed determination or results of review is first made available to
interested parties. This goal is consistent with the proposal from a
number of commentators that the Department should respond to
ministerial error allegations prior to the date when a summons must be
filed with the Court of International Trade or when a notice of intent
to commence panel review must be filed with the NAFTA Secretariat. This
30-day framework is intended to avert needless litigation by allowing
parties sufficient time to review the correction notice before the
litigation deadline arrives.
Paragraph (b), which deals with disclosure, has been revised from
the existing and proposed regulations to eliminate the requirement that
a party to the proceeding request disclosure. Instead, paragraph (b)
provides for automatic disclosure normally within five days after the
date of public announcement of the preliminary or final determination
or final results of review. In this context, disclosure refers both to
the release of disclosure documents and to the holding of a disclosure
meeting. In this regard, because paragraph (c)(1) provides that
comments concerning ministerial errors must be filed within five days
after the earlier of the date of the release of the disclosure
documents or the date of the disclosure meeting, parties are advised to
schedule disclosure meetings as early as possible. One commentator
proposed that there be at least five days between the release of
disclosure materials and the disclosure meeting. Due to the time
constraints of the 30-day framework, however, the Department normally
will not be able to extend the disclosure and comment process.
Paragraph (b) also provides for disclosure normally within 10 days
after the date of public announcement of the preliminary results of
review. Although, as discussed below, the Department will not amend a
preliminary results of review to correct a ministerial error, the
Department believes that prompt disclosure will assist parties in the
preparation of any case brief and in determining whether to request a
hearing. In either an investigation or a review, parties that do not
want to receive disclosure materials or to have a disclosure meeting
should inform the Department promptly.
A number of commentators proposed that as part of disclosure, the
Department provide the computer program on diskette. The Department
intends to accommodate this proposal, where practicable, upon request
from a party. The Department may charge a nominal fee for providing a
copy of the computer program on diskette.
We also should note that paragraph (b) provides for disclosure only
if the Secretary has performed calculations. For example, in certain
types of reviews, such as a sunset review or an Article 4/Article 7
review, the Department may not calculate dumping margins or
[[Page 7321]]
countervailable subsidy rates, but instead might only make a judgment
as to whether an order should remain in effect. In such instances, the
final results of review would contain a full statement of the
Department's legal and factual conclusions, and there would be nothing
further to ``disclose.''
Paragraph (c)(2) establishes the time limits for filing comments
concerning ministerial errors. Specifically, a party to the proceeding
must file comments not later than five days after the earlier of (i)
the date of release of disclosure documents to that party, or (ii) the
date of the disclosure meeting with that party. With respect to a
preliminary determination in an investigation, a party may submit only
comments concerning a significant ministerial error as defined in
paragraph (g). With respect to a final determination in an
investigation or a final results of review, a party may submit comments
concerning any ministerial error as defined in paragraph (f). One
commentator proposed that the Department establish regulations for the
correction of ministerial errors made in a preliminary results of
review. The Department does not believe that such regulations would be
appropriate. Unlike a preliminary determination in an investigation,
which may result in the suspension of liquidation and the imposition of
provisional measures, a preliminary results of review has no immediate
legal consequence. As a result, a more judicious use of Department
resources is to correct any ministerial errors made in a preliminary
results of review in the final results. See Proposed Regulations at
1132.
Paragraph (c)(3) establishes the time limits for filing replies to
comments. Specifically, replies to comments must be filed not later
than five days after the date on which such comments are made. One
commentator suggested eliminating replies to comments because alleged
ministerial errors should be indisputable. While it is often the case
that a ministerial error is obvious, there are instances where the
``ministerial'' nature of an error or the impact of an error is in
dispute. In these instances, parties' replies aid the Department in
analyzing the allegation. There is an exception for replies to comments
in connection with a significant ministerial error in a preliminary
determination. Because of greater time constraints due, in part, to the
fact that Department personnel conduct verification soon after the
announcement of a preliminary determination, the Department will not
consider replies to comments in a preliminary determination. Any reply
that a party wishes to make should be included in that party's case
brief so that the Department may address the reply in its final
determination.
Paragraph (c)(4) deals with the extension of the time limit for
filing comments concerning a ministerial error in a final determination
or a final results of review. A party may file a written request
showing good cause for extension within three days after the date of
the public announcement of a final determination or a final results of
review. The Department will not grant an extension of the time limit
for filing comments on a significant ministerial error in a preliminary
determination. Although the Department normally has 30 days in which to
announce the issuance of a correction notice, the time frame for
analyzing significant ministerial errors allegations in a preliminary
determination is, as explained above, more constrained. As noted
previously, a party has the opportunity to raise a ministerial error
allegation in its case brief for consideration in the final
determination or final results of review.
Some commentators suggested that domestic interested parties be
allowed more time to file comments on ministerial errors because these
parties have more material to review than respondents. The Department
does not believe that it is appropriate to distinguish between domestic
interested parties and respondents in this fashion. However, the fact
that a domestic interested party intends to file ministerial error
comments on a large number of respondents may provide good cause for an
extension of the time to file comments. The Department will make such
extension decisions on a case-by-case basis, taking into consideration
the intended 30-day framework for addressing ministerial error
allegations.
Paragraph (d) deals with the contents of comments and replies. In
order for the Department to complete its analysis of alleged
ministerial errors within the 30-day framework, comments must reference
specific evidence in the official record to explain the alleged
ministerial error and must present the appropriate correction. In
addition, comments concerning an alleged significant ministerial error
in a preliminary determination must demonstrate how the alleged
ministerial error is significant by illustrating the effect of the
error on the weighted-average dumping margin or countervailable subsidy
rate. One commentator proposed that parties be allowed to submit
factual information past the appropriate time limits if the information
is needed to show or deny the existence of ministerial errors. The
Department has not adopted this proposal. Based on the definition of
ministerial error as set forth in paragraph (f), whether something
qualifies as a ministerial error should be discernable from evidence
already on the official record. Paragraph (d) also requires that
replies to any comments be limited to issues raised in such comments.
Paragraph (e) deals with the analysis of any comments received and
the announcement of the issuance of a correction notice (normally not
later than 30 days after the date of public announcement of the
Department's preliminary or final determination or final results of
review). As discussed above, the 30-day framework is intended to avoid
needless litigation by providing for resolution of ministerial error
allegations before the litigation deadline expires.
Paragraph (f) defines ministerial error and is largely unchanged
from existing Secs. 353.28(d) and 355.28(d).
Paragraph (g) defines significant ministerial error and essentially
is unchanged from proposed Secs. 353.15(g)(4) and 355.15(h)(4). See
Proposed Regulations at 1133-34. A number of commentators proposed
setting a flat rate as a benchmark for ``significant.'' These proposed
rates were lower than the standard for ``significant'' originally set
out in the Proposed Regulations and incorporated herein. The Department
believes that it would not be appropriate to lower the significant
ministerial error standard. In establishing this standard, which, as a
matter of administrative practice, the Department has applied
successfully for several years, the Department had to balance the
competing interests of accurate preliminary determinations and the need
to complete the investigation in a timely manner. The Department has
determined that the current standard allows it to correct the most
serious errors promptly, while also permitting it to complete
verification and issue a timely final determination. Moreover, the
Department encourages parties, in their case briefs, to comment on all
ministerial errors, including those not meeting the ``significant''
standard; all such errors will be addressed in the final determination.
Section 351.225
Section 351.225 deals with scope rulings, including rulings
involving circumvention. With a few exceptions, section 351.225 is
substantively unchanged from existing Secs. 353.29 and 355.29, but
paragraphs (b) through (f) do
[[Page 7322]]
contain some clarifications regarding procedures. Among other things,
these clarifications are intended to make clear that the Department
may, if appropriate, make a scope ruling based solely upon the
application and prior determinations. Only if the Department determines
that further inquiry is warranted will it formally initiate a scope
inquiry. One other change worth noting is that paragraph (f)(5)
establishes a 300-day deadline for scope rulings to which the
Department will adhere to the extent practicable.
Paragraphs (g) and (h) incorporate by reference sections 781(a) and
(b) of the Act. Several commentators argued that the standard for
determining whether the process of assembly or completion under these
sections of the Act was minor or insignificant had not changed from
prior law. However, as observed by other commentators, the Senate
Report states that, ``section 230 [of the URAA] amends section 781(a)
and (b) to shift the focus of the circumvention inquiry away from a
test of the difference in value between the subject merchandise and the
imported parts or components toward the nature of the process performed
in the United States or third country.'' S. Rep. 103-412, 103d Cong, 2d
Sess., at 81.
Paragraphs (g) and (h) require the Department, in determining the
value of parts or components purchased from affiliated parties, to
apply the major input rule of section 773(f)(3) of the Act. Several
commentators argued that such a provision is necessary to avoid the use
of distorted values between affiliated parties. The Department agrees
that such a provision is consistent with the Department's policy of
avoiding the use of distortive prices paid to affiliated parties in its
calculations.
Several commentators also argued that the Department should
establish numeric guidelines for determining whether the value of
imported parts or components constitutes a ``significant portion of the
total value of the merchandise'' within the meaning of sections
781(a)(1)(D) and (b)(1)(D) of the Act. We have not adopted this
suggestion, because the SAA recognizes that no single standard would be
appropriate for every product examined by the Department. The SAA, at
894, states, ``[t]hese provisions do not establish rigid numerical
standards for determining the significance of the assembly (or
completion) activities in the United States or for determining the
significance of the value of the imported parts or components.''
One commentator argued that the term ``class or kind'' as used in
section 781(a) and (b) of the Act should be construed to encompass more
than merely the category of merchandise covered by an order.
Specifically, this commentator argued that, for purposes of
circumvention inquiries, the term ``class or kind'' should always
include components or parts. The Department agrees with other
commentators, however, who argued that the term ``class or kind'' in
the circumvention context is not broader than the merchandise covered
by an order for other purposes of the statute.
Paragraph (k) adds advertisement or display to the criteria that
the Department uses to determine whether a product is within the scope
of an antidumping duty or countervailing duty order. Although this
criterion was not previously specified in the regulations, the courts
have recognized that it is a factor that should be considered. See
Kyowa Gas Chem. Indus. v. United States, 582 F. Supp. 887, 889 (CIT
1984). One commentator urged the Department to add ``substitutability''
to the criteria. However, the Department believes that such a criterion
would add significant uncertainty to the Department's orders, because
it implies that an order could be expanded to include many products not
contemplated in the petition (for example ``substitutability'' could be
cited to expand an order covering honey to include sugar, corn syrup
and molasses).
Paragraph (l) sets forth the procedures for suspension of
liquidation. One party argued that the Department should order the
suspension of liquidation as soon as a circumvention inquiry is
initiated and impose cash deposits retroactively if the final
circumvention determination is affirmative. While the Department
recognizes that parties may have a ``free ride'' by circumventing until
caught, the proposal would punish unfairly parties who unknowingly
circumvent an order. The statute does not require a finding of intent
in order to make an affirmative circumvention determination. Moreover,
the Department agrees with commentators who argued that this proposal
would create tremendous business uncertainty and impose a heavy burden
on the Department and on Customs.
Paragraph (l)(4) provides that, when a final scope ruling is made
within 90 days of the initiation of a review, products covered by that
decision will be included in the calculation of any dumping margin or
countervailing duty rate in that review, where practicable. If the
ruling is made after that date, entries of the product will be subject
to the final results of review, but, because collection of information
is not practicable after this date, the Department will rely on non-
adverse facts available.
New paragraph (m) provides that if different orders relate to the
same product, the Department may, under appropriate circumstances,
conduct a single scope inquiry covering all such orders. Thus, for
example, if there is an antidumping duty order on widgets from Germany,
and a countervailing duty order on widgets from France, the Department
may conduct a single inquiry under paragraph (i) (minor alterations),
(l) (later developed products) or (k) (other scope determinations). Any
final ruling resulting from the inquiry would apply to both orders. In
this way the Department will avoid both the burden of redundant
inquiries and the danger of inconsistent determinations.
Finally, paragraph (n) deals with the service requirements for
scope inquiries. Paragraph (n) defines the term ``scope service list''
as used throughout section 351.225 to include all parties who have
participated in any segment of the proceeding. This broad service list
is necessary because scope rulings are not often limited to the
specific parties raising the issue, but rather affect all domestic and
respondent interested parties.
Two commentators argued that the Department should look to Customs
rulings in determining the country of origin of merchandise. The
Department agrees that a Customs ruling may provide useful guidance;
however, as recognized by the CIT, the Department is not required to
follow Customs rulings in making its own scope rulings. Diversified
Products v. United States, 572 F. Supp. 883, 887-88 (1983).
Other Issues
One commentator suggested that the Department publish in the
Federal Register its ``remand determinations''; i.e., the
determinations the Department makes in response to a remand order from
a court or a NAFTA binational panel. We have not adopted this
suggestion at this time, because it is expensive to publish documents
in the Federal Register and because the Department's current practice
is to make remand determinations available to the public on request
(with business proprietary information deleted, of course). However, to
the extent that parties experience difficulties in obtaining copies of
remand determinations, the Department will consider this suggestion as
well as other alternatives, such as making these and other documents
available on the Internet.
[[Page 7323]]
Some commentators have expressed the view that industrial users of
products under antidumping or countervailing duty orders should have an
opportunity to demonstrate that certain products are not available
domestically, that continued inclusion of such products within an order
does not serve the purpose of the law, and that, if the petitioners
fail to show that the material is available domestically, the order
should be revoked or narrowed with respect to those certain products.
We are not proposing changes to the rules in this area because the
existing practices have been adequate to address valid concerns. The
clarification of investigations in their early stages to avoid later
supply problems, and the narrowing of existing orders through changed
circumstances proceedings has resulted in exclusion of a number of
products not made in the United States, in direct response to supply
concerns expressed by industrial users. Suggestions as to the use of
existing authority for this purpose would be appropriate.
Subpart C--Information and Argument
Subpart C deals with collection of information and presentation of
arguments to the Department, and is based on subpart C of Parts 353 and
355 of the Department's existing regulations. In addition to the
regulatory changes noted in this section, the Department is also in the
process of introducing other procedural reforms to streamline and
simplify antidumping and countervailing duty proceedings. Where these
reforms require regulatory change or are appropriately contained in
regulations, they are included here. Other non-regulatory
simplification measures will be introduced in Policy Bulletins and
through Department procedures. Non-regulatory changes include (1)
providing greater consistency in the handling of draft and newly-filed
petitions by having, to the extent practicable, the same Department
personnel initiate and conduct the investigation that reviewed the
original petition; and (2) making available on the Internet all
Department determinations under the URAA, as well as the URAA itself,
the Statement of Administrative Action, and these regulations. The
process of simplification is ongoing and one in which the Department
continues to invite suggestions.
Section 351.301
Section 351.301 sets forth the time limits for submission of
factual information in investigations and reviews.
Paragraph (b) is based on existing Secs. 353.31(a)(1) and
355.31(a)(1), and sets forth the time limits in general for submission
of factual information. Several commentators suggested that the
Department adopt regulations establishing a final deadline of seven
days prior to verification for the submission of information, whether
solicited or unsolicited. Another commentator suggested a deadline of
14 days prior to verification. The Department believes that the seven-
day deadline appropriately balances the needs of the Department to
prepare for verification with the goal of easing the burdens on parties
appearing before the Department. Therefore, paragraph (b)(1) provides
that, with respect to investigations, submission of factual information
is due no later than seven days before the date on which verification
of any person is scheduled to commence. The timing of submission of
factual information under existing Secs. 353.31(a)(1)(i) and
355.31(a)(1)(i) also is tied to verification. However, there has been
some confusion over the deadline as parties variously interpreted
``verification'' to mean a company-specific verification or
verification for any company (or, in a CVD proceeding, verification of
the government). In furtherance of the goal of simplifying the
Department's procedures, these regulations clarify that the deadline
for submission of factual information is identical for all parties,
i.e., seven days before the date on which verification of any person is
scheduled to commence. (In contrast, the deadline for submission of
factual information after verification, for reasons discussed below, is
company- or government-specific.)
With respect to administrative reviews, paragraph (b)(2) provides
that submission of factual information is due no later than 140 days
after the last day of the anniversary month. With respect to changed
circumstances, sunset, and section 762 (quantitative restriction
agreements) reviews, paragraph (b)(3) provides that submission of
factual information is due no later than 140 days after the publication
of notice of initiation of the review. With respect to new shipper
reviews, new paragraph (b)(4) provides that submission of factual
information is due no later than 100 days after the publication of
notice of initiation of the review. With respect to the remaining types
of reviews, paragraph (b)(5) provides for submission of factual
information by a date specified by the Department.
One commentator proposed that, once the deadline for submissions
prior to verification has passed, the Department should not allow for
submission of any corrections at verification. The Department has not
adopted this proposal. The Department's current practice allows
respondents to submit information at the beginning of verification to
correct errors found during the course of preparing for verification.
This policy balances the requirement that respondents present accurate
and timely responses, with the goal of accurate determinations. Cf.
Murata Mfg. Co. v. United States, 820 F. Supp. 603, 607 (CIT 1993) with
NSK Ltd. v. United States, 798 F. Supp. 721 (CIT 1992), aff'd, 996 F.2d
1236 (Fed. Cir. 1993). The regulations make clear that the Department
will continue this practice, as well as the practice of allowing
respondents to submit information after verification where the
Department has requested such information. Specifically, paragraphs
(b)(1)-(4) provide that where verification is scheduled for a person,
factual information requested by verifying officials will be due no
later than seven days after the date on which the verification of that
person is completed. This practice promotes accuracy and completeness
in the calculation of margins (rates), both of which are underlying
objectives of the new facts available methodology. Furthermore, the
SAA, at 868, notes that the Department is not precluded from requesting
information, in addition to that set forth in the verification outline,
during a verification.
New paragraph (c) sets for the time limits for certain submissions,
including information to rebut, clarify, or correct factual information
submitted by another party, information in questionnaire responses, and
publicly available information to obtain values for factors in
nonmarket economy cases.
Paragraph (c)(1) is based on existing Secs. 353.31(a)(2) and
355.31(a)(2), and provides the time limits for when an interested party
may submit factual information to rebut, clarify, or correct factual
information submitted by any other interested party. The existing
regulations allow only domestic interested parties to rebut, clarify,
or correct factual information submitted by respondent interested
parties. The regulation was drafted this way to allow domestic
interested parties time to comment on respondents' information,
particularly where such information may have been submitted on or after
the applicable deadline. Upon further consideration, the Department has
determined that the goal of accurate determinations is enhanced by
allowing any interested party time to comment on submissions of factual
information. As a result, paragraph (c)(1) provides that
[[Page 7324]]
any interested party may submit factual information to rebut, clarify,
or correct factual information submitted by any other interested party
at any time prior to the applicable deadline for submission of factual
information. If factual information is submitted (with the Department's
permission) after the applicable deadline, interested parties have 10
days to comment on such information. This 10-day period, however, does
not allow interested parties to continue to comment indefinitely on an
alternating 10-day cycle. Rather, if the applicable deadline for
submission of factual information has passed, interested parties would
have one opportunity to comment on each such submission.
Paragraph (c)(2) deals with questionnaire responses and other
submissions on request, and is based on existing Secs. 353.31(b) and
355.31(b). Paragraph (c)(2)(i) provides that the Department may request
any person to submit factual information at any time during a
proceeding. Paragraph (c)(2)(ii) is new, and incorporates the
requirements of the SAA, at 869, that the Department give notice of
certain requirements to each interested party from whom the Department
requests information.
Paragraph (c)(2)(iii) is new, and incorporates the requirements of
the SAA, at 866, that interested parties shall have at least 30 days
from the date of receipt to respond to the full initial questionnaire.
The time limit for response to individual sections of the
questionnaire, if the Secretary requests a separate response to such
sections, may be less than the 30 days allotted for response to the
full questionnaire. In particular, the Department anticipates that the
response to Section A of a questionnaire, which seeks general
information about a company, will be due before the expiration of the
30-day period. The Department's ability to timely identify appropriate
respondents, in particular, would be hampered were the Department to
delay the deadline for submission of this information. Consistent with
the SAA, at 866, paragraph (c)(2)(iii) also provides that the ``date of
receipt'' will be seven days from the date on which the initial
questionnaire was transmitted.
Paragraph (c)(2)(iv) is new, and provides a 14-day deadline for
notification by an interested party, under section 782(c)(1) of the
Act, of difficulties in submitting a questionnaire response. Section
782(c)(1) of the Act provides that, if promptly asked to do so by an
interested party, the Department may modify its requests for
information to avoid imposing an unreasonable burden on that party. The
statute also provides that the Department will take into account
difficulties experienced by interested parties, particularly small
companies, in supplying information, and will provide any assistance
that is practicable. One commentator suggested that petitioners be
allowed to comment formally on requests by respondents that the
Department modify information requests. Parties do have the right
generally to submit comments on any relevant issue, and, as such, the
Department does not believe that a special regulation addressing this
issue is necessary. Another commentator proposed defining ``small
companies'' to whom the Department would provide assistance using an
objective criterion, such as a company's annual sales volume (e.g.,
small companies are those that earn less than $1 million in annual
gross revenue). The Department does not believe that it is in a
position to define ``small companies'' at this juncture. The Department
will make a determination of what is a small company on a case-by-case
basis.
Paragraph (c)(2)(v) is new, and, consistent with the SAA, at 866,
indicates that a respondent interested party may request that the
Department conduct a questionnaire presentation, during which
Department officials will explain the requirements of the
questionnaire.
Paragraph (c)(3) is new and extends the time limits for submission
of publicly available information to obtain values for factors in
nonmarket economy cases. Because publicly available valuation data is
not verified, the Department is able to accept such data after
verification. The extended time limits, therefore, permit parties to
submit publicly available information even after a preliminary
determination or a preliminary results of review, but still allow
parties ample opportunity to comment on such information in their case
briefs.
Paragraph (d) sets the time limits for certain allegations,
including allegations concerning market viability, allegations of sales
at prices below the cost of production, countervailable subsidy
allegations, and upstream subsidy allegations.
Paragraph (d)(2) is new, and sets the time limits in investigations
and reviews for allegations of sales at prices below the cost of
production (COP) under section 773(b) of the Act.
The Department received a number of comments regarding the
``reasonable grounds'' threshold for initiation of COP investigations.
Some commentators argued for consideration of sales below cost
allegations on a country-wide basis. Other commentators suggested that
the Department's regulations provide that where sales below cost
allegations are not submitted until after respondents have provided
questionnaire data, the allegations must be based on information
specific to the exporter or producer.
The Department agrees with the latter commentators that where
company-specific information has been placed on the record, any
subsequent sales below cost allegation must take into consideration
such information. The SAA, at 833, states that the standard for
initiation of a sales below cost investigation is the same as the
standard for initiating an antidumping investigation. The Department
interprets this to mean that a sales below cost allegation, like an
allegation of dumping, must be supported by information reasonably
available to petitioner, including information already on the record.
The Department also, however, agrees with the former commentators
that the SAA does provide for consideration of a sales below cost
allegation on a country-wide basis. The Department's practice under the
existing regulations only allows for company-specific allegations based
on company-specific data. (In some instances, petitioners have used
their own data where certain company-specific information was
unavailable.) In practice, this meant that petitioners did not file
sales below costs allegations until after companies filed their Section
B responses covering home market sales data. As a result, in many
instances the Department was unable to request and receive companies'
cost data in time to analyze it before the preliminary determination.
Pursuant to the SAA, at 833-34, however, the Department now has the
authority to consider sales below cost allegations on a country-wide
basis. In most instances, considering a country-wide allegation at the
outset of an investigation will allow the Department to include its
below-cost analysis in the preliminary determination, and, hence,
consistent with the SAA, at 833-34, will provide parties with a greater
opportunity to comment on the Department's analysis.
Therefore, with respect to country-wide allegations, paragraph
(d)(2)(i)(A) allows the petitioner to file such an allegation in an
investigation up until 20 days after the date on which the initial
questionnaire was transmitted. Consistent with the SAA, at 833, this
time frame will permit the Department to initiate below cost inquiries,
where appropriate, at the outset of the case. In addition, the 20-day
deadline--one day
[[Page 7325]]
before Section A responses normally are due--provides petitioners with
the maximum time available to make a country-wide allegation before
company-specific data is filed by respondent interested parties.
With respect to company-specific allegations, paragraph
(d)(2)(i)(B) provides for filing such allegations in an investigation
up to 20 days after a respondent interested party files a response to
the relevant section of the questionnaire; i.e., the Section B response
containing home market sales data. The time limit, under paragraph
(d)(2)(ii), for filing company-specific sales below cost allegations in
administrative reviews, new shipper reviews, and changed circumstances
reviews is identical. Paragraph (d)(2)(iii) provides the time limit for
filing company-specific sales below cost allegations in expedited
antidumping reviews.
A number of commentators also argued that the changes under section
773(b) of the Act in no way relaxed the ``reasonable grounds''
initiation standard for COP investigations, but, instead, were intended
simply to permit the Department to initiate such investigations at the
outset of a case. One commentator maintained that standards for below-
cost investigations continue to be more stringent than those of an
antidumping investigation. The Department believes that the statutory
changes do not change the ``reasonable grounds'' requirement for
initiation of a COP investigation. The Department will continue its
practice of assessing the sufficiency of a petitioner's below-cost
allegations on a case-by-case basis, and it will reject those
allegations that are clearly frivolous or that are otherwise not
supported by information reasonably available to petitioners.
The Department received one other comment of note concerning its
initiation standard for COP investigations. The commentator suggested
that as part of its initiation threshold, the Department take into
account ``aberrational sales'' by accepting only those below-cost
allegations that provide a ``reasonable ground'' for the existence of
more than 20 percent below cost sales (i.e., the substantial quantities
threshold under section 773(b)(2)(C)(i) of the Act). Several other
commentators urged the Department to reject this suggestion, stating
that there was no statutory basis for such a practice. The proposal for
a substantial quantities initiation threshold could apply only in those
instances where respondents already have submitted questionnaire data.
Therefore, the proposal undoubtedly conflicts with the Department's
authority to consider country-wide cost allegations at the outset of an
investigation. Moreover, even in the case of company-specific
allegations filed subsequent to respondents' submission of
questionnaire data, the proposal lacks merit, because the substantial
quantities threshold under section 773(b)(2)(C)(i) of the Act does not
relate to the existence of ``reasonable grounds'' to initiate a COP
investigation.
Paragraph (d)(3)(i) is based on existing section 355.31(c), and
sets forth the time limits for a countervailable subsidy allegation in
investigations and reviews. These time limits are unchanged from the
existing regulations. Paragraph (d)(3)(ii) is based on existing
Sec. 355.20(b), and sets forth the time limits for an upstream subsidy
allegation in an investigation. The 10-day time limit for an allegation
made prior to a preliminary determination is new. The 15-day time limit
for an allegation before a final determination is consistent with
existing regulations.
One commentator suggested that the Department's regulations clarify
that the determination of whether ``new'' evidence has been submitted
by the petitioner regarding a subsidy will be based on a consideration
of the public evidence already included in the record of the
proceeding. The public record would automatically include all public
verification reports from prior segments of the proceeding.
Furthermore, the commentator argued that upon receipt of new evidence
of a subsidy, the burden of proof should shift to the foreign
government, because it is in possession of the information necessary to
establish that the program is not countervailable. Finally, the
commentator suggested that the Department change its deadline for
receiving new subsidy allegations from 120 days after publication of
the notice of initiation of an administrative review to three weeks
before verification.
While the Department may place public reports from prior segments
of the proceeding on the record in an ongoing proceeding, it is not be
required to do so. Parties are free to do so themselves as long as the
information is submitted in a timely fashion. As for shifting the
burden of proof, the Department's practice currently is to
reinvestigate subsidy programs previously determined to be
noncountervailable only where new information or evidence of changed
circumstances is present. Similarly, the Department will not reexamine
the countervailability of a program previously determined to be
countervailable absent new information or evidence of changed
circumstances. In both of these instances, the burden is on the
domestic or respondent interested parties to provide new information or
evidence of changed circumstances that would warrant a reconsideration
of the subsidy program in question. With respect to extending the time
for filing new subsidy allegations, the Department believes that a
deadline of three weeks before verification does not provide sufficient
time for the Department to send out and receive a response to a
questionnaire concerning the alleged subsidy.
Paragraph (d)(4) is new, and sets forth the time limit for a
targeted dumping allegation in an antidumping investigation. One
commentator suggested that petitioners be given at least 90 days from
the date of receipt of a respondent's sales listings in which to
comment on possible targeted dumping. The Department appreciates the
fact that at the outset of an antidumping investigation, petitioners
normally will not have access to the type of data that goes into a
targeted dumping analysis, and that they will need time in which to
analyze questionnaire responses once they are received. However, the
Department believes that in most instances, a deadline of 30 days
before the scheduled date of the preliminary determination will provide
petitioners with sufficient time to analyze the applicable data and
submit an allegation, if appropriate. If the timing of responses does
not permit adequate time for analysis, the Department may extend the
time as appropriate.
Section 351.302
Section 351.302 is new, and clarifies the Department's authority to
grant extensions of time limits and to reject untimely or unsolicited
submissions. Although portions of Sec. 351.302 are based on provisions
of the Department's current regulations, other portions are entirely
new.
Paragraph (b) provides that the Department may extend a regulatory
deadline based upon its own determination that there is good cause to
do so or where an interested party shows good cause for such an
extension. Parties should not draw the inference that simply because a
particular deadline does not explicitly address the Department's
authority to extend such deadline that the Department may not do so.
Unless expressly precluded by statute, the Secretary may extend any
deadline for good cause. The deadlines that include the phrase ``unless
the Secretary alters this time limit'' generally are tied to
transmittal of, or response to, the initial questionnaire,
[[Page 7326]]
and, as such, are more likely to be extended than other deadlines tied
to, for example, the date of publication of the preliminary
determination (see, e.g., Sec. 351.301(d)(1) versus
Sec. 351.301(c)(3)).
Paragraph (c) sets forth the procedures for requesting an extension
of a time limit, and is based on existing Secs. 353.31(b)(3),
355.31(b)(3), 353.31(c)(3), and 355.31(c)(3). One commentator suggested
that extensions for submission of questionnaire responses should be
granted only in ``extraordinary circumstances,'' and that extensions
should be limited to a period of 10 days. The Department agrees that it
is important to collect information as early as possible in an
investigation or review to provide parties an adequate opportunity to
comment on the data and to provide the Department with adequate time to
conduct its analysis. However, decisions regarding the possibility of
extensions will be based on the ability of the party to respond within
the original deadline and the parties' and the Department's ability to
accommodate the requested extension. Thus, the Department believes that
it is appropriate to determine whether to grant an extension, and for
how long, based upon the facts in the particular proceeding. Another
commentator suggested that the regulations provide for issuance of only
one supplemental questionnaire. The Department has no intention of
requesting the same information time after time. However, a limitation
on the number of supplementals could interfere with the Department's
ability to obtain clarifications or further information necessary to
reach an informed decision.
Paragraph (d) provides that the Department will not consider
untimely submissions for which it has not granted an extension under
paragraph (b), and that it will return such materials to the submitter.
In addition, consistent with section 782(c) of the Act, to the extent
practicable rejected submissions will be accompanied by a written
explanation of the reasons for not accepting the material.
One commentator proposed that parties be allowed to file objections
to the Department's rejection of information, and that these objections
be included in the record for judicial review. As long as a party's
objection itself does not include a restatement of the rejected
information, parties are permitted under the regulations to file timely
comments on the Department's decision to reject information; e.g., as
part of its case brief. Therefore, no specific provision is necessary
to meet the commentator's objective.
Section 351.303
Section 351.303 is new, and contains the procedural rules regarding
filing, format, service, translation, and certification of documents.
The Department has attempted to simplify these requirements, and, in
all instances, has reduced the number of copies required for filing.
Section 351.303 applies to all persons submitting documents to the
Department. Although portions of Sec. 351.303 are based on existing
Secs. 353.31, 355.31, 353.38(e), and 355.38(e), other portions are
entirely new.
Paragraph (c) is new, and indicates the number of copies required
for filing documents with the Department. Paragraph (c)(1) provides
that, in general, six copies of any submission must be filed with the
Department. Paragraph (c)(2) describes the application of the one-day
lag rule under which filing requirements are altered slightly to allow
for corrections in the bracketing of business proprietary information.
The existing one-day lag rule filing requirements have been modified to
simplify and streamline the filing process. Specifically, paragraph
(c)(2)(i) indicates that only one copy of the business proprietary
version of a document must be filed with the Department within the
applicable time limit. (The service requirements of paragraph (f) also
apply.) Paragraph (c)(2)(ii) provides that on the next business day,
six copies of the complete, final business proprietary version (not
just the corrected pages) must be filed with the Department. With
respect to the final business proprietary version, the service
requirements of paragraph (f) may be satisfied by serving other persons
with just the corrected pages. The final business proprietary version
must be identical to the business proprietary version filed on the
previous business day, except for any bracketing corrections. Paragraph
(c)(2)(iii) provides for the filing of three copies of the public
version simultaneously with the filing of the final business
proprietary version. Paragraph (c)(2)(iv) describes the filing
requirements for information in double brackets (information which the
submitter does not agree to have disclosed under APO). Finally,
paragraph (c)(3) clarifies that all information on computer media must
be releasable under APO.
Paragraph (d) contains the formatting requirements for documents
filed with the Department. Paragraph (d)(2)(iv) is new, and requires
that documents indicate the Department office conducting the
proceeding.
Paragraph (e) requires that documents submitted in a foreign
language be accompanied by an English translation. This requires that
all non-English language documents be accompanied by an English
translation of pertinent portions. When parties are unable to comply
with this requirement, the Department will work with them on an
acceptable alternative.
Paragraph (f)(1) provides for service of copies on other persons.
Paragraph (f)(2) provides that each document filed with the Department
must be accompanied by a certificate of service. Paragraph (f)(3)(i)
provides for service of briefs. Paragraph (f)(3)(ii) is new, and
clarifies the requirements for service of requests for review.
Paragraph (g) clarifies that each submission containing factual
information must be accompanied by the appropriate certification
regarding the accuracy of the information.
Section 351.304 [Reserved--APO]
Section 351.305 [Reserved--APO]
Section 351.306 [Reserved--APO]
Section 351.307
Section 351.307 deals with verification of information, and is
based on existing Secs. 353.36 and 355.36.
Paragraph (b)(1) is based on existing Secs. 353.36(a)(1) and
355.36(a)(1), and indicates when the Department will verify factual
information. One commentator suggested defining ``good cause for
verification,'' the standard applicable in determining whether to
verify in an administrative, new shipper, or changed circumstances
review, by including in the regulations a non-exhaustive list of
particular circumstances under which the Department normally would find
that good cause for verification exists; e.g., changes in a
respondent's accounting methodology, organization structure, or
ownership, or significant changes in the product-mix offered. While,
the Department agrees that these circumstances may, in some cases,
provide good cause for verification, it is more appropriate to
determine good cause on a case-by-case basis, weighing the specific
facts before the Department in any given review.
Paragraph (b)(1)(v) deals with requests for verification in an
administrative review, and is based on existing
Secs. 353.36(a)(1)(v)(A) and 355.36(a)(1)(iv)(A). The deadline for
domestic interested parties to request verification has been shortened
from 120 days to 100 days after publication of the notice of initiation
of review. This change is intended to give the Department a longer time
to prepare for
[[Page 7327]]
verification, thereby resulting in more efficient verifications.
Paragraph (b)(2) is new, and provides that the Department may
verify in any other segment of the proceeding not provided for in
paragraph (b)(1), if the Department determines that it is appropriate
to do so.
Paragraph (b)(3) is based on existing Secs. 353.36(a)(2) and
355.36(a)(2), and provides that the Department may select and verify a
sample of exporters or producers where it is impractical to verify
relevant factual information for each person due to the large number of
exporters or producers included in an investigation or administrative
review.
Paragraph (b)(4) is new, and, consistent with the SAA, at 868,
describes when the Department may conduct verification.
Paragraph (c) is based on existing Secs. 353.36(b) and 355.36(b),
and, consistent with the SAA, at 868, indicates that the Department
will issue a verification report.
Paragraph (d) is based on existing Secs. 353.36(c) and 355.36(c),
and, consistent with the SAA, at 868, describes certain procedures for
verification. Paragraph (d) (2), carried over from existing Sec. 353.36
(c), provides that the Department may request access to the records of
persons not affiliated with respondent exporters, producers, or
importers. This provision clarifies that the Department may use the
records of the unaffiliated party if needed to establish the accuracy
of data provided by the respondent. The last sentence of paragraph (d)
also is new, and, consistent with current practice, clarifies that as
part of verification in a countervailing duty proceeding, the
Department may request access to records of the government of the
affected country.
One commentator proposed that to ensure that parties have an
adequate opportunity to prepare for verification, the regulations
should include provisions requiring that the Department provide by a
particular date notice of its intent to verify, as well as detailed
information regarding the location of the verification and the exhibits
the Department will require. These proposals are consistent with
paragraph (d), and, to the extent practicable, the Department intends
to implement them in practice.
Another commentator suggested a number of ``improvements'' to the
verification process. These included allowing the presence of a neutral
third party at verification, copying all documentation relied upon in
verification, allowing all parties (not just respondents) to review
draft verification reports, including in the record both the draft
verification report and the final report, conducting verification in
Washington with books and records forwarded by courier or
electronically, and permitting domestic counsel and consultants to
participate at verifications. We agree with the commentator that there
are a number of ways to improve the verification process. For example,
we are modifying our questionnaire in order to collect documentation
that would link the reported sales information to the respondent's
general ledger. We also intend to require that, prior to verification,
respondents submit any computer programs used to identify the sales
subject to investigation or review. By collecting this information
prior to the commencement of verification, the Department will be able
to use the time available at the verification site more efficiently.
While we disagree with the suggestion that a neutral third party or
domestic counsel participate at verification, we invite other
suggestions on how to improve the verification process.
Finally, another commentator proposed that petitioners be given a
formal opportunity to comment on verification outlines. We agree that
petitioners should be given opportunity to comment. Because this is
part of the Department's standard practice, the Department believes
that it is not necessary to include a provision in the regulations.
Section 351.308
Section 351.308 is new, and deals with determinations on the basis
of the facts available.
Paragraph (b) provides that the Department will make determinations
on the basis of the facts available in accordance with section 776(a)
of the Act. Under the statute, the Department will use the facts
otherwise available if necessary information is not available on the
record, or if an interested party or any other person withholds
requested information, fails to provide such information by the
deadlines for submission of the information or in the form and manner
requested, significantly impedes a proceeding, or provides such
information but the information cannot be verified.
Evident from a comparison between the pre-URAA statute and the new
statute is the fact that the circumstances triggering use of facts
available are virtually identical to those triggering use of best
information available (``BIA''). Significantly, however, although the
circumstances giving rise to use of BIA and facts available are
basically indistinguishable, the presumptive adverse inference
associated with use of BIA is not automatically associated with use of
facts available. Specifically, section 776(b) of the Act provides that
only if the Department finds that an interested party ``has failed to
cooperate by not acting to the best of its ability to comply with a
request for information'' may the Department use an inference that is
adverse to the interests of that party in selecting from among the
facts otherwise available. Therefore, the determination of what to use
as facts available will be affected by whether or not the Department
may make an adverse inference under the statute.
A number of commentators proposed that the regulations set forth
the Department's current two-tiered methodology for selecting BIA.
However, given the differences between the Department's past practice
regarding BIA and the new statutory provisions on facts available, the
Department does not believe this proposal would be appropriate.
In cases where the Department determines that an interested party
has not failed to cooperate, the Department will apply simply the
``facts available''; i.e., the Department will make its determination
``based on all evidence of record.'' SAA at 869. However, as paragraph
(e) provides (by cross-reference to section 782(e) of the Act), the
Department will consider information that is submitted by an interested
party and is necessary to the determination, but that does not meet all
the applicable requirements established by the Department, only if: (1)
The information is submitted by the deadline established for its
submission, (2) the information can be verified, (3) the information is
not so incomplete that it cannot serve as a reliable basis for reaching
the applicable determination, (4) the interested party has demonstrated
that it acted to the best of its ability in providing the information
and meeting the requirements established by the Department with respect
to the information, and (5) the information can be used without undue
difficulties.
One commentator suggested that information contained in the
petition should not be used as facts available. The statute, however,
does not limit the specific sources from which the Department can
obtain facts available.
In cases where the Department finds that an interested party has
failed to cooperate by not acting to the best of its ability to comply
with a request for information, section 776(b) of the Act provides that
the Department may make an adverse inference about the missing
[[Page 7328]]
information, and, hence, apply ``adverse facts available.'' A number of
commentators proposed that ``a good faith effort'' to provide
information responsive to the Department's request for information be
sufficient to meet the requirement of ``acting to the best of [a
company's] ability.'' The determination of whether a company has acted
to the best of its ability will be decided on a fact- and case-specific
basis, and the Department will consider whether a failure to respond
was deliberate or simply due to practical difficulties that made the
company unable to respond within the specified deadline. However, it is
clear that affirmative evidence of bad faith on the part of a
respondent is not required before the Department may make an adverse
inference.
Several commentators additionally suggested that where information
is not maintained by the respondent in the ordinary course of trade,
failure to produce such information should not presumptively be a
violation of the ``best of its ability'' standard. However, not all
information that needs to be produced during the course of a proceeding
is kept in the ordinary course of business (e.g., worksheets), and
failure to provide such information may be deemed to violate the ``best
of ability'' standard. The determination as to whether a company has
acted to the best of its ability to comply with an information request
can only be made based on the record evidence in a particular
proceeding.
Consistent with section 776(b) of the Act and the SAA, at 870,
paragraph (c) provides that an adverse inference may include reliance
on secondary information or any other information placed on the record.
Paragraph (c)(1) indicates that secondary information includes
information derived from the petition, a final determination in an
antidumping or countervailing duty investigation, or any previous
review.
Paragraph (d) explains that where the Department relies on
secondary information, to the extent practicable the Department will
corroborate that information from independent sources, such as
published price lists, official import statistics and customs data, and
information obtained from interested parties during the instant
investigation or review. Consistent with the SAA, at 870, the third
sentence of paragraph (d) indicates that ``corroborate'' in this
context means that the Department will look to such sources reasonably
at the Department's disposal to examine whether the secondary
information has probative value. Paragraph (d) also indicates that in
accordance with the SAA, at 870, where corroboration is not
practicable, the Department still may apply an adverse inference.
One commentator argued that secondary information taken from a
petition need not be corroborated, because the Department used this
information as the basis for its initiation. Section 776(c) of the Act,
however, specifically provides that, to the extent practicable, the
Department will corroborate secondary information, which includes the
petition, from independent sources that are reasonably at the disposal
of the Department. As a result, the Department has not adopted this
proposal.
Section 351.309
Section 351.309 deals with written argument, and is based on
existing Secs. 353.38 and 355.38.
Paragraph (b)(1) provides that the Department will consider in
making its final determination or final results of review written
arguments in case or rebuttal briefs filed within the applicable time
limits.
Paragraph (b)(2) provides that the Department may request written
argument on any issue from any person at any time during a proceeding.
For example, the Department may choose to request post-hearing briefs
on a particular topic.
Paragraph (c)(1) sets out the time limits for filing case briefs in
investigations and reviews. Paragraph (c)(2) indicates that, as part of
the case brief, parties are encouraged to provide a summary of the
arguments not to exceed five pages.
Paragraph (d)(1) sets out the time limits for filing rebuttal
briefs. The time limit for filing rebuttal briefs--within five days
after the case briefs are filed--is now the same in both investigations
and reviews. Paragraph (d)(2) indicates that, as part of the rebuttal
brief, parties are encouraged to provide a summary of arguments not to
exceed five pages.
Section 351.310
Section 351.310 is new, and deals with matters related to hearings.
Although portions of section 351.310 are based on existing
Secs. 353.38(b), 355.38(b), 353.38(f) and 355.38(f), other portions are
entirely new. These provisions have been modified from prior
regulations with an eye to easing the burdens and costs imposed on
parties appearing before the Department.
Paragraph (b) is new, and provides that the Department may conduct
a pre-hearing conference to facilitate the conduct of the hearing. In
most instances, the pre-hearing conference will be held by telephone.
Examples of issues to be discussed include the necessity of conducting
a hearing, time limits for direct and rebuttal presentations,
identification of significant issues, and page limits for case and
rebuttal briefs.
Paragraph (c) is based on existing Secs. 353.38(b) and 355.338(b),
and sets forth the time limit for requesting a hearing. The existing
time limits for requesting a hearing in both investigations and reviews
have been extended. The extended time limit--30 days after the date of
publication of the preliminary determination or preliminary results of
review--will allow parties more time to consider the necessity of
requesting a hearing.
Paragraph (d) is based on existing Secs. 353.38(f) and 355.38(f),
and indicates that upon request, the Department will hold a public
hearing normally two days after rebuttal briefs are filed. Under
section 774(b) and section 751(e) of the Act, the Department is
required to hold a hearing upon the request of an interested party in
an investigation and in any review under section 751 of the Act. In
other segments of a proceeding, such as scope inquiries, the decision
to hold a hearing is discretionary. Consistent with section 774(b) of
the Act and existing Secs. 353.38(f)(3) and 355.38(f)(3), paragraph
(d)(2) provides that such hearings are not subject to the
Administrative Procedure Act.
Paragraph (e) is new, and provides that the Department may
consolidate hearings in two or more cases. Cases where the Department
is most likely to consolidate hearings are those where common issues
exist concerning the same product from different countries or where
common issues exist concerning different products from the same
country.
Paragraph (f) is new, and indicates that the Department may conduct
closed hearing sessions where parties wish to discuss business
proprietary information. The Department's existing regulations do not
expressly provide for representatives to discuss business proprietary
information during administrative hearings, although, in limited
instances, the Department has allowed discussion of business
proprietary information during a hearing. One commentator suggested
that the Department should consider procedures similar to those used by
the ITC regarding in camera sessions for purposes of discussing
business proprietary information that cannot be adequately summarized
for discussion at a public hearing. The commentator argued that the
inability to conduct a closed hearing may prejudice parties,
[[Page 7329]]
who may not be able to give a full presentation of their arguments.
We agree that the Department should be able to conduct closed
hearing sessions where appropriate. Paragraph (f), therefore, allows an
interested party to request a closed hearing session. However, the
Department believes that in the interest of transparency, closed
hearing sessions should not consume the entirety of a hearing.
Therefore, the Department intends to limit the duration of such
sessions, and to limit them to the discrete issues identified by the
requesting party. Before a closed hearing session begins, the hearing
room will be cleared of all persons not subject to APO. Consistent with
paragraph (g), the section of the transcript from a closed hearing
session will be treated like other documents containing business
proprietary information.
Section 351.311
Section 351.311 deals with countervailable subsidy practices
discovered during an investigation or review, and is based on existing
Sec. 355.39. Apart from minor clarifications, the only change is the
addition of subsidy programs in violation of Article 8 of the SCM
Agreement, which the Department is notified of by the United States
Trade Representative.
Section 351.312
Section 351.312 is new, and, consistent with section 777(h) of the
Act, provides consumer organizations and industrial users the
opportunity to submit information and argument on matters relevant to a
particular determination of dumping, subsidization, or injury. Although
such parties are not ``parties to the proceeding'' as defined in the
statute, the Department recognizes, as pointed out by one commentator,
``that industrial users' comments are a potential authoritative source
for available factual information supporting Department
determinations.'' The importance of input from industrial users and
consumer organizations is recognized in both the AD Agreement, at
Article 6.12, and the SCM Agreement, at Article 12.10. The SAA, at 871,
while emphasizing that section 777(h) of the Act does not confer
``interested party'' status on such users and organizations, explains
that this provision explicitly requires the Department to furnish such
users and organizations with an opportunity to provide relevant
information.
Paragraph (b) indicates that industrial users and representative
consumer organizations may submit to the Department relevant factual
information and relevant written argument in the form of case and
rebuttal briefs. Paragraph (b) also makes clear that all such
submissions must be filed in accordance with the procedural rules in
Sec. 351.303.
One commentator noted that the opportunity under the Act for such
users and organizations to submit relevant information would not be
meaningful if the Department did not respond to such information. With
respect to this comment, the Department will include in the record of a
proceeding Information submitted by industrial users and consumer
organizations, and the Department may rely on such information as
appropriate. Furthermore, the Department intends to address relevant
comments made by industrial users and consumer organizations in making
its determinations in the same manner that it considers and responds to
``interested party'' comments.
Paragraph (c) clarifies that industrial users and consumer
organizations may submit business proprietary information, but neither
they nor their representatives will be granted access under APO to
business proprietary information submitted by other persons.
Part 351, Subpart D--Calculation of Export Price, Constructed Export
Price, Fair Value and Normal Value
Subpart D deals with the calculation of export price, constructed
export price (``CEP''), fair value and normal value, and corresponds to
subpart D of Part 353 of the Department's existing regulations.
Section 351.401
Section 351.401 deals with general principles common to the
identification and calculation of export price, constructed export
price and normal value. In this regard, although the URAA changed the
names of purchase price and exporter's sales price to export price and
constructed export price, respectively, to conform to the terminology
of the AD Agreement, the SAA is clear that ``no change is intended in
the circumstances under which export price (formerly ``purchase
price'') versus constructed export price (formerly ``exporter's sales
price'') are used.'' SAA at 822-23. Several commentators have argued
that the Department should abandon its prior practice (often called
``indirect purchase price'') under which the Department considered
certain sales to be ``purchase price'' sales, even though there was
some involvement by a U.S. affiliate. Other commentators have pointed
to the language of the SAA as support for their conclusion that this
aspect of the distinction between export price and constructed export
price remains under the URAA.
The Department agrees with these latter commentators that Congress
and the Administration did not intend a change to the circumstances
under which the Department would use export price or constructed export
price, including the ``indirect purchase price'' situations. It has
been the Department's longstanding and well-recognized practice that a
transaction will be considered an export price sale, despite the
involvement of an affiliate in the United States where: (1) The
merchandise in question was shipped directly from the manufacturer to
the unrelated buyer, without being introduced into the physical
inventory of the related selling agent; (2) this was the customary
commercial channel for sales of this merchandise between the parties
involved; and (3) the related selling agent in the United States acted
only as a processor of documentation and a communication link with the
unrelated buyer. Because no change from current practice is required,
the regulations do not address this issue.
Paragraph (b) codifies the Department's longstanding practice of
requiring parties claiming an adjustment to provide sufficient support
for that claim. This regulation is not intended to change the
Department's practice as recognized by the courts. See e.g., Timken v.
United States, 673 F. Supp. 495, 513 (CIT 1987). Because the relevant
information is normally under the sole control of the respondent
interested party, this practice is usually applied to adjustments that
would benefit such a party. This regulation is not intended to impose
any additional burden on domestic interested parties that do not have
access to the relevant information. Paragraph (b) also codifies the
Department's longstanding prohibition against double-counting
adjustments.
Under paragraph (c), the Department will continue its practice of
adjusting reported gross prices for discounts, rebates and certain
post-sale adjustments to price that affect the net price. Where such
discounts, rebates and price adjustments are granted on a transaction-
specific basis, they should be reported on that basis. However, as with
selling expenses, the Department will continue its current practice of
allowing non-distortive allocations where transaction-specific
reporting is not feasible. SAA at 823-24. Where verification is
conducted, the Department will review the
[[Page 7330]]
respondent's records to ensure that discounts, rebates and post-sale
price adjustments are reported on as specific a basis as those records
permit.
Paragraph (d) provides that the Department will not adjust costs
used as the basis for adjustments to factor in delayed or early payment
of expenses. Certain parties have argued that, when a party incurs an
expense but does not pay for it immediately, the Department should
reduce the amount of the adjustment to account for the savings that
accrue due to the delayed payment. However, the courts have upheld the
Department's position that the statute does not require that level of
precision in quantifying adjustments. See, Federal Mogul v. United
States, 839 F. Supp. 881, 886 (CIT 1993).
Paragraph (e) deals with the adjustment for movement expenses
described in section 772(c)(2)(A) of the Act for export price and
constructed export price calculations, and section 773(a)(6)(B)(ii) of
the Act for normal value calculations. Consistent with the SAA, at 823
and 827, paragraph (e) clarifies that the deduction for movement
expenses includes a deduction for all warehousing expenses incurred
after the merchandise leaves the producer's factory, or, in the case of
a reseller, the point from which the reseller shipped the merchandise.
This paragraph also clarifies that the phrase ``original place of
shipment'' in the Act refers to the place of shipment from the party
making the sale which is the subject of the Department's examination.
This is intended to clarify that, where the sale to the United States
which is being examined is made by a reseller, movement expenses from
the producer to the reseller are not deducted. This is appropriate
because such expenses are part of the seller's cost of acquisition.
Paragraph (f) describes the situations in which the Department will
treat multiple affiliated producers as a single entity. Under prior
practice, the Department, in certain situations, would treat related
producers that were separate legal entities as a single entity; i.e.,
the Department would ``collapse'' the producers into a single firm.
Where firms were so collapsed, the Department would issue a single
questionnaire to, and calculate a single weighted-average dumping
margin for, the collapsed entity. Paragraph (f) codifies the
Department's approach regarding such producers, based on the new
statutory term ``affiliated persons.'' In order to be treated as a
single entity, the producers must be affiliated and have production
facilities that are sufficiently similar that shifting production would
not require substantial retooling. Although such decisions are almost
always made on the basis of the subject merchandise and foreign like
product, or on a more narrow basis, in rare situations the Department
may conclude that a product that is not subject merchandise or a
foreign like product is sufficiently similar to subject merchandise
that the producers of those products may be candidates for collapsing.
This paragraph does not address the Department's ability to
``collapse'' resellers, without production facilities, and their
affiliated producers, although the considerations identified in
paragraphs (f) (1), (2) and (3) would be among those considered in
reaching such a decision. Similarly, this paragraph does not address
the issue of whether a producer or exporter in a nonmarket economy
country is entitled to an individual antidumping rate. That
determination is addressed by the definition of ``rates'' in section
351.102.
Section 351.401(g) provides that, in accordance with the
Department's past practice, respondents may allocate expenses if
transaction-specific reporting is not feasible. Where verification is
conducted, the Department will verify that expenses are reported on as
specific a basis as permitted by the company's records and that the
allocation does not distort the comparison. This is in accordance with
the SAA, at 828, which states that the Department may continue its
practice of permitting allocations, ``provided that the allocation
method does not cause inaccuracies or distortions.''
Some commentators argued for a regulation providing that certain
direct selling expenses never could be reported on an allocated basis,
but instead always must be reported on a transaction-specific basis.
Other commentators argued for a regulation permitting the reporting of
adjustments on an allocated or average basis. Yet another commentator
argued for a regulation that would permit customer-specific
allocations, even if based on in-scope and out-of-scope merchandise, if
the Department determines that such an allocation is reasonable and has
a minimal potential for creating a distorting effect.
Consistent with the SAA, at 823-824, paragraph (g) provides that,
in order to qualify as a direct selling expense, an expense
``normally'' must be reported on a transaction-specific basis. However,
as noted above, the Department may consider allocated expenses as
direct selling expenses when transaction-specific reporting is not
feasible. In determining what is feasible, the Secretary may balance
the difficulties of reporting transaction-specific expenses against the
potential inaccuracies of reporting allocated expenses.
New paragraph (h) deals with the Department's treatment of
subprocessors or ``tollers.'' Several commentators expressed support
for the Department's recent decision that tolling operations (i.e.,
subcontractors) should not be treated as manufacturers or producers of
the subject merchandise. The Department concurs with those commentators
who urged that, because this policy has not been widely publicized,
that it be enunciated in the regulations. Under paragraph (h), where a
party owning the components of subject merchandise has a subcontractor
manufacture or assemble that merchandise for a fee, the Department will
consider the owner to be the manufacturer, because that party has
ultimate control over how the merchandise is produced and the manner in
which it is ultimately sold. The Department will not consider the
subcontractor to be the manufacturer or producer, regardless of the
proportion of production attributable to the subcontracted operation or
the location of the subcontractor or owner of the goods. For example,
where Firm A sends raw materials to a subcontractor for finishing
before Firm A sells the finished goods to the United States, the
Department will base export price or constructed export price on the
price charged by Firm A (or its U.S. affiliate) for the finished goods.
Similarly, the Department will base normal value on Firm A's sales of
the finished goods in its home market (subject to the viability
determination described in section 351.404).
Paragraph (i) establishes how the Department will identify the date
of sale for sales of the subject merchandise and foreign like product.
Under this provision, the Department will normally rely on the date of
invoice. This is a change from prior practice under which the
Department based the date of sale on the date on which the ``essential
terms of sale'' (normally price and quantity) were established. See,
Certain Forged Steel Crankshafts from the Federal Republic of Germany,
52 FR 28170, 28172 (1987). Several commentators argued that this
methodology delayed proceedings, increased the cost to the respondents,
complicated verification, and was unpredictable. In response to these
concerns, paragraph (i) provides that the Department normally will use
the date of invoice as the date of sale. However, the Department
recognizes that this date may not be appropriate in some circumstances,
such as those
[[Page 7331]]
involving certain long-term contracts or sales in which there is an
exceptionally long time between the date of invoice and the date of
shipment. Paragraph (i) provides the Department with sufficient
flexibility to handle such situations.
Some commentators suggested that the Department use as the date of
sale whatever date a respondent uses in its internal records. However,
this approach would create a high degree of unpredictability and
inconsistency among respondents, and it might be subject to
manipulation. The date of invoice is easily verifiable, and, in the
Department's experience, is clearly recorded in most respondents'
records. With respect to the concerns of one commentator that use of a
respondent's invoice date could make the date of sale subject to
manipulation, the Department intends to verify that the records upon
which the date of invoice are based were kept in the ordinary course of
business. Additionally, particularly during administrative reviews, the
Department will carefully scrutinize any change in record keeping that
could change the date of invoice.
Section 351.402
Section 351.402 deals with certain adjustments that the Department
will make in calculating export price and constructed export price
under section 772 of the Act.
Paragraph (b) clarifies the expenses that the Department will
deduct from the price to the unaffiliated purchaser (i.e., the
``starting price'') in calculating constructed export price under
section 772(d) of the Act. Consistent with the SAA at 823, the
Department will make deductions under section 772(d) for those expenses
enumerated in the Act which are due to economic activities in the
United States. Thus, commissions, direct selling expenses, assumptions
of expenses on behalf of the buyer, and indirect selling expenses
attributable to the sale to the unaffiliated purchaser in the United
States will be deducted in calculating the constructed export price.
This deduction will be made irrespective of when the expenses are
incurred, or where payment is made. The cost of advertising in the
United States, for example, may be deducted under section 772(d) even
if the advertising is paid for outside of the United States. However,
the foreign seller's expenses associated with selling to the affiliated
reseller in the United States would not be deducted under section
772(d), rather, they would be dealt with as circumstance of sale
adjustments under section 773(a)(6)(C)(iii) of the Act.
The manner in which the Department intends to implement the special
rule for merchandise with value added after importation contained in
section 772(e) of the Act is explained in some detail in paragraph (c).
Under that section, where a substantial amount of value is added by a
process of further manufacture or assembly in the United States, the
Department may use surrogates for the constructed export price, rather
than perform the extensive calculation required to deduct the actual
value added in the United States. Paragraph (c)(1) clarifies that
deduction for value added in the United States and the special rule may
apply where the actual importer or purchaser, for example a
subcontractor, is not affiliated with the exporter, but is acting on
behalf of the affiliated party in the United States.
Paragraph (c)(2) explains how the Department will make an
estimation of whether the value added in the United States ``exceeds
substantially'' the value of the subject merchandise. The SAA explains
that, ``[w]hile Commerce is not required to calculate precisely the
value added after importation into the United States, `exceed
substantially' means that the value added in the United States is
estimated to be substantially more than half of the price of the
merchandise as sold in the United States.'' SAA at 826. For purposes of
this estimation, the Department will normally calculate the value added
by subtracting the average net price at which subject merchandise is
sold to affiliated importers who undertake further manufacturing, from
the average net price at which the merchandise with value added is
eventually sold to unaffiliated customers in the United States. Other
than reduction for discounts, rebates and other post-sale price
adjustments, no adjustments will be made to these prices. Where this
average difference (i.e., value added in the United States) is at least
60 percent of the average price to unaffiliated customers, the special
rule normally will be applied to all merchandise with value added in
the United States. Usually, the Department will calculate these
averages across the subject merchandise sold with value added. However,
where there are significant disparities in price between subject
merchandise or the value added products, the Department retains the
discretion to base the averages on smaller groupings of products.
Paragraph (c)(3) explains that, for merchandise to which the
Department has determined the special rule applies, it will normally
assign a margin equal to the weighted-average margin calculated based
upon the prices of identical or other subject merchandise sold to
unaffiliated parties. This is equivalent to using the price of sales to
unaffiliated parties, along with all other terms and conditions of
those sales, and calculating the margins based on those surrogate
prices, terms and conditions. Because such margins will have been
calculated for those sales to unaffiliated parties, the Department will
not need to repeat the calculation for the sales to which the special
rule applies. The Department believes this approach is appropriate,
because a price cannot be dissociated from the terms and conditions
that gave rise to that price. For example, a price for one product
cannot simply be substituted as an appropriate price for a different
product. If the Department were simply to adopt a price for a different
product and then analyze the sale, there would be a question as to
whether the price should be adjusted to account for the difference in
merchandise to avoid distortion. Adjustments for other differences
between the surrogate sales and the special rule sales also might be
necessary. Making such adjustments would unduly complicate the analysis
under this provision, which is intended to simplify the process.
Paragraph (d) elaborates on the procedure the Department will
follow in deducting profit to arrive at a constructed export price
under sections 772(d)(3) and 772(f). Various commentators have urged
that the regulations provide further guidance regarding the profit
deduction. Paragraph (d)(1) specifies, in accordance with section
772(f) of the Act, that both the expenses used to allocate the profit
to the U.S. sales, and the profit to be allocated normally will be
based upon all sales of the subject merchandise in the United States
and the foreign like product in the foreign market. This clarifies
explicitly, as suggested by some commentators, that losses in one
market would offset profits in another. This is clearly contemplated by
the term ``total actual profit'' in section 772(f) of the Act, and is
reinforced by the reference in the SAA, at 825, to situations in which
there is no profit. Some commentators suggested that the regulations
clarify whether a profit ratio or per-unit profit will be used. This
change to the rule is unnecessary, but in accordance with section
772(f)(2) of the statute, the Department will apply a profit ratio,
e.g. profit divided by selling expenses.
In calculating profit, this paragraph specifies that the Department
will not disregard home market sales below cost. Although some
commentators suggested that below-cost sales should be disregarded when
determining total
[[Page 7332]]
actual profit, there is no provision in the statute for disregarding
sales below cost in this context, and doing so would conflict with the
statutory requirement to use ``actual profit.''
Paragraph (d)(2) specifies that the Department will not be limited
to audited financial statements, but may use any appropriate financial
report, including internal reports, the accuracy of which can be
verified, if verification is conducted. This provision reflects the
suggestion of commentators that the Department make clear its
discretion to use financial reports prepared in the normal course of
business that are as specific as possible to the merchandise under
investigation or review.
Finally, paragraph (d)(3) recognizes the obligations of the
Department not to require the reporting of costs solely to make the
profit deduction, and, where practicable, to use costs that are
submitted voluntarily for purposes of calculating profit. However, to
ensure that voluntary submissions of cost data can be used for this
purpose, the Secretary will specify deadlines after which such
voluntary submissions will no longer be accepted. The Department has
not adopted a rule, proposed by one commentator, that the Department
not be allowed to initiate an investigation of sales below cost based
on an allegation derived from cost information submitted voluntarily
for this purpose. If the information submitted voluntarily supports a
sufficient allegation that home market sales have been made below cost,
then the Department is required to initiate a cost investigation.
Various commentators suggested that the regulations specify the
costs that will be subtracted from revenues to determine total actual
profit. Although the Department has not elaborated on the guidance
provided in section 773(b)(3) of the Act with respect to cost of
production and section 773(e) of the Act with respect to constructed
value, the Department will develop an appropriate treatment of
particular expenses through practice, as it has done with cost of
production and constructed value.
A number of commentators contended that the Department should cap
the amount of profit deducted at the amount of profit actually earned
on each U.S. sale. Other commentators argued for an adjustment to
normal value to offset any distortion caused by the profit allocation
method required by the statute. These commentators claimed that failure
to make such an adjustment to normal value would lead to double-
counting of profit.
Article 2.4 of the Agreement provides for the deduction of profit
and selling expenses associated with economic activities in the export
market in order to construct an export price. The statute implements
the Agreement by requiring that the profit calculation for constructing
an export price be computed based on the combined profits of the
exporter on sales to both the U.S. and home markets. The SAA, at page
825, prohibits a cap based on the transfer price by stating that ``the
transfer price between exporters or producers and the affiliated
importer is irrelevant in determining the amount of profit to be
deducted'' in constructing an export price. Further, the statute does
not provide for an adjustment to normal value in the manner suggested.
Some commentators also suggested that the regulations state that
profit will be deducted in calculating CEP only when the importer is
affiliated with the exporter. They argue that this is necessary to
ensure that the profit of an unaffiliated consignment importer will not
be deducted twice. While the Department fully agrees with this comment,
the regulations do not include such a provision, because the statute
clearly limits the profit deduction to profits allocated to expenses
incurred by the producer, exporter, or affiliated seller.
One commentator suggested that the regulations explain whether
profits in the home market or a third country market will be used when
there are few sales in the home market, i.e., that market is not
``viable'' under section 351.404, discussed below. The statute does not
clearly address this question, and as this is a new provision with
which the Department has no experience, the Department will address
this question after gaining experience in its administration.
Paragraph (e) explains how the Department will treat payments
between affiliated parties for purposes of section 772(d) of the Act.
This provision explains that the Department will normally base the
deduction of expenses on the cost to the affiliate, rather than on any
payment to the affiliate. However, where the Department is satisfied
that the exporter does not have access to that information, the
Department may use the payment to the affiliated party if that payment
represents an arm's-length price for the service provided by the
affiliated party. The Department will determine whether the price is
arm's length by a comparison of the price at issue with prices for
similar services paid to unaffiliated providers, or with prices charged
by the affiliate to unaffiliated parties. Thus, under this provision,
where an affiliated importer sells the subject merchandise on
commission, the Department will normally use the selling expenses of
the affiliated importer, but may use the amount of the commission, if
the conditions identified above exist.
Paragraph (f) provides that the Department will deduct from the
export price (or the constructed export price) any antidumping or
countervailing duties paid on behalf of the importer, or reimbursed to
the importer, by the producer or exporter and sets out an exception and
the procedures to be applied in that situation. Other than the changes
in language required by the URAA, the provision with respect to
antidumping duties is unchanged from Sec. 353.26 of the existing
regulations. The requirement that such countervailing duties be
deducted from the export price (or constructed export price) is new.
Under section 772(c)(1)(C) of the Act, the Department increases the
price used to calculate export price (or constructed export price) by
the amount of any countervailing duty imposed to offset an export
subsidy. The countervailing duty paid by the importer has the effect of
increasing the price to the importer by the amount of that duty. If the
producer or exporter pays or reimburses the duty, the price has not
been increased and a deduction in the amount of the duty paid or
reimbursed by the producer or exporter, to offset the addition made
under section 772(c)(1)(C), is appropriate to arrive at the correct
export price (or constructed export price). As with antidumping duties,
the statute authorizes no adjustment to export price (or constructed
export price) for countervailing duties imposed to offset other types
of subsidies. And just as with antidumping duties, payment of those
countervailing duties by the exporter or producer on behalf of the
importer represents an effective reduction in the price to the
unaffiliated purchaser. Thus, in both instances it is appropriate to
take the deduction described in paragraph (f).
Section 351.403
With respect to the calculation of normal value, Sec. 351.403 sets
forth, without substantive change, the regulations regarding sales and
offers for sale and the regulations regarding use of sales to or
through an affiliated party. However, as discussed above with respect
to section 351.102, differences between the old term ``related party''
and the new term ``affiliated party'' may have an impact in this area.
The provisions corresponding to Sec. 351.403 are currently contained in
Secs. 353.43(a) and 353.45 of the existing regulations.
[[Page 7333]]
Because other provisions of 353.43 have been added to the statute, they
are not restated in these proposed regulations.
Several commentators suggested that the Department adopt a
regulation allowing respondents not to report ``downstream'' sales
(i.e. sales by affiliated parties of merchandise purchased from the
respondent) if the quantity of sales to affiliated parties is below a
certain threshold percentage of sales to unaffiliated parties. Others
suggested, in contrast, that the Department require that downstream
sales always be reported. Because factors other than value, such as
comparability of sales, affect this decision, neither proposal is
reflected in the regulations. However, the Department will continue to
consider this important issue, which has implications both for the
accuracy of its calculation and the reasonableness of its information
requirements. The Department encourages the submission of comments on
this matter.
Similarly, several commentators recommended methodologies for
determining when a price to an affiliated party should be considered
comparable to the price at which merchandise is sold to unaffiliated
parties; i.e. when a price is at ``arm's length.'' Because of the
complexity of this issue, and because the Department's practice in this
area is still evolving, the Department has not addressed this issue in
these proposed regulations. However, the Department will continue to
consider this issue for the final regulations.
Section 351.404
Section 351.404 sets forth in combined form the requirements of
sections 773(a)(1)(B) and (a)(1)(C) of the Act regarding whether sales
in the exporting country or in a third country may be used as a basis
for normal value. This provision modifies Secs. 353.48 and 353.49 of
the Department's existing regulations.
The antidumping statute has long required the Department in
calculating foreign market value (now normal value) to avoid the use of
markets in which there are few sales (i.e., markets that are not
``viable''). Paragraph (b)(1) sets forth the general condition under
which the Secretary will find a market to be viable, that is, when
satisfied that the sales in the exporting or third country market are
of sufficient quantity to form the basis for normal value.
Paragraph (b)(2) defines the sufficient quantity standard as
satisfied when the aggregate quantity (or value) of foreign like
product sold in or to the foreign country is five percent or more of
the aggregate quantity (or value) of subject merchandise sold to the
United States. Under the prior statute and regulations, viability was
established by comparing the quantity of sales in the exporting country
to the quantity of sales to all export markets except the United
States. In accordance with the URAA, the comparison in paragraph (b)(2)
is between sales in the foreign market and sales to the United States.
The URAA also changed the comparison that the Department will make
in deciding if the sales in the foreign market are in sufficient
quantities. Under prior practice, the comparison was normally made
between sales of ``such or similar'' merchandise. Under the URAA, the
comparison will be between sales of the foreign like product in the
foreign market and sales of subject merchandise to the United States.
Some commentators have argued that the Department should measure
viability on the basis of categories of merchandise smaller than the
foreign like product. However, as other commentators pointed out, the
statute is explicit that the Department determine market viability for
each respondent on the basis of the aggregate quantity (or value) of
the foreign like product. Moreover, the SAA, at 821-22, states that,
``[t]he viability of a market will be assessed based on sales of all
merchandise subject to an antidumping proceeding, not on a product-by-
product or model-by-model basis.'' Commentators noted that the
Department's calculations would become extremely complex if, for a
given respondent, the normal value for some U.S. sales were to be based
in the home market, while the normal value for other U.S. sales were to
be based in a third country. Finally, because basing this test on sales
of the foreign like product will require less disaggregated data, it
will allow the Department to make the viability determination earlier
in the proceeding.
Paragraph (b)(2) reflects the preference contained in the statute
for measuring viability on the basis of quantity. Several commentators
argued that the Department should retain the flexibility to measure
viability on the basis of value. While the Department may use value,
the statute provides that value may be used only where quantity is not
appropriate. The SAA makes clear, however, that quantity is to be
defined broadly, and may be measured on the basis of number of items,
weight or such other bases that the Department considers appropriate.
Some commentators have argued that the Department must retain the
flexibility to use a test other than five percent. While five percent
has long proven to be a satisfactory measure of viability, in unusual
situations the Secretary may apply a number less than or greater than
five percent. This is consistent with the SAA, at 821, which indicates
that such situations will be ``unusual,'' and which reflects the fact
that the Department has successfully applied the five percent threshold
in the past. It also reflects the need for an early decision with
respect to the market in which normal value will be established,
because respondents must provide data relative to sales in that market.
Paragraph (c)(1) stipulates that if the Department finds a viable
exporting-country market, it will calculate normal value on the basis
of prices in that exporting country. If the Department finds that the
exporting-country market is not viable, but that a third-country market
is viable, it may calculate normal value on the basis of prices to the
third country. The use of the word ``may'' in the third country
provision reflects the language of section 773(a)(4) of the Act, which
provides that the normal value may be the constructed value of the
subject merchandise even if a third country market is viable. Paragraph
(c)(1) is not intended to address circumstances in which prices must be
disregarded because they are below the cost of production, as discussed
in connection with section 351.406, below.
Paragraph (c)(2) provides that if the Department finds a viable
market, it may decline to calculate normal value on the basis of prices
in or to that market in certain circumstances. For both the exporting
country and a third country, if parties establish to the Secretary's
satisfaction that the particular market situation would not permit a
proper comparison, the Department may decline to use sales in the
relevant market as the basis for normal value. The SAA, at 822, cites
as possible examples of such situations a single sale in the foreign
market which meets the five percent threshold, extensive government
control over pricing that does not permit competitive forces to affect
prices, and differing patterns of demand in the United States and the
foreign market. Also, if parties establish to the Secretary's
satisfaction that prices to a third country are not representative, the
Department may decline to use sales to that country.
As explained above in connection with paragraph (b), normally a
finding that the foreign market sales constitute five percent or more
of sales to the United States will be considered determinative with
respect to the issue of viability. The Department will review another
factor only if a party
[[Page 7334]]
convincingly demonstrates that that factor mitigates against reliance
on the five percent standard. This is in accordance with the
Department's experience, the language of the SAA, at 821, and the need
for early viability determinations. The SAA explains that ``sales in
the home market `normally' will be considered of sufficient quantity to
render the home market viable if they are five percent or more of sales
to the United States. The Administration intends that Commerce will
normally use the five percent threshold except where some unusual
situation renders its application inappropriate.'' Therefore, unless a
party presents convincing evidence that some aspect of the market in
question is so unusual as to make that market an inappropriate basis
for comparison and the five percent test inappropriate, the Department
will rely on the results of the five percent test in determining
whether the foreign market is an appropriate basis for normal value.
Placing primary reliance on the five percent test is also consistent
with the need to make the viability determination early in a proceeding
so that respondents can provide the necessary sales information and the
Department can meet its statutory deadlines.
In furtherance of the need to make viability determinations early
in an investigation or review, paragraph (d) references the deadline
for filing any allegation (along with all supporting factual
information) regarding market viability, including an allegation that
one of the exceptions in paragraph (c)(2) applies. That deadline (40
days after a questionnaire is issued) is contained in
Sec. 351.301(d)(1). The deadline, while short, is approximately two
weeks after the general information response to the questionnaire is
normally due. If the Department extends the deadline for responding to
that section of the questionnaire, it also will extend the time for
making an allegation regarding market viability. Among the allegations
covered by Secs. 351.301(d) and 351.404(d) are arguments that some
number other than five percent should be used to determine viability,
or that viability should be determined based on the value, rather than
quantity, of sales.
Paragraph (e) outlines factors for consideration when several third
country markets are viable. These criteria are slightly modified from
those found in Sec. 353.49(b) of the Department's prior regulations. In
the past, the Department has most often found that the largest third
country market is the best basis for comparison with the United States.
However, in a few situations, the Department has discovered that other
factors mitigate against selection of the largest market. For example,
where sales to a particular third country market are of merchandise
that is very similar to that sold to the United States, the use of that
third country market may be more appropriate, even if it is not the
largest market.
Several commentators argued that the Department should retain the
criteria found in the existing regulations for selecting a third
country. In this regard, we note that the criterion that sales to the
selected third country market be of sufficient quantity is now
encompassed in the five percent test, which now applies to third
country markets as well as the home market. The criterion that the
selected market be like the United States in terms of organization and
development is now reflected in the requirement of paragraph (c)(2)
that there not be a market situation which prevents a proper
comparison. In addition, paragraph (e) provides that the Department may
consider other criteria for selection of a third country market that
are relevant to a particular case. As in the past, while the Department
will consider all relevant criteria, not all of the criteria of this
section need be present in the selected market, and none is
dispositive.
Paragraph (f), based on Sec. 353.48(b) of the existing regulations,
indicates that the Department normally will choose to calculate normal
value based on sales to a viable third country market rather than on
constructed value. The change in terminology (i.e., the deletion of
``prefer'') is intended to reaffirm that the Department retains the
discretion to select constructed value over a third country price-to-
price comparison in appropriate circumstances. However, once the
Department chooses a comparison market, it will not reexamine the issue
of viability. Thus, if the Department finds that it must disregard
sales in the selected foreign market of a product that is most similar
to the subject merchandise (e.g., because the sales are below cost),
the Department will apply constructed value rather than seek sales in
another market or use sales of less similar merchandise. This policy is
discussed in more detail below in connection with Sec. 351.406
(``comparison of merchandise'').
Section 351.405
Section 351.405 deals with the calculation of normal value based on
constructed value, and modifies Sec. 353.50 of the Department's
existing regulations.
Under section 773(e)(2)(A) of the Act, as a general rule the
Department will base amounts for profit and selling, general and
administrative expenses (``SG&A'') on the actual amounts incurred and
realized by the specific exporter or producer in connection with the
production and sale of a foreign like product in the ordinary course of
trade. For ease of discussion, this general rule will be referred to as
the ``preferred methodology.'' If data regarding a specific company's
actual profit and SG&A are not available, section 773(e)(2)(B) of the
Act provides three alternative methods for calculating these amounts
(the ``alternative methods''). As stated in the SAA, at 840, the
statute does not establish a hierarchy or preference among the three
alternative methods.
Paragraph (b) clarifies an issue regarding the market that will
form the basis for the calculation of profit and SG&A under the
preferred methodology and under the alternative methods. Specifically,
paragraph (b)(1) provides that in applying the preferred methodology,
sales in the country in which the merchandise is produced or a third
country, as appropriate, will form the basis for the calculation of
profit and SG&A. In contrast, paragraph (b)(2) provides that in
applying the alternative methods, only sales in the country in which
the merchandise is produced will form the basis for the calculation of
profit and SG&A (or in the case of the third alternative method, the
basis of the so-called profit cap).
The issue arises because of the use in the statute of identical
language that the Department interprets differently in different
situations. Specifically, the statute states that with respect to both
the preferred methodology and the alternative methods, profit and SG&A
shall be based on sales ``for consumption in the foreign country.'' The
SAA, at 840, provides that in the context of the three alternative
methods, profit and SG&A shall be based on ``home market'' sales; i.e.,
sales in the country in which the merchandise is produced. Article
2.2.2 of the AD Agreement similarly indicates that with respect to the
three alternative methods, the appropriate market is the ``domestic
market of the country of origin.'' Both the SAA and the AD Agreement
are silent, however, on the market in which to calculate profit and
SG&A with respect to the preferred methodology. Therefore, the
Department intends to maintain its current practice of using home
market or third country sales as the basis for profit and SG&A, as
appropriate. Specifically, when an exporter's third country market
forms
[[Page 7335]]
the basis for normal value and the Department resorts to constructed
value due to below-cost third country sales or model matching
considerations, the Department will use third country sales as the
basis for profit and SG&A. Use of third country sales in these
situations is the most accurate and practical approach for both the
Department and the respondent.
In practice, the Department can derive an actual amount of profit
by subtracting the cost (derived from COP data) from the home market
sales price (derived from the home market sales data) to arrive at a
net profit for each transaction examined. The Department will use the
net profit figures to derive a per unit amount for profit. The
Department will derive an ``actual'' amount of G&A by dividing the G&A
from a company's financial statements by the cost of goods sold to
arrive at a G&A ratio. The Department then will apply this ratio to
total cost of manufacture on a per unit basis. The actual amounts for
per unit selling expenses can be derived from the home market sales
list. This leaves the question of whether the ``actual amounts'' for
profit and SG&A should be based on a model-specific or aggregate-figure
basis.
One commentator argued that the Department should not calculate
SG&A expenses exclusive of those sales that the Department disregards
as being below cost, because these expenses rarely relate directly to
individual sales. Another commentator, however, argued that SG&A and
profit should be obtained from the same, or comparable, pool of sales.
The Department's practice has been to use aggregate figures.
Notably, section 773(e)(1)(B) of the pre-URAA statute provided for
calculation of an amount for profit and SG&A ``equal to that usually
reflected in sales of merchandise of the same general class or kind as
the merchandise under consideration'' (emphasis added). In comparison,
section 772(e)(2)(A) of the amended Act provides for use of the actual
amounts incurred and realized for profit and SG&A ``in connection with
the production and sale of a foreign like product.'' The use of ``a''
arguably could be interpreted to mean a particular model. The SAA, on
the other hand, refers to actual amounts incurred, ``in selling the
particular merchandise in question (foreign like product).'' SAA, at
839. This language supports a view that the use of ``a'' was not
intended to overturn our prior practice of relying on aggregate figures
for profit and SG&A. Moreover, if ``a'' were to be interpreted
literally, the Department would have the discretion to pick and choose
the sale of the foreign like product from which profit and SG&A would
be taken. This clearly would undermine the predictability of the
statute. Given these distinctions, the amended Act arguably provides
for a narrower basis for the calculation of profit and SG&A than did
the prior statute. Therefore, the Department intends to calculate
profit and SG&A based on an average of the profits of foreign like
products sold in the ordinary course of trade.
Both the pre-URAA statute and the amended Act provide that only
sales ``in the ordinary course of trade'' be used as the basis for
profit and SG&A. Under section 771(15) of the amended Act, however, the
definition of ordinary course of trade has been expanded to require
that the Department consider sales disregarded under the cost test to
be outside the ordinary course of trade. A number of commentators
argued that the profit and SG&A calculations should exclude all below-
cost sales. The Department believes that automatic exclusion of below-
cost sales would be contrary to the new statute. Specifically, in
calculating profit and SG&A under the preferred and second alternative
methods, the statute allows for exclusion of sales outside the ordinary
course of trade. The statutory definition of ordinary course of trade,
in turn, provides that only those below-cost sales that are
``disregarded under section 773(b)(1)'' of the Act are automatically
considered to be outside the ordinary course of trade. In other words,
the fact that sales are below cost does not automatically trigger
exclusion; rather, the sales must have been disregarded under the cost
test before they will be excluded from the calculation of profit and
SG&A.
A number of commentators argued that the regulations should provide
representative examples of sales that would be disregarded as not being
in the ordinary course of trade, such as sales with abnormally high
profits. One commentator suggested that the regulations define
``abnormally high profits.'' Another commentator, in contrast, argued
that no sale should be disregarded because of abnormally high profits
unless an affirmative showing is made on a sale-by-sale basis that the
price was not set by normal market forces. The SAA, at 839-840, and
834, indicates that the Department could consider sales with abnormally
high profits to be outside the ordinary course of trade, along with
sales of off-quality merchandise, sales to affiliated parties not at
arm's-length prices, sales of merchandise produced according to unusual
product specifications, merchandise sold at aberrational prices and
merchandise sold pursuant to unusual terms of sale. The Department does
not believe that it is appropriate to include these examples in the
regulations. As implied by the statute and the SAA, the Department has
the discretion to consider sales and transactions, other than those
specifically cited, to be outside the ordinary course of trade. The
Department believes that it is more appropriate to make these ordinary
course of trade determinations on a case-by-case basis.
A number of commentators proposed that the regulations should adopt
a de minimis profit level of two percent, and that where the profit
amount calculated by the Department using one methodology is de
minimis, the Department should rely on an alternative methodology. The
Department has not adopted this proposal. The new statute specifically
eliminates the prior statutory minimum for profit, and, instead,
requires the use of the ``actual'' amounts incurred and realized by a
specific exporter or producer. Nowhere does the new statute authorize
the Department to establish a new de minimis rule requiring the
Department to reject an alternative for calculating profit if that
alternative results in a low amount for profit.
As discussed above, section 773(e)(2)(B) of the Act provides for
three alternative methods if data regarding a specific company's actual
profit and SG&A are not available. One commentator suggested that the
regulations should clarify the point at which the number of sales in
the ordinary course of trade would be so small that the Department
would disregard actual data in favor of an alternative method to
calculate profit and SG&A. Another commentator argued that the
regulations should provide that when actual data is not available for
the calculation of profit, the Department must base its profit
calculation on the company's financial records. Still another
commentator argued that the regulations should clarify that only in
exceptional circumstances will the Department resort to other
producers' profits when calculating a respondent's profit. Finally, a
number of commentators argued that the third alternative (``any other
reasonable'' method) should be the company-wide profitability for the
respondent in question for the most recent fiscal year, and that the
Department should use this alternative only where profit cannot be
determined under either of the other two
[[Page 7336]]
alternatives. As discussed above, the SAA, at 840, makes clear that the
statute does not establish a hierarchy or preference among the three
alternative methods, and that selection of an alternative must be made
on a case-by-case basis. No one approach would be appropriate
necessarily for use in all cases. As stated in the SAA, at 841, ``the
Administration does not believe that it is appropriate at this time to
establish particular methods and benchmarks for applying [the third]
alternative [method].'' As the Department still has not had enough
experience in this area to develop a practice, the Department believes
that it is inappropriate to adopt these suggestions.
Under alternative methods one and three, profit and SG&A would be
based on sales of products in the ``same general category of products
as the subject merchandise.'' The SAA, at 840, indicates that this
would be consistent with the existing practice of relying on a
producer's sales of products in the same ``general class or kind.'' In
addition, the SAA, at 840, indicates that the term ``general category
of merchandise'' encompasses a category of merchandise broader than the
term ``foreign like product.'' As a result, the Department intends to
establish appropriate general categories on a case-by-case basis.
The SAA, at 841, provides that the Department should not require
companies to submit all data necessary to apply each alternative. For
example, the SAA states that the Department will not require a company
which has provided profit information on its own sales of the
particular foreign like product also to submit profit information on
its sales of the same general category of products solely to enable the
Department to use the latter information to calculate profit for a
different company. One commentator suggested that the regulations
reaffirm the commitment in the SAA that the Department will not make
burdensome information requests about profits in the context of
calculating constructed value. The commentator proposed, in particular,
that the Department should pledge to use audited and readily-available
profit data. However, a number of commentators expressed concern that
respondents not be allowed to unilaterally determine what profit
information to submit, and suggested that respondents be required to
submit additional key information, including profit and loss operating
statements, charts of accounts, and information demonstrating the
company's cost of capital. One commentator argued that the regulations
should require full cost reporting by all companies under investigation
(or review) so that alternative two would be a viable option. Given the
directive to refrain from requiring excessive additional reporting of
data, the Department believes that it would be premature to adopt these
proposals. As a practical matter, over time the Department will gain
experience as to the appropriate type and quantity of data to request.
Section 351.406
Section 351.406 is new, and deals with the analysis of whether to
disregard certain sales as below the cost of production under section
773(b) of the Act.
The Cost Test: Section 773(b)(1) of the Act provides that the
Department may exclude below-cost sales from the determination of
normal value if such sales occurred within an extended period of time
in substantial quantities, and were not at prices which permit recovery
of all costs within a reasonable period of time.
Paragraph (b) clarifies that the phrase ``extended period of time''
normally will coincide with the period over which sales under
consideration for use in the calculation of normal value were made;
i.e., the period of investigation or review. Most comments on this
issue were in accord with this approach. One commentator, however,
stated that while there was a certain practical appeal to this
approach, it would be more prudent for the Department to interpret the
phrase ``extended period of time'' on a case-by-case basis. The SAA, at
831-32, states that for purposes of computing the quantity of below-
cost sales, the Department will examine sales during the entire period
of investigation or review. Thus, the SAA suggests that ``an extended
period'' of time is intended to coincide with the investigative or
administrative review period, as appropriate.
Two commentators raised the issue of whether below-cost sales must
be made continuously throughout the period in order for the Department
to consider such sales to have been made ``within an extended period of
time.'' These commentators posed a scenario wherein a substantial
quantity of below-cost sales were made during a single month of a
twelve-month review period, and questioned whether, in such an
instance, the Department would have a sufficient basis for disregarding
those sales. Other commentators argued that, consistent with the SAA,
the Department no longer was required to find that below-cost sales
occurred in a minimum number of months before excluding such sales from
its analysis. According to these commentators, the Department must
disregard substantial quantities of below-cost sales even if made in
only one month of the period of investigation or review.
The SAA, at 831-32, states that because below-cost sales need only
occur ``within'' an extended period of time, the Department no longer
must find that such sales occurred in a minimum number of months during
the period. Thus, where the below-cost sales found during one month of
the period meet the other requirements of the cost test (i.e.,
substantial quantities and cost recovery), the Department would exclude
such sales from its analysis.
Although not further addressed in these regulations, section
773(b)(1)(A) of the Act also requires that the Department determine
whether below-cost sales have been made in substantial quantities.
Under section 773(b)(2)(C)(i) of the Act, the Department will consider
below-cost sales to have been made in ``substantial quantities'' if
they account for 20 percent or more of the volume of sales under
consideration for normal value. Under section 773(b)(2)(C)(ii) of the
Act, the Department also may find below-cost sales to be in substantial
quantities if the weighted average per unit price of the sales under
consideration is less than the weighted average per unit COP of those
sales.
In most cases, the Department intends to apply the 20 percent test
in identifying those instances in which respondents sold substantial
quantities of the merchandise at below-cost prices. In cases involving
highly perishable agricultural products, however, the Department
intends to apply the other substantial quantities benchmark (the
weighted average price-to-cost test), which closely corresponds to the
Department's previous substantial quantities benchmark for below-cost
sales in cases involving highly perishable agricultural products. The
Department's prior practice reflected the nature of perishable
agricultural products, which often must be sold at below-cost prices in
large quantities as the products begin to grow old and spoil.
Comments on the issue of substantial quantities were split. Some
commentators argued that both substantial quantities tests should be
applied in all cases. Other commentators maintained that under normal
circumstances, the Department should apply only the 20 percent
benchmark. These commentators contend that the language of the SAA
limits the use of the weighted average
[[Page 7337]]
benchmark strictly to cases involving highly perishable agricultural
products.
The SAA, at 832, states that the new weighted average price-to-cost
benchmark, like the old 50 percent rule, is intended to account for the
unique situation that exists with regard to below-cost sales of highly
perishable agricultural products. As a result, the Department intends
to apply this benchmark normally only in cases involving highly
perishable agricultural products. However, because there may be other
circumstances in which it would be appropriate to apply the weighted
average price-to-cost benchmark, the Department has not established a
bright line rule that would limit the use of this benchmark to cases
involving highly perishable agricultural products.
Finally, in determining whether to exclude below-cost sales from
the calculation of normal value, section 773(b)(1)(B) of the Act
requires that the Department determine whether such sales, ``were not
at prices which permit recovery of all costs within a reasonable period
of time.'' New section 773(b)(2)(D) of the Act clarifies that prices
shall be considered to provide for recovery of costs within a
reasonable period of time if such prices which are below cost at the
time of sale are above the weighted average per unit cost of production
for the period of investigation or review. Under the statute,
therefore, the Department's cost recovery test must consist of an
analysis involving individual prices for specific below-cost sales
transactions. This is consistent with the position taken by a number of
commentators.
Regarding cost recovery, several commentators also made suggestions
concerning the issue of adjustments to cost for ``periodic temporary
disruptions to production'' and the treatment of ``unforeseen
disruptions in production.'' The SAA, at 832, provides that before
testing for cost recovery, the Department may adjust COP to take
account of variations in per unit costs caused by ``temporary
disruptions to production that occur on a less frequent than annual
basis.'' The SAA cites major maintenance that occurs every three years
as an example of such a temporary disruption, and notes that the
respondent must demonstrate that the disruptions have ``recurred at
regular and predictable intervals.'' The SAA also provides special
treatment for unforeseen disruptions to production that are beyond the
respondent's control. Here, the SAA cites as an example the destruction
of respondent's production facilities by fire, and states that the
Department will continue to adjust for such disruptions by relying on
costs computed at a time prior to the unforeseen event.
One commentator submitted draft regulations outlining the above
concepts from the SAA with regard to periodic disruptions in production
and their effect on cost recovery. In response to this submission,
another commentator argued that the proposed draft language was too
restrictive of respondents' ability to demonstrate that below-cost
sales should not be disregarded.
The Department believes that determinations involving periodic
temporary disruptions to respondents' production costs are fact-
specific in nature, and that while regulatory examples of such
disruptions might give some guidance, they also might be interpreted as
limiting the types of circumstances for which the Department will
consider an adjustment. Moreover, in computing cost of production, the
Department typically allows respondents to amortize or otherwise adjust
for costs associated with major maintenance or other periodic
activities that disrupt production. Thus, regulations providing
specific examples of temporary disruptions might be interpreted as
limiting these types of adjustments solely to the cost recovery
analysis. The Department, therefore, has not included in its
regulations specific provisions concerning adjustments to costs for
periodic temporary disruptions in production. Nor do the regulations
include any discussion of how the Department intends to treat costs
associated with unforeseen disruptions in production. To do so in the
context of cost recovery would conflict with explicit guidance given in
the SAA, at 832, which states that the issue of unforeseen disruptions
in production is ``not a matter of cost recovery.''
Initiation of Below-Cost Sales Investigation: The Department
received several comments on the standard for determining whether an
allegation of sales below cost provides reasonable grounds to initiate
an investigation of sales below cost. These comments are discussed
above in connection with section 351.301(d)(2).
Below-Cost Sales Disregarded and Ordinary Course of Trade: Section
773(b)(1) of the Act provides that where below-cost sales have been
disregarded, the Department will base normal value on the remaining
sales of the foreign like product made in the ordinary course of trade.
However, if there are no remaining sales made in the ordinary course of
trade, the Department will base normal value on constructed value. The
Department's past practice was to disregard all sales of a product if
below-cost sales exceeded 90 percent of the total sales quantity of the
product. Under section 773(b)(1) of the Act, however, the Department is
required to use any existing above-cost sales to compute normal value
if such sales were made in the ordinary course of trade. Additionally,
the SAA, at 833, states that only where there are no above-cost sales
in the ordinary course of trade will the Department resort to
constructed value as the basis for normal value.
Under section 771(15) of the Act, the term ``ordinary course of
trade'' encompasses those below-cost sales that meet the criteria of
section 773(b)(1) of the Act. Thus, in most instances, the Department
will disregard such sales and compute normal value using only the
remaining above-cost sales. The SAA, however, describes two
circumstances under which this general rule may not apply.
The first circumstance involves sales of obsolete or year-end
merchandise. The SAA, at 833, notes that sales of such merchandise are
often made at below-cost prices. Despite this fact, the SAA explains
that it is appropriate to use these below-cost sales as the basis for
normal value where the merchandise exported to the United States is
similarly obsolete or end-of-model year. The second circumstance, while
not explicitly stated in the SAA, involves above-cost sales made
outside the ordinary course of trade. The SAA, at 834, provides
examples of sales that the Department might consider as being outside
the ordinary course of trade. These include sales made at aberrational
prices or with unusual terms of sale. Although such sales may pass the
COP test under section 773(b)(1) of the Act, the Department normally
would exclude them from the calculation of normal value. The Department
has incorporated examples of sales that may be considered outside the
ordinary course of trade as defined in Sec. 351.102 of the regulations.
The Department received proposals from several commentators
concerned about the determination of below-cost sales as outside the
ordinary course of trade. Two of these commentators expressed the
opinion that below-cost sales are a fundamental business reality, and,
as such, companies set prices to obtain a reasonable return in the
aggregate for their product line. The two commentators suggested that
to account for this phenomenon in its antidumping analysis, the
Department should adopt a two-tier test for substantial quantities.
Under the first tier, the Department would look to see if below-cost
sales in the comparison market were, in
[[Page 7338]]
aggregate, greater than twenty percent of all such sales. If so, the
Department would determine that the overall pattern of sales in the
comparison market were not in the ordinary course of trade, and then
would apply the twenty percent substantial quantities benchmark to
comparison market sales on a model-specific basis.
This suggestion drew sharp criticism from a number of other
commentators, who maintained, among other things, that the exclusion
test for sales below cost is to be applied on a model-specific basis.
The Department agrees with these commentators that the proposed two-
tier test would not be consistent with the SAA, at 832, which states
that ``the cost test will generally be performed on no wider than a
model-specific basis.'' Many of the commentators opposing the two-tier
test recommended that the Department state in its regulations its
intent to continue use of a model-specific cost test. The Department
believes that such a regulation is not necessary, because the
Department has used a model-specific cost test as part of its practice
for a number of years, and has no intention of changing its practice on
this issue.
The Department also received many comments relating to the use of
remaining above-cost sales as the basis for normal value. Some
commentators recommended that the Department's regulations reflect the
language of the statute and the SAA by providing for the use of
constructed value only where there were no comparison market sales made
in the ordinary course of trade. Other commentators, however, urged the
Department to avoid setting arbitrary and inflexible standards for
determining when above-cost sales must be used to establish normal
value. These commentators claimed that where there are only a few
aberrational, high-priced sales above-cost, such sales may be totally
unrepresentative as a basis for normal value. To avoid this problem,
one of the commentators suggested that the Department use statistical
concepts to identify when the price of a particular transaction is so
far from the average price as to be deemed not in the ordinary course
of trade.
In rebuttal, certain commentators argued that the Department should
not exclude from consideration for normal value small numbers of above-
cost sales simply because such sales were made at high prices.
According to these commentators, any above-cost sales made in the
ordinary course of trade should be used to compute normal value. The
commentators further argued that the Department should reject the
``simple statistical'' tests proposed by other commentators, because
this approach is contrary to the usual practice of examining a wide
host of factors to determine whether sales are in the ordinary course
of trade.
Section 773(b)(1) of the Act indicates that the Department is to
disregard sales made outside the ordinary course of trade when
computing normal value. In addition, section 773(b)(1) of the Act
provides for the use of constructed value only where there are no
above-cost sales remaining in the ordinary course of trade. However, in
cases where the few remaining above-cost sales are made at
aberrationally high prices, the SAA provides that these sales may be
excluded from consideration for normal value if they are determined to
be outside the ordinary course of trade. This determination typically
will depend on specific facts regarding the product, the industry, the
terms of sale, and any number of other considerations, including,
perhaps, statistical analyses of prices. Thus, to base the ordinary
course of trade analysis solely on statistical concepts would be
inappropriate, at least at this time. Moreover, without the experience
that comes from actual cases, it would be foolhardy to define specific
criteria for deciding which above-cost sales are ``aberrational'' and
which are in the ordinary course of trade.
Finally, one commentator suggested that before conducting its cost
analysis, the Department should exclude sales made outside the ordinary
course of trade (other than below cost sales). This commentator argued
that including such sales in the below-cost test effectively double-
counts the sales not made in the ordinary course of trade. Commentators
opposing this suggestion stated that it is not in accordance with the
new statute. The Department agrees that this suggestion is not
supported by the statute. Section 773(b)(1) of the Act instructs the
Department to determine whether sales of the foreign like product have
been made at less than the cost of production. Nowhere does the statute
suggest that the Department should perform its cost analysis only on
sales in the ordinary course of trade.
Comparison of Merchandise: Two commentators suggested that the
regulations provide the Department with the alternative of using the
next most similar category of products for comparison purposes, rather
than automatically resorting to the use of constructed value (``CV'')
when there are no above-cost sales for a particular model. In opposing
this recommendation, one commentator argued that, in accordance with
the statute, product matching occurs without regard to the exclusion of
below-cost sales.
Under section 773(a) of the Act, the Department is authorized only
to compare the merchandise under investigation to the foreign like
product. The suggestion of one commentator that where the most similar
merchandise can not be used for comparison because there are
insufficient sales above the cost of production, the Department may use
less similar merchandise as comparison models is incompatible with the
statutory scheme. Section 771(16) directs the Department to base its
comparisons on the first of three categories in which there is
merchandise that may be satisfactorily compared with the subject
merchandise (see section 771(16) of the Act, with respect to which the
only change brought about by the URAA was the substitution of the term
``foreign like product'' for the term ``such or similar merchandise'').
Most favored is ``merchandise which is identical in physical
characteristics'' and ``produced in the same country by the same
person'' as the merchandise under investigation. If there were no sales
of merchandise with identical physical characteristics, the Department
must select merchandise that meets the conditions set forth in section
771(16)(B) of the Act; i.e., like the merchandise under investigation
and approximately equal in commercial value. If no merchandise
qualifies under section 771(16)(B), the Department must select
merchandise that meets the conditions set forth in section 771(16)(C)
of the Act; i.e., of the same general class or kind, similar in use,
and reasonably comparable with the merchandise under investigation. The
Department would subvert this statutory scheme if it did not use the
first category in which there were sales; for example, by making a
comparison with ``similar'' merchandise even though the respondent had
sales of identical merchandise. Moreover, adopting the proposed
methodology effectively would add an additional criterion to 771(16);
namely, that merchandise in the category selected must be sold above
cost in sufficient quantity. As the CIT has explained in upholding the
Department's policy under prior law, ``[o]nce the model matches are
established and the COP test is completed, Commerce is not required to
reexamine all of the undifferentiated model data in order to make new
matches and price comparisons on the basis of whatever subset of lower-
ranked such or similar merchandise survives
[[Page 7339]]
the COP test.'' Zenith v. United States, 872 F. Supp. 992, 1000 (CIT
1994). See also Policy Bulletin 92/4, ``The Use of Constructed Value in
COP Cases,'' for a detailed discussion of this issue.
One commentator recommended that for purposes of computing COP and
CV, the Department should rely on the product categories that a
respondent uses in its normal course of business. Several commentators
opposed this recommendation, stating that costs are to be computed
based on the same product categories established by the Department for
model matching. The Department's practice is to calculate costs
consistent with the model matching criteria it develops outset of an
investigation or review, after having received the views of the
parties. The product categories developed in such fashion generally
account for significant differences in actual costs affecting price.
The Department intends to continue this practice because it prevents
any manipulation of the cost analysis through changes in internal
product classifications.
Section 351.407
Section 351.407 contains special rules for the allocation of costs
and the calculation of CV and COP in situations involving startup
operations.
Allocation of Costs: Paragraph (b) provides that the Department
will consider various factors associated with the production and sale
of the subject merchandise and the foreign like product in order to
ensure that the method used to allocate production costs reasonably
reflects and accurately captures all of the producer's actual costs.
Paragraph (b) specifically mentions two factors, production quantities
and relative sales values, that the Department may take into account in
judging whether common production costs (including costs incurred as
part of a joint manufacturing process) have been allocated among
products on an appropriate basis. As has been its practice in the past,
however, the Department may weigh other significant qualitative and
quantitative factors concerning the production of the merchandise in
question to ensure that a producer has reported a representative
measure of the materials, labor, overhead, and other costs associated
with the subject merchandise and the foreign like product.
Startup Costs: Startup costs are addressed in paragraph (c). Under
section 773(f)(1)(C)(ii) of the Act, the Department may make an
adjustment for costs relating to startup operations only if the
following two conditions are satisfied:
(1) A producer is using new production facilities or producing a
new product that requires substantial additional investment, and
(2) production levels are limited by technical factors associated
with the initial startup phase of commercial production.
For good reason, these conditions are somewhat generalized, because
they must allow for any number of startup operation scenarios. The
Department recognizes the fact-specific nature of the startup
adjustment, and realizes that much of the guidance for implementing the
adjustment will come from future case work. Nevertheless, the
Department believes that the regulations offer an opportunity to
furnish parties with additional clarification of those circumstances
that qualify as startup operations and those that do not. To achieve
this goal, while at the same time keeping the definition of startup
clearly within the bounds intended by Congress, the Department has
incorporated into the regulations concepts from the SAA, at 836-838,
that help to define startup operations and explain the startup
adjustment.
Definition of startup: Paragraph (c)(1) includes definitions for
``new production facilities'' and ``new products,'' as well as guidance
on whether improvements to products or facilities and expansion of
capacity qualify as startup operations. The Department received a
number of comments concerning the definition of startup. For the most
part, the commentators fell into two camps--those who believed that
startup should be ``narrowly defined'' in the regulations, and those
who rejected this approach. In either case, the commentators did not
provide substantive definitions that differed in any significant way
from those adopted by the Department. Rather, their thoughts on whether
or not to craft the regulations ``narrowly'' related to issues of
implementation and burden of proof, both of which are discussed
separately below.
In addition to the comments described above, the Department
received comments on two other issues regarding the startup definition.
With respect to the first issue, one commentator argued that the term
``new product'' does not refer to ``improved'' products or to new-
model-year versions of products, and recommended that the Department's
regulations reflect this premise. According to the commentator, ``new
products'' must have completely new designs or require the use of new
facilities or ``substantial additional investment'' to existing
facilities. Another commentator wrote to reject this position, stating
that, while the SAA clearly intends to exclude from startup any
incrementally improved products, it does not prohibit new-model-year
versions from qualifying as ``new products'' where they satisfy the
definition of a startup. The Department agrees with the latter
commentator. There is no basis in the statute or SAA to specifically
exclude new-model-year products or ``improved'' products where their
production otherwise meets the startup criteria.
With respect to the second issue, two commentators recommended that
the Department include an additional condition to the startup analysis.
These commentators maintained that no startup adjustment should be
allowed where, based on a comparison of prices and costs in the startup
period, the Department finds that the respondent has adjusted its
prices upward to reflect the higher startup costs. The Department has
rejected this proposal, because neither the statute nor the legislative
history provides for this approach.
Demonstrating entitlement to a startup adjustment: Although the
statute does not provide any specific guidance regarding the burden of
establishing entitlement to a startup adjustment, the SAA, at 838,
makes clear that the burden is on the party seeking the adjustment:
Specifically, companies must demonstrate that, for the period
under investigation or review, production levels were limited by
technical factors associated with the initial phase of commercial
production and not by factors unrelated to startup, such as
marketing difficulties or chronic production problems. In addition,
to receive a startup adjustment, companies will be required to
explain their production situation and identify those technical
difficulties associated with startup that resulted in the
underutilization of facilities.
Importantly, however, the SAA notes that the burden imposed for startup
adjustments is consistent with the Department's approach to adjustments
in general. Thus, in demonstrating to the Department that a startup
adjustment is warranted, respondents will be held to the same legal and
factual standards that apply to all other adjustments in an antidumping
analysis.
The Department received a number of comments regarding this
``burden of proof'' issue. Although virtually all of the commentators
recognized that the burden of establishing entitlement to an adjustment
fell on the party making the claim (in all likelihood the respondent),
there was significant disagreement as to
[[Page 7340]]
the evidentiary standard that the Department should apply in
considering whether to grant a startup cost adjustment. Those
commentators seeking to limit the availability of the startup
adjustment claimed that in considering whether to grant an adjustment,
the Department's regulations must hold respondents to a rigid
evidentiary standard. They reasoned that because the startup provision
constitutes an exception to the cost of production/constructed value
section of the statute, the Department should grant an adjustment only
in limited circumstances. This would ensure that, in the words of the
SAA, at 835, the startup adjustment did not provide respondents with a
``license to dump.''
The Department believes that, contrary to the commentators claims,
this statement from the SAA is not intended to place a higher-than-
normal burden on parties. Instead, the statement merely advocates
strict enforcement of the startup provision, and advises the Department
to grant adjustments only in those circumstances where they are
warranted.
The Department also received recommendations from two commentators
that wished to reduce the burden of proof below that applicable to
other adjustments. The first commentator suggested that the
Department's regulations provide that once a respondent has made a
prima facie case of entitlement to a startup adjustment, the Department
would make the adjustment unless there was clear and convincing
evidence that factors other than startup affected sales volumes. In
addition, the commentator recommended that the regulations impose an
early deadline, following the request for a startup adjustment by
respondent, by which the Department must: (1) Decide precisely what
additional information a respondent must supply to support a claimed
startup adjustment, and (2) decide whether an adjustment is
appropriate. The second commentator took a somewhat less radical (but
still far-reaching) approach in recommending that the Department
interpret the burden on respondents as a ``burden of production''
rather than a ``burden of proof.'' This commentator explained that the
term ``burden of production'' meant that a respondent has the
responsibility for cooperating in the proceeding and producing whatever
evidence is available to support its claim. By contrast, according to
the commentator, the ``burden of proof'' meant that the respondent had
the ultimate burden of persuasion in convincing the Department of its
entitlement to a startup adjustment.
The Department has not adopted these recommendations. Again,
according to the SAA, the burden of proof undoubtedly rests with the
party seeking a startup adjustment. Therefore, it is incumbent upon
that party to (1) prove that the startup conditions of section
773(f)(1)(C)(ii) of the Act existed during the period of investigation
or review, and (2) as with any antidumping adjustment, document that
fact to the Department's satisfaction.
Duration of the startup period: Under section 773(f)(1)(C)(ii) of
the Act, the startup phase ends at the time commercial production
levels have been achieved. Commercial production levels themselves,
however, represent a somewhat nebulous benchmark. Therefore, in gauging
the end of the startup period, the statute instructs the Department to
consider factors unrelated to startup operations that also may affect a
respondent's production volumes. These factors include market demand,
product seasonality, and business cycles. Section 773(f)(1)(C)(iii) of
the Act further provides that the benchmark commercial production
levels are to be characteristic of the merchandise, producer, or
industry concerned.
It is clear from the statute that measurement of commercial
production volumes (and, thus, determination of the end of the startup
period) is dependent on a range of factors specific to the product or
industry under consideration. This concept is also expressed in the
SAA, at 837, which states:
The Administration recognizes that the nature and timing of
startup operations will vary from industry to industry and from
product to product, and that any determination of the appropriate
startup period involves a fact-intensive inquiry * * *. For this
reason, the Administration intends that Commerce determine the
duration of the startup period on a case-by-case basis.
However, while the duration of the startup period is to be
evaluated based on the facts of each case, the SAA does provide
guidance regarding the type of evidence that the Department will
examine and the factors it should consider in making its determination.
The SAA, at 836-37, instructs the Department to first examine the
actual production experience for the merchandise in question in
determining when a company reaches commercial production levels. In
addition, the SAA states that the Department should consider other
information, including ``historical data reflecting the same producer's
or other producer's experiences in producing the same or similar
products.'' The SAA makes clear, however, that the Department should
ascribe little weight to a producer's projections of future production
volumes or costs. Lastly, the SAA notes that the Department must
consider those factors described in the statute that are unrelated to
startup operations but that may affect production volumes. Again, these
include product demand, seasonality, and business cycles. These factors
are reflected in paragraphs (c)(2) and (c)(3). Furthermore, consistent
with the SAA, paragraph (c)(4)(i) provides that the Department will
determine the duration of the startup period on a case-by-case basis.
The Department received relatively few recommendations regarding
the duration of the startup period. This perhaps reflected the
commentators appreciation of the fact-intensive nature of the startup
period determination. Most commentators that did provide
recommendations generally urged the Department to incorporate the
statutory language into the regulations. Certain commentators suggested
that the regulations reflect the SAA stipulation that attainment of
peak production levels will not be the standard for identifying the end
of the startup period. This is consistent with paragraph (c)(2)(i).
One commentator argued that the startup period should be ``narrowly
conscribed,'' but did not offer any direct suggestions as to what this
meant or how it should be achieved. The Department believes, however,
that the statute does not provide for a narrow interpretation of the
startup period. Rather, the intent of the statute is to determine the
duration of the startup period based on the specific facts of each
case.
Method of adjusting for startup costs: Section 773(f)(1)(C)(iii) of
the Act sets forth the basic methodology for making startup
adjustments. According to this section, where the essential conditions
of startup have been satisfied, the Department will adjust for startup
operations by ``substituting the unit production costs incurred with
respect to the merchandise at the end of the startup period for the
unit production costs incurred during the startup period.'' Section
773(f)(1)(C)(iii) further provides that in situations where the startup
period extends beyond the period of investigation or review, the
Department will base any startup adjustment on ``the most recent cost
of production data that it reasonably can obtain, analyze, and verify
without
[[Page 7341]]
delaying the completion of the investigation or review.''
Given the variety of products and diverse industries investigated
by the Department, the statutory instructions under section
773(f)(1)(C)(iii) of the Act provide a reasonably comprehensive
framework for implementing the startup adjustment methodology. The
Department believes that any attempt to further define the adjustment
methodology runs the risk of limiting the Department's ability to
consider the facts of each case in adjusting for startup costs.
Likewise, in those instances where the startup operations extend
beyond the period of investigation or review, the regulations do not
impose time limits on the acceptance of relevant cost of production
data beyond those already set forth in the statute. Instead, the
Department will evaluate its ability to obtain, analyze, and verify
such data on a case-by-case basis. Moreover, the regulations do not
limit the type of data that may be used to adjust production costs for
extended startup periods. For example, where the startup operations
involve a new manufacturing facility, the appropriate adjustment
methodology may require deriving surrogate costs based on identical
merchandise manufactured at a previously existing facility.
Costs included in the startup adjustment: As explained in the SAA,
at 837, in adjusting production costs for startup operations, the
Department ``will consider unit production costs to be items such as
depreciation of equipment and plant, labor costs, insurance, rent and
lease expenses, materials costs, and overhead.'' The SAA further notes
that ``sales expenses, such as advertising costs, or other non-
production costs, will not be considered startup costs because they are
not directly tied to the manufacturing of the product.'' The Department
believes that these examples from the SAA provide helpful guidelines in
determining which types of costs qualify as production costs for which
a startup adjustment may be allowed. Therefore, they are reflected in
paragraph (c)(4)(iii).
Despite the clear language of the SAA, some commentators have
suggested that adjustments for startup operations should take into
account only variable production costs, excluding altogether any fixed
production costs that may have been incurred during the startup phase.
This proposal is inconsistent with the SAA, which does not limit
qualified startup costs to variable costs only. Indeed, several of the
eligible cost categories identified in the SAA--depreciation,
insurance, rent and lease expenses, and (in some instances) overhead--
are typically regarded by the Department as fixed costs. Moreover, the
fact that production levels are limited during the startup period means
that, in most instances, the per unit fixed costs will be affected to a
greater extent by startup operations than will the per unit variable
costs during the same period. Thus, the Department has rejected the
proposal that the startup adjustment be limited to variable production
costs only.
Amortization of startup costs: In general, the adjustment for
startup operations calls for the replacement of high, per-unit
production costs incurred during startup operations with lower costs
from a period subsequent to the startup phase. Under this methodology,
however, a portion of the actual startup costs remains unaccounted for
as a result of the startup adjustment. Although the statute is silent
on how to treat this difference between actual costs and surrogate
costs calculated for startup, the SAA, at 837, states that such
deferred costs are to be amortized over a reasonable period of time.
The SAA further provides that the amortization period should begin
subsequent to the startup phase and extend over the life of the startup
product or machinery. Paragraph (c)(4)(ii) reflects the language in the
SAA by providing that where startup operations relate to a new product,
the Department, in most cases, will look to documentation regarding the
estimated life of that product to determine the appropriate
amortization period for excess startup costs. Where startup operations
relate to a new production facility, the Department normally will
determine the proper amortization period based on reasonable estimates
of the useful lives of new production equipment.
Several commentators suggested that the amortization period for
deferred costs must be ``relatively short and immediate'' in all cases.
In addition, one of the commentators maintained that the amortization
period must commence at the beginning of the startup phase, while
another commentator claimed that the period for amortization could not
extend beyond the period of investigation or review. The Department
disagrees with the suggestion that the startup cost amortization period
must be short and immediate in all cases, because there is no support
for this suggestion in either the statute or the SAA. Instead, the
length of the amortization period depends on the specific facts of each
case and may vary greatly depending on a number of factors, including a
respondent's past production experience and commercial practices within
the industry under investigation or review.
The Department also has not adopted a proposal that (1) the startup
amortization period must commence at the beginning of the startup
phase, and (2) the amortization period may not exceed the period of
investigation or review. Regarding the first point, the SAA states that
the amortization period is to begin subsequent to the startup phase.
With respect to the second point, the SAA states that the amortization
period for deferred startup costs should reflect the life of the
product or machinery, as appropriate. The SAA gives no indication that
the amortization period must not extend beyond the period of
investigation or review. In fact, it is entirely conceivable that the
life cycle of a particular product or piece of machinery (and, thus,
the amortization period for deferred startup costs) could span several
segments of a single proceeding.
Recognition of previously incurred startup costs: Two commentators
suggested that the Department adopt regulations to discourage selective
use of the startup adjustment, as well as to provide for more equitable
treatment of startup costs in general. To achieve these objectives, the
commentators recommended that the Department disallow startup claims
where a respondent does not also amortize startup costs for other
products covered by an order. As one of the commentators explained in
relating startup costs to other types of non-recurring costs:
[T]he treatment of any non-recurring costs should provide for an
equitable approach that adds non-recurring costs to later sales as
well as deducting them from current sales. Thus, if certain types of
non-recurring costs incurred during the investigation period are to
be reduced and not fully attributed to that period, then similar
non-recurring costs from before the period should be allocated in a
similar manner and added to the costs during the period.
Under the commentator's proposed accounting methodology, the Department
presumably would require a respondent seeking an adjustment for startup
operations to recognize an amortized portion of similar startup costs
previously incurred on all other products and facilities that had
undergone startup prior to the period of investigation or review. Thus,
as a condition for receiving a startup adjustment for one product, a
respondent would have to show that it had accounted in a like manner
for the startup costs incurred with respect to all other products sold
during the period.
The Department does not find the above accounting requirement to be
an
[[Page 7342]]
appropriate condition of startup. There is no such requirement in
either the statute or the SAA. Moreover, the Department believes that
requiring a respondent to account for all past startup costs as a
precondition to receiving an adjustment for startup costs incurred
during the period of investigation or review would discourage
respondents from seeking a startup adjustment in those circumstances
where an adjustment is appropriate. Under such a requirement, the
burden placed on respondents would be too great, requiring them in many
instances to look to detailed accounting records of old product lines
and facilities that, for practical business reasons, may long since
have been discarded.
Nonrecurring Costs: New section 773(f)(1)(B) of the Act states that
the Department will adjust COP and CV for those nonrecurring costs that
benefit current or future production periods. The SAA, at 835, notes
that the provisions of section 773(f)(1)(B) of the Act are consistent
with the Department's past practice, which associated expenditures with
production of the merchandise during the period or periods benefitted
by those expenditures.
Two commentators suggested that the Department establish
regulations clarifying that nonrecurring costs treated as non-operating
or extraordinary expenses by a company should be included in the cost
of production only if those costs benefit current or future production.
The commentators suggested that the Department's regulations state that
to the extent such costs do benefit current or future production, they
should be included in COP and CV by allocating the costs over the
production they benefit. The commentators added that, in some
instances, this may entail the amortization of the costs over periods
longer than the period of investigation or review. Another commentator
stated that while it did not object to the proposal for regulations
clarifying the treatment of nonrecurring costs, the Department also
should require respondents to provide information and data for
nonrecurring costs incurred before the period of investigation or
review. This commentator noted that the Department could then include
in COP and CV the previously incurred costs if such costs benefitted
production during the period of investigation or review. Finally,
another commentator urged the Department to reject the proposed
regulations for treatment of nonrecurring costs. The commentator stated
that the Department should continue to examine nonrecurring costs on a
case-by-case basis.
As the Department has learned in past cases, it is not always easy
to determine whether (and to what extent) a particular expenditure
benefits current or future production periods. In virtually all
instances, the Department must analyze the expenditure in light of any
number of specific factors in the case. For example, the SAA, at 835,
cites pre-production research and development (R&D) costs as an example
of nonrecurring costs that could benefit current or future periods.
However, there is no guarantee that such costs, if incurred to develop
a new product or production process, would hold any future benefit to a
company. To the contrary, after many months of costly research, a
manufacturer could find its new product technologically useless due to
the efforts of its competitors. In that case, the amounts incurred for
R&D would not benefit the producer in terms of future product sales.
Under these circumstances, the R&D expenditures must be recognized as
an expense in the year incurred rather than amortized to some future
periods.
Because of the fact-specific nature of determinations involving
nonrecurring costs, the Department has not drafted any regulations to
implement section 773(f)(1)(B) of the Act. Examples of nonrecurring
costs in the regulations would not prove helpful to parties, because
there are many unique categories of expenditures to consider in a
variety of industries. Moreover, depending on the circumstances, a
particular expenditure in one case could provide the producer a future
benefit, whereas the identical expenditure made by another producer in
a different case may provide no benefit at all. Thus, including
specific examples of nonrecurring costs in the regulations might create
confusion for parties.
The Department believes that a respondent's accounting treatment of
a particular expenditure is one factor to consider in determining how
that expenditure should be treated for purposes of computing COP and
CV. It is by no means dispositive, however. With regard to the
suggestion that the Department account for nonrecurring costs incurred
in prior periods, the Department believes that it is unnecessary for
the Department to make this a regulatory requirement. Instead, the
Department will examine on a case-by-case basis whether to account for
such previously-incurred costs where they benefit production during the
period of investigation or review.
Major Input Rule: Section 773(f)(3) of the Act (which replaces old
section 773(e)(3)) contains the ``major input rule.'' Under this rule,
the Department may examine transactions between affiliated producers
and suppliers for purchases of major inputs. Section 773(f)(3) of the
Act (formerly section 773(e)(3)) provides that where the Department has
reasonable grounds to believe or suspect that an affiliated supplier
has made below-cost sales of a major production input, the Department
may base the value of the input on the affiliated supplier's production
costs. This provision applies both to cost of production and
constructed value.
A number of commentators suggested that the Department clarify
through regulation the following standards for initiating an input
dumping investigation: (1) That no supplier cost information may be
requested by the Department without ``reasonable grounds'' to suspect
input dumping; (2) that no carryover of ``reasonable grounds'' exists
between segments of a proceeding (i.e., findings of below-cost inputs
in one segment does not provide grounds for automatic initiation in the
next); (3) the time limits within which the Department must make a
determination as to which affiliated party inputs are ``major''; and
(4) that no supplier cost information may be requested if the
supplier's transfer prices are demonstrated to be at arm's length.
Other commentators suggested that the Department define a ``major
input'' as any material, labor, or overhead input that represents five
percent or more of the total cost of materials for the merchandise. In
addition, these commentators urged the Department to consider on a
case-by-case basis the use of transfer prices or costs in valuing major
inputs. The commentators stressed that this determination must be made
separately for each input rather than in the aggregate for all
affiliated party inputs.
The determination of whether an affiliated party input constitutes
a ``major input'' in a particular case depends on the input and the
product under investigation. It would be inappropriate for the
Department to attempt to establish an all-encompassing threshold for
defining the term ``major input,'' because such a definition likely
would prove to be too broad in some circumstances and too narrow in
others. However, the Department does agree that it should attempt to
identify, as early as possible in a proceeding, a standard for
identifying major inputs that is appropriate to the product and
industry in question. In addition, as the Department gains more
experience in determining whether parties are ``affiliated'' under the
new law, the
[[Page 7343]]
Department will establish through practice the evidentiary threshold
for requesting transfer prices and cost data from affiliated suppliers
that furnish major inputs (see section 351.102 and the accompanying
explanation for further discussion regarding affiliated persons).
Calculation of Costs: One commentator stated that it is unclear
from the SAA when costs are ``rapidly changing'' such that it would be
appropriate to use shorter time periods to calculate costs. The
commentator suggested that the Department's regulations provide
illustrative examples that would allow interested parties to determine
when costs are ``rapidly changing.'' According to the commentator, the
Department's regulations also should describe the shorter periods that
would be used to compute costs in such situations.
Another commentator recommended that the Department clarify in its
regulations the circumstances in which it will calculate costs based on
amounts incurred by both the exporter and producer. The commentator
urged the Department to refrain from attempting to correct ``upstream
dumping,'' and instead limit its analysis of both the exporter's and
the producer's costs to those situations in which the relationship
between the two throws into question the legitimacy of their
transactions.
The Department believes that determinations involving both of these
issues are fact-specific in nature, and that while regulatory examples
might give some guidance, they also might be construed as imposing
limits on the circumstances in which the Department will address these
issues. As a result, the Department has not included any provisions in
the regulations specifically addressing these issues. The Department
intends to develop its practice with respect to these issues over time.
With respect to the use of a respondent's normal records in
computing COP and CV, two commentators suggested that the regulations
incorporate the concepts outlined in the SAA, at 834-35, including the
stipulation that the Department will use the records of the exporter or
producer of the merchandise, provided that such records are kept in
accordance with the generally accepted accounting principles (GAAP) of
the exporting or producing country and reasonably reflect the costs
associated with the production and sale of the merchandise. The
commentators also recommended additional regulations describing the
type of evidence the Department will consider in determining whether
respondent's costs are ``reasonably reflected,'' and stating that the
Department will re-allocate costs that would inappropriately reduce COP
and CV. In response to these suggestions, one commentator argued that
the SAA does not provide the Department with the authority to adjust a
respondent's books and records in order to compute a ``more accurate''
per-unit cost. Rather, the Department is to use company records as the
basis for reporting costs, so long as those records are kept in
accordance with GAAP and reasonably reflect costs incurred.
Section 773(f) of the Act explicitly provides for the use of a
company's books and record in the calculation of costs, provided that
such records are kept in accordance with the generally accepted
accounting principles of the exporting country and reasonably reflect
the costs associated with the production and sale of the merchandise.
As a result, the Department has not repeated this directive in the
regulations. The determination of whether a respondent's costs are
``reasonably reflected'' will be based on a case- and fact-specific
analysis. Where a respondent's records do not reasonably reflect the
costs associated with the production and sale of the merchandise, the
Department may adjust the figures in a respondent's books and records
in order to compute a more accurate per-unit cost.
With respect to the Department's COP questionnaire, one commentator
suggested that the questionnaire be revised to elicit sufficient
information that traces the cost of production from the per unit cost
of the subject merchandise back to a company's audited financial
statements. The Department must balance its ability to conduct COP
investigations with reporting burdens placed on respondents, and the
Department this year revised its questionnaire with this balance in
mind. Notably, the questionnaire does require respondents to provide
reconciliation of unit costs. If, however, the information requirements
of the Department's standard antidumping questionnaire should prove
inadequate in a particular case, the Department will modify its
information requirements.
Section 351.408
The current statutory provision addressing the calculation of
normal value in antidumping proceedings involving nonmarket economies
(``NMEs'') was enacted as part of the Omnibus Trade and Competitiveness
Act of 1988 (Pub. L. 100-418, section 1316(a)). The Department never
issued regulations implementing the 1988 amendment. Instead, the
Department developed its NME methodology through administrative
practice. Now, with the benefit of seven years' experience in
administering the NME provision, the Department believes it is
appropriate to codify the rules the Department intends to apply.
Certain of these rules, contained in Sec. 351.408, restate the practice
the Department has developed over the past seven years, while other
rules constitute changes that the Department believes to be
improvements over current practice.
We have decided not to codify the existing MOI (market oriented
industry) test at this time. Some commentators have argued that it does
not make sense to use an NME producer's prices or costs in an
environment in which institutions important to the functioning of
markets such as private ownership and private capital markets do not
exist. In their view, an NME producer's prices or costs can only have
economic meaning where these very fundamental types of institutions are
in place. Other commentators see the current MOI test as overlooking
the important role that an open trading system, with relatively few
quantitative restraints, can play in ensuring that domestic prices and
costs are market-determined, and in reducing the effects of remaining
instances of state presence or control. In light of these concerns, we
are seeking comments on whether the current MOI test succeeds in
identifying situations where it would be appropriate to use domestic
prices or cost in an NME as the basis for normal value and, if not,
what form the test should take.
Surrogate Selection: Section 773(c)(1) of the Act contains the
usual methodology for calculating normal value in proceedings involving
NMEs, the so-called ``factors of production'' methodology. Section
773(c)(2) provides an alternative to the preferred methodology,
allowing the Department in narrowly drawn circumstances to use the
export prices of certain market economies as normal value. In either
case, the Department is required to select a ``surrogate'' market
economy country or countries to use in its calculations.
Section 773(c)(4) of the Act describes the criteria for surrogate
selection where the factors of production methodology is used:
surrogates should be market economies at a level of economic
development comparable to that of the NME and significant producers of
comparable merchandise. Where the export price alternative to the
factors of production methodology is being used,
[[Page 7344]]
prices are to be taken from market economy countries at levels of
economic development comparable to that of the NME. This alternative,
as to which further comment is appropriate, has not been used in any
antidumping proceeding since the 1988 amendment was enacted, but if it
is used in future cases, the economic comparability criterion,
discussed in more detail below, would be applied in the same way it is
applied when the factors of production methodology is used.
In selecting surrogate countries for investigations and reviews
that were conducted under the 1988 amendment and that involved the
valuation of NME producers' factors of production, the Department has
accorded differing weights to the economic comparability and
significant producer criteria. Typically, the Department has placed
greater emphasis on the former. However, the regulations do not codify
this weighing scheme, because, depending on the specific facts of a
case, this scheme can result in a poor surrogate selection. For
example, where the production process for the merchandise being
investigated relies heavily on non-traded inputs (i.e., inputs that
must be acquired locally, such as electricity), it is reasonable to
expect that significant production of that merchandise will occur only
in countries where the input is relatively inexpensive. However, these
countries may not be economically comparable to the NME. For example,
the Department has not observed any correlation between electricity
prices and levels of economic development. The Department believes that
in adopting the significant producer criterion, Congress intended for
the Department to select a surrogate country (or countries) where input
prices and availability allow significant production to occur.
Therefore, where production of the subject merchandise relies heavily
on an input that is more readily available, or available at lower cost,
in certain countries, it is appropriate to place greater weight on the
``significant producer'' criterion.
On the other hand, where the most important inputs are easily
traded and can be obtained from multiple sources in the surrogate
country, the significant producer criterion may be less important. This
is because in these situations there is no direct correspondence
between significant levels of production and input price or
availability. Instead, wage rates and other considerations such as
investment restrictions or access to important markets will be more
important determinants of where production will occur. With the
exception of wage rates, which are discussed further below, these other
considerations will not usually have as direct an impact on the input
prices that would be used to value the NME producers' factors of
production.
For these reasons, the Department does not believe it is
appropriate to create an a priori weighing scheme to be applied to the
criteria for selecting surrogates. Instead, in each proceeding the
Department will identify those countries that are economically
comparable to the NME and those countries that are significant
producers of comparable merchandise. If there is a country that meets
both criteria, that country will be selected as the surrogate. If there
is more than one country that meets both criteria, the Department will
evaluate the specific facts developed in the course of the proceeding
to determine whether to select the more economically comparable country
or the country whose producers employ production technologies similar
to those of the NME producers. If no country meets both the economic
comparability and the significant producer criteria, the Department
will examine the facts of the case and comments submitted by the
parties to determine which criterion should receive the greatest
weight.
Economic Comparability: Regarding the economic comparability
criterion, the Department's practice of relying most heavily on
comparability of per capita GDP to select economically comparable
countries is codified in paragraph (b). Certain other indicia of
economic comparability have been considered in the past, such as growth
rates and the distribution of labor between the manufacturing,
agricultural and service sectors. However, primary weight has been
placed on per capita GDP.
Factor Valuation: Once a surrogate country (or countries) has been
selected, the next step is to assign values to the actual factors or
inputs used by the NME producer. In choosing these values, the
Department has developed practices that emphasize ``accuracy, fairness,
and predictability.'' Oscillating Fans and Ceiling Fans from the
People's Republic of China, 56 FR 55271, 55275 (October 25, 1991),
cited with approval in Lasko Metal Products, Inc. v. United States, 43
F.3d 1442 (Fed. Cir. 1994). The Department continues to believe that
these goals should guide the factor valuation process, and,
consequently, is proposing rules to further this.
Two important practices have arisen to promote the accuracy,
fairness and predictability of the factor valuation process. First, the
Department has developed a preference for using publicly available,
published information (``PAPI'') to derive factor prices. See Final
Determination of Sales at Less Than Fair Value: Certain Carbon Steel
Butt-weld Pipe Fittings from the People's Republic of China, 57 FR
21058, 21062 (May 18, 1992) (Butt-Weld Pipe Fittings). This practice,
along with the practice of attempting to use data derived from a single
surrogate country, clearly enhances the transparency and predictability
of our determinations. However, based on experience, the Department has
concluded that a preference for PAPI also can result in decreased
accuracy. This is particularly true where surrogate country trade
statistics are used and the import/export categories used to derive
unit values are broad.
In order to strike a better balance between the goals of accuracy
and transparency, paragraph (c)(1) drops the preference for published
information, limiting the preference to publicly available information.
The public availability standard is aimed at promoting transparency,
while the deletion of the published information standard enables the
Department to achieve greater accuracy when information on the specific
factor can be derived outside of published sources. Paragraph (c)(1) is
not meant to preclude the Department from using published information.
Instead, it is intended to reflect the Department's preference for
input specific data over the aggregated data that frequently appear in
published statistics.
The Department continues to take the position that it is not
required to use ``perfectly conforming information'' for factor
valuations. Ceiling Fans from the People's Republic of China: Notice of
Court Decision; Exclusion from the Application of the Antidumping Duty
Order, in Part; and Amended Final determination and Order, 59 F.R. 9956
(March 2, 1994). However, the Department is exploring means of
enhancing the accuracy of the data used to value the NME producers' raw
materials. To that end, the Department intends to use the flexibility
accorded to the agency by section 773(c) and reflected in court
decisions to date regarding our administration of the 1988 amendment.
The second important practice that has developed involves
situations where an NME producer uses inputs which are: (1) Imported
from a market economy producer, and (2) paid for in a market economy
currency. In these instances, the Department has used the price
actually paid by the NME
[[Page 7345]]
producer in lieu of a price in the surrogate country. This practice has
been upheld by the Federal Circuit in Lasko. Paragraph(c)(1) clarifies
the Department's authority to continue this practice.
The regulation also clarifies two aspects of this practice. First,
in situations where a portion of the NME producer's input is sourced
from a market economy source (and paid for in a market economy
currency) and the remainder is sourced from producers within the NME,
paragraph (c)(1) makes clear that the price paid to the market economy
supplier should normally be used to value the input, not the price
derived from a surrogate. This reflects the Department's position that
accuracy is enhanced when the NME producer's actual costs can be used.
However, where the amount purchased from a market economy supplier is
insignificant, that price may be disregarded.
Second, in using prices of inputs imported from market economy
suppliers, the Department in the past has stated that the imported
input must be paid for in a convertible currency. The Department
believes that this is an overly rigorous requirement. The extent to
which currencies may be converted varies even among market economy
currencies. Yet, the Department uses the exchange rates for less-than-
fully convertible currencies in our dumping proceedings involving those
countries. Paragraph (c)(1) recognizes that full convertibility of the
currency used to pay for the imported input is not necessary so long as
the market economy producer is paid in a market economy currency.
Valuation in Single Country: Paragraph (c)(2) codifies the
Department's general preference for valuing all factors, except labor
(as discussed below), in a single surrogate country. As noted above, to
enhance the predictability of proceedings involving nonmarket
economies, the Department has followed the practice of attempting to
value the NME producers' factors of production in a single country,
even though sections 773(c)(1) and (c)(4) clearly permit values to be
developed from more than one country.
Where the Department is able to develop industry specific data on
manufacturing overhead, general expenses, and profit, it is
particularly appropriate to remain within a single country for those
values. Normally, it is inappropriate to combine the manufacturing
overhead rate from producers in one surrogate with the general expenses
of producers in another surrogate, and the profit of producers in yet
another surrogate. Therefore, particularly for manufacturing overhead,
general expenses and profit, the Department prefers to use a single
surrogate.
With regard to other inputs, however, the preference for using a
single country addresses, at least in part, a different concern. It is
meant to prevent parties from ``margin shopping''; i.e., to prevent
parties from arguing that the Department combine input prices from
different surrogates to achieve the highest or lowest valuations of
those inputs. While it is important to discourage margin shopping, the
Department also has encountered situations in which the accuracy of
available information regarding prices for particular factors in the
surrogate country is highly questionable. See Notice of Final
Determination of Sales at Less Than Fair Value: Certain Cased Pencils
from the People's Republic of China, 59 FR 55625, 55630 (November 8,
1994). Clearly, in these situations it is appropriate to reject the
questionable values and use data from a second country. Alternatively,
where the factor is traded internationally, the goals of accuracy and
fairness may be better served by using the prices observed in
international markets to represent the price at which producers in the
surrogate country could obtain the input.
Labor: Paragraph (c)(3) proposes a new methodology with respect to
the valuation of labor. Practitioners and academicians commenting on
the application of the antidumping law to NMEs (and, in particular, the
use of economically comparable countries as surrogates) have tended to
equate comparable per capita GDPs with comparable wages. The Department
has examined this proposition based on recent data of the type the
Department uses in its proceedings, and has concluded that while per
capita GDP and wages are positively correlated, there is great
variation in the wage rates of the market economy countries that the
Department typically treats as being economically comparable. As a
practical matter, this means that the result of an NME case can vary
widely depending on which of the economically comparable countries is
selected as the surrogate.
Because of the variability of wage rates in countries with similar
per capita GDPs, paragraph (c)(3) directs the Department to use what is
essentially an average of the wage rates in market economy countries
viewed as being economically comparable to the NME. The statute permits
this approach because section 773(c)(4) refers to using prices or costs
in ``one or more market economy countries.'' Moreover, use of this
average wage rate will contribute to both the fairness and the
predictability of NME proceedings. By avoiding the variability in
results depending on which economically comparable country happens to
be selected as the surrogate, the results are much fairer to all
parties. To enhance predictability, the average wage to be applied in
any NME proceeding will be calculated by the Department each year,
based on the most recently available data, and will be available to any
interested party. This method of computing the wage rate should reduce
the workload on the Department and the parties, because it eliminates
the need to develop specific wage rate information for each case.
Specifically, the Department will calculate the wage rate to be
applied by using an ordinary least squares regression relating the wage
rates and per capita GDP of approximately 45 market economy countries.
The data used and the results of the regression will be available from
the Department upon request.
Manufacturing Overhead, General Expenses, and Profit: Paragraph
(c)(4) deals with the valuation of manufacturing overhead, general
expenses, and profit. These elements tend to be significant components
of the constructed normal value of NME exports, and, hence, it is
particularly important to have accurate values for them. However, the
Department's experience in this regard has been less than satisfactory.
Frequently, under prior law, the Department could not find surrogate
values for these elements, thus forcing the Department to rely upon the
statutory minima of 10 and 8 percent for general expenses and profit,
respectively. The amendments to section 773(e)(2)(A) have eliminated
this as an option. Moreover, even in cases in which PAPI was available,
it was virtually always highly aggregated and frequently it was not
clear what types of expenses were included in the amounts.
Given the importance of manufacturing overhead, general expenses
and profit in the calculation of normal value, the Department believes
it is important to seek information that is as accurate as possible. To
this end, paragraph (c)(4) expresses a preference for using non-
proprietary information gathered from producers of identical or
comparable merchandise in the surrogate country for valuing
manufacturing overhead, general expenses and profit. Because the
Department expects that these elements will vary widely across
industries, we
[[Page 7346]]
will attempt to obtain data that is as specific as possible to the
subject merchandise.
In past cases, the Department has relied on U.S. embassies in
surrogate countries to obtain data on manufacturing overhead, general
expenses, and profit (as well as values for other inputs) with
disappointing results (see Butt-Weld Pipe Fittings, supra). The
Department intends to redouble its efforts to work with embassies in
gathering this data, while at the same time seeking alternative means
of developing this information. However, even if the Department is able
to develop industry-specific information, it would be overly optimistic
to believe that the Department will have detailed information on the
exact expenses that have gone into the values for manufacturing
overhead and general expenses. As far as overhead is concerned, this
can raise problems of double counting. For example, if we do not know
whether water or electricity is included in the surrogate producers'
overhead, we will not know whether to value those factors separately,
in addition to the overhead. The Department continues to believe that
these situations must be approached on a case-by-case basis using facts
available, in accordance with section 773(c)(1).
Assignment of Antidumping Margins: The Department has addressed the
rates to be applied in NME cases in connection with the definition of
``rates'' contained in Sec. 351.102.
Section 351.409
Section 351.409 sets forth the guidelines for making adjustments to
normal value for differences in quantities, and is based on section
353.55 of the existing regulations. The statutory authorization for
quantity adjustments is found in section 773(a)(6)(C)(i) of the Act.
The proposed rule is substantially the same as the existing rule, with
three exceptions discussed below.
Paragraph (b) is changed from existing section 353.55(b). The
existing paragraph provides that the Department will deduct a quantity
discount from the selling price of merchandise used in the antidumping
calculation, regardless of whether the quantity discount was actually
applied, only in two circumstances. To qualify for the adjustment, a
respondent either had to have granted discounts of a similar magnitude
on 20 percent of the foreign market sales, or the respondent had to
demonstrate that savings were specifically attributable to production
of different quantities. One commentator suggested that the Department
should have more flexibility to grant the adjustment, because there may
be other ways to demonstrate that different price levels exist for
different quantities. The Department agrees that this may be so, and,
accordingly, paragraph (b) provides that an adjustment for differences
in quantities ``normally'' will be made only if the ``20 percent'' or
``production savings'' rules, noted above, are satisfied.
The same commentator also suggested that the absence of a published
price list should not be controlling with respect to the allowance of
an adjustment. While the Department does not necessarily agree that the
absence of a price list is controlling under existing Sec. 353.55,
paragraph (d) clarifies that the existence or absence of a price list
is not controlling. In addition, the Department has clarified that
where a price list does exist, the Department, in determining whether
or not to grant an adjustment, will give weight to the price list only
to the extent that the producer or exporter in question has adhered to
the price list.
Paragraph (e) is new, and deals with the relationship between
adjustments for differences in quantities and adjustments for
differences in levels of trade. Under the new statute and these
proposed rules, the Department may grant claims for level of trade
adjustments more frequently than it did in the past. In many instances,
however, there is likely to be a correlation between the level of trade
at which a sale occurs and the volume sold. Therefore, there is a real
possibility that in adjusting for differences in level of trade, the
Department also will be adjusting, in whole or in part, for differences
in quantities. In order to conform to the prohibition in
Sec. 351.401(b) against the double-counting of adjustments, paragraph
(e) provides that where the Department makes a level of trade
adjustment, the Department will not make an adjustment for differences
in quantities unless the effect on price comparability of quantity
differences can be isolated from the effect of the level of trade
difference.
Section 351.410
Section 351.410 clarifies aspects of the Department's practice with
respect to adjustments for differences in circumstances of sale under
section 773(a)(6)(C)(iii) of the Act and the SAA, at 828. In general,
the Department's practice with respect to adjustments for direct
selling expenses and assumptions of expenses remains unchanged from
prior practice. However, paragraph (a) confirms that the expenses for
which the Department will make a circumstance of sale adjustment
include, in constructed export price situations, direct expenses and
``assumptions'' incurred in the foreign market on sales of the subject
merchandise, that are not deducted under section 772(d) of the Act. The
reference to a deduction for other selling expenses relates to the
commission offset contained in paragraph (e), discussed below.
One commentator suggested that section 351.410 be drafted in such a
way as to essentially function as a catch-all provision to achieve
``fairness.'' While section 773(a) of the Act and Article 2.4 of the
Antidumping Agreement both require that a fair comparison be made, both
provisions specify in detail the methods by which this requirement is
satisfied. Therefore, the Department has not adopted this suggestion.
Paragraph (b) defines ``direct selling expenses.'' The provision
broadly defines such expenses in the same way that they are defined in
the statute for purposes of the deduction from constructed export price
under section 772(d)(1)(B) of the Act. In addition, paragraph (b)
provides a non-exhaustive list of expenses that frequently qualify as
direct selling expenses. In this regard, this list includes
commissions, a type of expense which often was treated as a direct
selling expense under prior Department practice. In section 772(d)(1)
of the Act, commissions are listed separately from direct selling
expenses. This might suggest that, for purposes of adjustments to
normal value, commissions should not be treated as direct selling
expenses. However, the SAA, at 828, indicates that Congress intended
that, with the exception of the so-called ``ESP offset,'' the
Department's practice regarding circumstance of sale adjustments would
remain unchanged. Accordingly, for purposes of adjustments to normal
value, the Department has included commissions in the list of commonly
encountered direct selling expenses.
Some commentators suggested that the Department should recognize
expenses as direct in the home or third country market when they are
reported in accordance with business records normally kept by the firm
based on the GAAP of the appropriate country. The Department has not
adopted this suggestion. As noted above, a direct selling expense must
result from, and bear a direct relationship to, the particular sale in
question. The fact that, for example, salespersons' salaries are
reported to the Department in a manner consistent with foreign GAAP and
the
[[Page 7347]]
particular firm's normal business records does not transform what is
unquestionably a fixed expense into an expense that ``results from'' a
sale.
Other commentators suggested that direct selling expenses should be
defined as expenses incurred after a sale. The Department has not
adopted this suggestion. ``After'' and ``results from'' do not
necessarily mean the same thing. While direct selling expenses
typically are ``post-sale'' expenses, the Department has chosen to
adhere to the language of the statute and the SAA.
Assumed expenses, which are treated like direct expenses, are
defined in paragraph (c). Although such expenses were not previously
identified as a separate category of expenses, it has long been the
Department's policy to treat such expenses in the same manner as direct
expenses.
Paragraph (d) is largely unchanged from prior regulations, and
provides that the normal basis for circumstance of sale adjustments
will be the amount of the expense. However, if appropriate, the
Department may rely on differences in value to make the adjustment.
Paragraph (e), based on existing Sec. 353.56(b)(1), continues the
special rule to be applied when commissions are deducted in one market,
but there are no commissions in the other market. Under the special
rule, other selling expenses may be deducted from the price in the
market without commissions up to the amount of the commission.
The Department also received several suggestions relating to the
treatment of particular types of adjustments, such as discounts and
rebates and adjustments for differences in credit terms. Discounts and
rebates are dealt with in Sec. 351.401(c). Without commenting on the
merits of the particular suggestions with regard to selling expenses,
the Department has declined to promulgate regulations on these
particular topics, because they go beyond the level of methodological
detail that the Department is attempting to achieve in these
regulations.
Section 351.411
Section 351.411 establishes the provisions for making adjustments
for differences in physical characteristics. As under current practice,
the Department is not authorized to make adjustments for physical
characteristics when products are considered to be identical.
Section 351.412
Section 351.412 deals with levels of trade, adjustments for
differences in levels of trade, and the CEP offset. Paragraph (b)
establishes how the Department will identify levels of trade in
calculating export price, CEP, and normal value. Paragraph (b)(1)
clarifies that, for export price and normal value, the level of trade
will be based on the price of the sale before any adjustment is made.
For constructed export price, the level of trade will be based on the
price after adjustments are made under Sec. 772(d) of the Act, but
prior to any other adjustment. The purpose of this provision is to
establish the level of trade of the constructed export price sale at
the level at which the sale would have been made, had it been an export
price sale.
With respect to the identification of levels of trade, some
commentators argued that, consistent with past practice, the Department
should base level of trade on the starting price for both export price
(``EP'') and CEP sales. In support of this argument, these commentators
cite the portion of the SAA (discussed above) that states that the
introduction of the new terms ``EP'' and ``CEP'' was not intended to
change prior Department practice. In addition, these commentators
argued that the deduction of U.S. expenses and profit does not change
the level of trade of the CEP.
The Department believes (as did other commentators) that this
position is not supported by the SAA, and that it is neither reasonable
nor logical. If the starting price is used for all U.S. sales, the
Department's ability to make meaningful comparisons at the same level
of trade (or appropriate adjustments for differences in levels of
trade) would be severely undermined in cases involving CEP sales. As
noted by other commentators, using the starting price to determine the
level of trade of both types of U.S. sales would result in a finding of
different levels of trade for an EP sale and a CEP sale adjusted to a
price that reflected the same selling functions. Accordingly, the
regulations specify that the level of trade analyzed for EP sales is
that of the starting price, and for CEP sales it is the constructed
level of trade of the price after the deduction of U.S. selling
expenses and profit.
Section 351.412(c)(1) explains the general rule that the Department
will make an adjustment for differences in levels of trade when it (i)
calculates normal value based on sales at a level of trade different
from that of the export price or constructed export price, and (ii)
determines that the difference in level of trade has an effect on price
comparability. We are interested in comments on how these rules can
provide further guidance on this adjustment. We also will take account
in the final rules the knowledge we expect to gain in administrative
proceedings under the new law.
Certain commentators argued that there should be a regulatory
presumption that the level of trade of the EP or CEP sale is the least
remote level. Under these circumstances, they argue, a level of trade
adjustment could never increase normal value. Therefore, the Department
would only be required to analyze respondents' claims for level of
trade adjustments. In the absence of a claim for an adjustment, the
level of trade of the U.S. sale and normal value would be considered
the same.
We disagree that the EP or CEP necessarily will be the least remote
level of trade. Therefore, the regulations specify that the Department
will in all instances analyze the level of trade of the sales in the
United States and the comparison market, and, where appropriate, will
increase or decrease normal value to effect a fair comparison.
Paragraph (c)(2) sets forth the rules for determining whether there
are different levels of trade. This determination will be based
primarily on the selling functions performed at each of the allegedly
different levels. As set forth in the SAA, at 830, overlap between
functions is not necessarily determinative of whether two levels of
trade are distinct. Paragraph (c)(2) makes clear that sales at two
allegedly different levels will be considered to have been made at the
same level where the selling functions at the two levels are
substantially the same.
Several commentators argued that the existence of a level of trade
must be established by criteria independent of seller functions. This
argument holds that only after establishing the existence of discrete
levels of trade should the Department consider differences in selling
functions and the pattern of price differences. Furthermore, they
contend, levels of trade are properly identified by the classification
of the seller's customers in the chain of distribution. Specifically,
to be considered at different levels of trade, two sellers must sell to
different customer categories in a chain of distribution (e.g.,
producer, distributor, retailer, consumer). For example, a producer and
distributor both selling to end users would be classified at the same
level of trade.
Other commentators, on the other hand, stated that there is no
mention of an additional test or criterion in either the Act or the
SAA. These commentators also note that both the Act and the SAA stress
activities of the seller and do not mention activities of the customer
as a factor in the level of
[[Page 7348]]
trade analysis. Furthermore, according to these commentators, it is
quite common, even usual, for firms operating at different levels of
trade to sell to the same customer categories and sometimes to the same
customers. For example, producers sell to large retailers as well as to
distributors that in turn sell to smaller retailers. However, the fact
that they both sell to retailers does not justify classifying producers
and distributors as being at the same level of trade. Each sells a
different mix of product and service.
The Department agrees that an additional test or criterion for
level of trade is not required by the AD Agreement or the statute, nor
is one justified. Although the language of section 773(a)(7)(A) of the
Act might be interpreted to mean that the recognition of a level of
trade is dependent on factors in addition to seller functions, the
Department interprets the reference to level of trade as referring to a
respondent's claimed or alleged level of trade. The only test
identified in the statute for the legitimacy of the claimed levels of
trade is the activity of the seller. The suggestion that customer
classifications define levels of trade does not comport with that test
and, furthermore, the Department believes that the effect of adopting
such a criterion would be to curtail severely the possibility of
adjusting for significant differences in seller functions, either with
a level of trade adjustment or the CEP offset. Nevertheless, the
Department does recognize that prices within a single level of trade,
defined by seller function, can be affected by the class of customer,
and the Department will make every effort to compare sales at the same
level of trade and to the same class of customer.
Paragraph (c)(2) defines level of trade solely on the basis of
seller functions. However, small differences in the functions of the
seller will not alter the level of trade. The latter point is
important, because certain commentators argued that the difference in
just one selling function should be sufficient to justify a difference
in level of trade. While it is conceivable that the Department may find
in a particular case that some single function is so significant as to
change the level of trade, this would be relatively rare. Furthermore,
the adoption of the suggested standard would result in the submission,
and possibly the grant, of unreasonable claims for level of trade
adjustments.
Paragraph (c)(3) reflects the requirements of the statute for
identifying effects on price comparability. One commentator recommended
requiring that at least 90 percent of the sales of the foreign like
product reflect differences in price at different levels of trade to
qualify for an adjustment. The regulations do not include a specific
test for a pattern of consistent price differences, because, at this
time, the Department has no experience in applying this standard.
Under paragraph (c)(4), the amount of any adjustment will be
measured by calculating the average percentage difference between
weighted-average prices at the two different levels, and applying this
percentage to the price to be adjusted. To avoid double-counting
adjustments, the regulation stipulates that price differences will be
measured after making price adjustments required under other
provisions, such as adjustments for movement and selling expenses under
section 773(a)(6) of the Act. One commentator recommended limiting the
adjustment to the difference between the lowest price at the more
advanced level of trade and the highest price at the less advanced
level of trade. The Department does not agree that this would be
appropriate, because it would reflect price extremes rather than usual
prices. Another commentator recommended that the regulations
specifically exclude from the measurement of a level of trade
adjustment related party prices that fail the arm's-length test and all
sales deemed outside the ordinary course of trade. The Department has
not included such regulations, because we have little experience in
this area and will need time to develop the appropriate methodology. To
attempt to further circumscribe this adjustment by regulation could
have unintended consequences that would be difficult to correct in an
actual case.
Paragraph (d) elaborates on the constructed export price offset
contained in section 773(a)(7)(B) by providing a definition of the
indirect expenses that make up this offset.
One commentator suggested that the regulations specify that in CEP
calculations there is a presumption that there will be a level of trade
adjustment or the offset. The Department has not included such a
regulation. It would not be appropriate to assume that the CEP is at a
different level of trade than the prices used as the basis of normal
value or that any such differences in level of trade affect price
comparability.
Section 351.413
Section 351.413, describing the authority to disregard
insignificant adjustments, is unchanged from section 353.59(a) of the
Department's prior regulations.
Section 351.414
Section 351.414 implements section 777A(d) of the Act, and deals
with the three methods authorized by the statute for determining
whether sales at less than fair value exist. Paragraph (b) is a
definitional section which coins shorthand expressions for the three
methods in order to render the remainder of Sec. 353.414 less
cumbersome.
Methodological Preferences: The methodological preferences set
forth in the SAA are codified in paragraph (c). Consistent with the
SAA, at 842-43, paragraph (c)(1) provides that the preferred method in
an antidumping investigation will be the average-to-average method, and
that the preferred method in an antidumping review will be the average-
to-transaction method.
In the case of reviews, there were numerous comments regarding the
use of the average-to-average method. The Department has not adopted
the suggestion of one commentator that the regulations provide that the
average-to-average method is the preferred method in a review. Although
section 777A(d)(2) of the Act does not expressly state that the
average-to-transaction method is the preferred method in a review, the
SAA expressly states that it is the ``preferred methodology.''
Conversely, the Department has not adopted the suggestion of
several commentators that the regulations preclude use of the average-
to-average method in a review. Although the average-to-transaction
method is clearly the preferred method in a review, neither the statute
nor the SAA affect the Department's preexisting authority under section
777A(a) of the Act to use the average-to-average method in reviews
under the appropriate circumstances. In this regard, several
commentators urged that the Department adopt a regulation expressly
acknowledging that the average-to-average method may be used in
reviews. The regulations do not include such a provision, because the
Department believes that the statute and these regulations are
sufficiently clear regarding the propriety of using the average-to-
average method in reviews.
Several commentators argued that the average-to-average method
should be used whenever normal value is based on constructed value. As
with any comparisons, the preferences of the statute and these
regulations apply. In investigations, the preferred method, including
comparisons with constructed
[[Page 7349]]
value, is average to average. In reviews, it is average to transaction.
We also have not adopted a suggestion that the regulations provide
that in cases involving highly perishable agricultural products, the
preferred approach will be to use the average-to-average method, with
averages being calculated over the market cycle. In the past, the
Department has used the average-to-average method in cases involving
perishable agricultural products, and believes that the administrative
and judicial precedents arising out of these cases would continue to be
valid under the new statute and these regulations. See e.g., Floral
Trade Council of Davis, Cal. v. United States, 606 F. Supp. 695, 703
(CIT 1991). However, at this time, the Department does not believe it
has sufficient experience with these types of cases to warrant the
creation of a regulatory preference in favor of the average-to-average
method in all cases of this type. Likewise, the Department does not
consider it appropriate to create a regulatory preference for averaging
over the market cycle. At this point, the Department believes it is
more appropriate to decide these issues on a case-by-case basis.
Paragraph (c)(1) also makes clear that the transaction-to-
transaction method will only be used in unusual circumstances, as urged
by several commentators. In addition, one commentator stated that a
regulation should provide details regarding the Department's
application of this method. The Department does not believe it
appropriate at this time to go beyond what is already included in the
SAA; namely, that this method ``would be appropriate in situations
where there are very few sales and the merchandise sold in each market
is identical or very similar or is custom-made.'' SAA, at 842.
Application of the Average-to-Average Method: Paragraph (d) deals
with the application of the average-to-average method. Paragraph (d)(1)
provides that the Secretary will identify those sales to the United
States that are comparable to each other and include such sales in an
``averaging group.'' The Secretary then will compare the weighted
average of the export prices or constructed export prices of the sales
included within a particular averaging group to the weighted average of
the normal values of such sales.
Paragraph (d)(2) deals with the identification of the averaging
group. In this regard, several commentators suggested that the
regulations provide for the use of various percentage benchmarks or
rules of thumb in identifying averaging groups. Paragraph (d)(2) does
not adopt these suggestions.
The SAA, at 842, provides the following guidance on this subject:
To ensure that these averages are meaningful, Commerce will
calculate averages for comparable sales of subject merchandise to
the U.S. and sales of foreign like products. In determining the
comparability of sales for purposes of inclusion in a particular
average, Commerce will consider factors it deems appropriate, such
as the physical characteristics of the merchandise, the region of
the country in which the merchandise is sold, the time period, and
the class of customer involved. For example, in the case of 13'' and
21'' televisions, average normal values would be calculated for each
size of television, not a single average for sales of both sizes of
televisions.
Although the SAA describes the factors that the Department will
consider in identifying an averaging group, it does not prescribe
exactly how these factors should be applied.
On the other hand, the Department appreciates the need for guidance
concerning the application of what is, for practical purposes, a new
method of determining sales at less than fair value. Thus, paragraph
(d)(2) provides that in identifying an averaging group, the Secretary
will rely primarily on comparability in physical characteristics of the
merchandise and the level of trade at which the sales to the United
States occur. These two factors are the easiest to identify, are the
most likely to have an effect on sales comparability, and the
Department has used them in the past for purposes of identifying
comparison transactions. The Secretary also will consider, but give
less weight to, the region of the United States in which the
merchandise is sold, the class of customer involved, and such other
factors as the Secretary considers relevant. While it is not possible
to reduce the identification of averaging groups to a precise formula
with respect to these two factors, the Department's general approach
will be to look for clear dividing lines among the sales, and to ignore
minor differences between sales.
With respect to the factor of physical characteristics, the views
of the commentators were widely divergent. Some commentators appeared
to suggest that all merchandise falling within a ``such or similar
group,'' as that term has been used in Department practice, should be
regarded as comparable and, thus, included in the same averaging group.
Other commentators essentially suggested that averaging groups be
identified on a model-specific basis or on the basis of control numbers
(``CONNUMS''), a term used in the Department's computer programs to
identify the specific merchandise sold in each market. Still others
have suggested that the Department determine comparability by applying
its ``20 percent difmer'' guideline, a guideline used in the past for
determining whether the foreign like product is such or similar to the
U.S. product.
Paragraph (d)(2) limits the averaging group to ``subject
merchandise identical or virtually identical in all physical
characteristics.'' Thus, the Department has adopted the model specific
or control number approach recommended by some commentators for
selecting the physical characteristics appropriate for inclusion within
the same averaging group. This is necessary and appropriate given the
instruction of section 777A(d)(1) that we compare, ``the weighted
average of the normal values to the weighted average of the export
prices (and constructed export prices) of comparable merchandise.''
The SAA identifies time as a factor affecting the comparability of
sales. Paragraph (d)(3) deals with this factor by prescribing the time
period over which weighted averages will be calculated. Paragraph
(d)(3) provides that the Secretary ``normally'' will calculate weighted
averages for the entire period of investigation or review, but that
shorter periods may be used where the normal values, export prices, or
constructed export prices for sales included within an averaging group
differ significantly over the course of the period of investigation or
review. Where values or prices are significantly different over time,
it is fair to assume that time has affected sales comparability.
On this issue, too, the comments reflected widely divergent views.
Some commentators argued that averaging always be done over the entire
period of investigation or review. Others suggested that the averaging
period not exceed one month. Still others suggested a ``normal'' rule
of one year or six months, with shorter periods in cases involving
industries where prices change more quickly. The approach of paragraph
(d)(3) is along the lines of the latter suggestion.
Application of the Average-to-Transaction Method: Paragraph (e)
deals with the application of the average-to-transaction method.
Consistent with the SAA, at 843, paragraph (e)(1) provides that where
normal value is based on price, the Department will limit its averaging
of such prices to sales incurred during the ``contemporaneous month.''
Paragraph (e)(2), in turn, defines ``contemporaneous month.'' In
[[Page 7350]]
response to a suggestion made by several commentators, paragraph (e)(2)
essentially codifies the Department's longstanding ``90/60'' day rule.
Targeted Dumping: Paragraph (f) deals with the so-called ``targeted
dumping'' provision in section 777A(d)(1)(B) of the Act.
Notwithstanding the general preference for the use of the average-to-
average method in an antidumping investigation, the average-to-
transaction method may be used where targeted dumping exists. Paragraph
(f)(1) sets forth the standard to be applied in identifying targeted
dumping, and, with one exception, tracks the language of the statute.
The exception is that the Department has incorporated the suggestion
made by several commentators, including both domestic and respondent
interests, that the Department employ standard statistical techniques,
in identifying targeted dumping.
Some commentators advocated that the regulations clarify the
statutory provision in various ways, such as through the use of
``bright line'' standards for identifying targeted dumping. Other
commentators opposed the adoption of bright line standards. In general,
the Department has not attempted to elaborate on the language of
section 777A(d)(1)(B), given its lack of experience with this
provision. More specifically, the Department has eschewed the adoption
of bright line standards for the time being. First, the SAA, at 843,
states that the Department ``will proceed on a case-by-case basis,
because small differences may be significant for one industry or one
type of product, but not for another.'' A bright line test would be
inconsistent with this case-by-case approach. Second, the commentators
differed widely with respect to where the ``bright line'' should be
drawn, and, given our lack of experience with this provision, the
Department has no basis for selecting a bright line on its own. While
it may be possible in the future to establish bright line rules-of-
thumb as rebuttable presumptions, at this point it would be premature
to do so.
Some commentators suggested a regulation stating that the targeted
dumping provision will be narrowly construed, while other commentators
argued for a liberal construction. Because the statute and its
legislative history do not support either construction, the Department
has not adopted either of these suggestions.
In addition to the comments described above, the Department
received numerous comments that, while falling short of bright line
standards, nonetheless went in the direction of establishing per se
rules. These comments included:
If the prices of the preponderance of sales alleged to be
part of the targeted dumping are within the range of prices of the non-
target sales, then targeted dumping is not taking place.
Price variations due to seasonal demand should not be
deemed to constitute targeted dumping.
Any trend within the subset of alleged targeted dumped
sales must be substantially uniform among the subset of sales.
Mere differences in price over time will rarely, if ever,
be sufficient to constitute targeted dumping.
Targeted dumping automatically exists whenever there are
significant individual sales made at prices substantially below a
firm's prevailing price.
Most of these comments raise factors that the Department
legitimately should consider in conducting an analysis of targeted
dumping in an actual antidumping investigation. In particular, the
Department recognizes that the statute requires that there be a
``pattern'' of sales at significantly different prices. We do not
believe that targeted dumping exists where the price differences are
simply random or spurious price fluctuations. In our view, targeting
means that, within the industry under consideration, the price
differences suggest a meaningful pattern. However, for the same reason
that the Department is unwilling to adopt bright line standards at this
time, the Department is unwilling to adopt per se rules or even
rebuttable presumptions. Several commentators advocated a regulation
which would state that targeted dumping does not exist if the same
pattern of sales exists in both the U.S. and the comparison market. We
have not adopted this suggestion for these proposed rules. We are
interested, however, in receiving comments from parties on the factors
to be considered in deciding whether the average-to-average methodology
takes account of patterns of significantly different export prices.
One commentator stated that the regulations should state that a
targeted dumping analysis will be done on a respondent- and model-
specific basis. With respect to a respondent-specific analysis, we
think it is self-evident that a targeted dumping analysis would be
respondent-specific. Thus, we see no need for a regulation on this
point. With respect to a model-specific analysis, while we would expect
that a targeted dumping analysis normally would consider whether sales
of particular models constitute targeted dumping, we are reluctant at
this time to go beyond the language of the statute, because other modes
of analysis also might be appropriate.
Paragraph (f)(2) deals with the sales to which the average-to-
transaction method is applied when targeted dumping is found, a
question which neither the statute nor the SAA expressly addresses.
Paragraph (f)(2) provides that ``normally'' the average-to-transaction
method will be limited to those sales determined to constitute targeted
dumping. The average-to-average method would be applied to the
remaining sales.
At least one commentator suggested that if targeted dumping is
found with respect to a particular firm, the average-to-transaction
method should be used with respect to all of that firm's sales. The
Department has not adopted this suggestion, because in many instances
such an approach would be unreasonable and unduly punitive. For
example, if targeted dumping accounted for only 1 percent of a firm's
total sales, there would not appear to be any basis for applying the
average-to-transaction method to those sales accounting for the
remaining 99 percent.
At the other extreme, some commentators suggested that the average-
to-transaction method always should be limited to those sales that
constitute targeted dumping. The Department has not adopted this
suggestion either, because there may be situations in which targeted
dumping by a firm is so pervasive that the average-to-transaction
method becomes the best benchmark for gauging the fairness of that
firm's pricing practices.
Paragraph (f)(3) deals with allegations of targeted dumping. Many
commentators suggested that the Department should only analyze targeted
dumping if the petitioner satisfies a minimum evidentiary threshold.
The Department agrees that those interested parties familiar with the
market for the subject merchandise are in the best position to direct
the Department's attention toward possible targeted dumping. Thus, it
will examine whether targeted dumping is occurring only after receipt
of a sufficient allegation that such targeting is taking place, and
that the average-to-average or, when appropriate, transaction-to-
transaction methods cannot adequately deal with the alleged targeting.
The requirement of an allegation should not pose a significant burden
on a domestic interested party, because the allegation can be based on
information that is readily available in the record of the proceeding.
[[Page 7351]]
Paragraph (g) deals with requests for information. The first
sentence of paragraph (g) provides that the Secretary will request
information relevant to the identification of averaging groups and to
the analysis of targeted dumping. The Department does not agree with
the implication in the commentators' statements that it should not
collect detailed, transaction-specific information in the absence of an
allegation. First, the SAA, at 843, specifically provides that the
Department will collect such transaction-specific information. Second,
the information is necessary to permit the interested parties to reach
reasonable judgements regarding the possibility that there is targeted
dumping. In this regard, the Department is concerned that the
prohibition against the release under APO of business proprietary
customer names in investigations not serve as a bar to possible
allegations. The Department will make every effort to ensure that
public summaries provide the parties with adequate information.
The second sentence of paragraph (g) provides that if a response to
a request for information relevant to the identification of averaging
groups and targeted dumping is such as to warrant the application of
the facts otherwise available, the Secretary may apply the average-to-
transaction method to all of the particular respondent's sales. This
approach was suggested by one commentator, although a different
commentator argued that there was no need for a special ``facts
available'' rule for price averaging. While it may be true that, as a
legal matter, the general ``facts available'' provisions of the statute
and these regulations are sufficiently broad to authorize the use of
the average-to-transaction method in the types of situation under
discussion, the Department believes that it would be useful to clarify
in advance the possible consequences of failing to provide adequate and
timely responses to requests for transaction-specific information.
One commentator suggested that if the Department employs the
targeted dumping exception, it should present its explanation for using
the exception in its preliminary determination so that all parties have
an opportunity to comment on the issue. The Department agrees with the
basic proposition that all parties should have ample opportunity to
comment on all issues in an antidumping proceeding. However, the
Department does not consider it advisable to promulgate a regulation
which would prohibit the application of the targeted dumping exception
in a final determination if that exception had not been applied in the
preliminary determination. Among other things, it would render
petitioners' right to comment on the issue meaningless in cases where
the Department did not invoke the exception in a preliminary
determination. In general, the Department anticipates that issues
relating to price averaging and targeted dumping will be among the
first to be raised by the parties to an antidumping investigation, and
that parties will have ample opportunity to submit comments.
Section 351.415
Section 351.415 implements section 777A of the Act, which provides
for the selection of the exchange rate used to convert foreign
currencies to U.S. dollars. The Department's past practice, as
specified in Sec. 353.60 of the prior regulations, was to convert
normal value at the exchange rate used by the U.S. Customs Service to
convert foreign currencies for duty assessment purposes.
Paragraph (a) requires the Department to convert foreign currencies
at the exchange rate in effect on the date of the U.S. sale, subject to
certain exceptions. First, as reflected in paragraph (b), if the U.S.
sale is tied directly to a forward exchange contract, the Department
will convert normal value at the forward rate. In accordance with the
SAA, at 842, group sales of currency on forward markets will be
allowed, provided that the exchange transaction can be linked to the
export sale. Second, as reflected in paragraph (c), fluctuations in the
daily exchange rates are to be ignored and, third, as reflected in
paragraph (d), respondents in an investigation must be granted at least
60 days to adjust prices after a sustained movement in the exchange
rate.
The statute does not provide guidance on how to recognize a
sustained movement or fluctuation. The SAA, at 841, provides that the
Department is to adopt regulations to implement section 777A. We have
not expanded on the statute in these proposed regulations because the
provisions concerning daily rates, fluctuations and sustained movements
are new, and we have had little practical experience. We believe,
therefore, that it is preferable to implement the new requirements
through an exchange rate model announced in a policy bulletin, which
will afford us the ability to adjust practice based on experience.
We plan to use the model for one year and then evaluate its
performance based on public comment. We then will alter the model as
necessary, and expand the regulations to provide more extensive
guidance.
The Department has designed the model with three goals in mind:
1. To implement the requirements of the statute in as simple a
manner as possible;
2. To ensure that all exporters, whether or not under order, can
estimate the daily exchange rate that the Department will employ in
an antidumping analysis at the time they set their U.S. prices; and
3. To capture the model in simple computer code to reduce the
administrative burden on the Department and parties wishing to
monitor exchange rates.
As required by the statute, the model has been designed to convert
a file of actual daily exchange rates to a file of ``official'' daily
exchange rates, which will be used to convert normal value to U.S.
dollars. In this process, the Department will classify each actual
daily exchange rate as normal or ``fluctuating.'' An extended pattern
of fluctuating rates will define a ``sustained movement.'' Based on
these classifications, the model will assign the appropriate exchange
rate for each day. This model is not suitable for use with hyper-
inflating currencies. In these cases, we intend to use the daily rate
absent compelling evidence that a fluctuation or sustained movement in
the currency's value has occurred.
We will prepare the file of official daily exchange rates by
processing the daily rate for all 32 currencies collected and certified
by the New York Federal Reserve Bank. We intend to create files of
official rates on a monthly basis and to post these files on the
Internet to facilitate wide access to the rates. We also will continue
our practice of providing rates on diskette for a small fee. In
addition, we will make the model's computer code widely available to
any party wishing to create the file of official rates.
Subpart F--Subsidy Determinations Regarding Cheese Subject to an In-
Quota Rate of Duty
Subpart F of Part 351 deals with subsidy determinations regarding
cheese subject to an in-quota rate of duty pursuant to section 702(a)
of the Trade Agreements Act of 1979. Once known as the ``quota cheese
provision,'' the URAA amended section 702(a) and related provisions to
conform to the WTO Agreement on Agriculture. In particular, the URAA
eliminated the requirement that the President impose quantitative
restrictions on cheese where price-undercutting conditions exist,
because such restrictions would be inconsistent with Article 4.2 of the
Agreement on Agriculture. However, the United States retains the right
to impose
[[Page 7352]]
fees on within-quota quantities where the price-undercutting conditions
of section 702 exist. See SAA, page 729.
Because the URAA did not significantly change the Department's role
under section 702, Subpart F is largely identical to existing Part 355,
Subpart D. The principal changes are the elimination of material that
merely repeats the statute and the substitution of the term ``cheese
subject to an in-quota rate of duty'' for the term ``quota cheese.''
Classification
E.O. 12866
This proposed rule has been determined to be significant under E.O.
12866.
Regulatory Flexibility Act
The Assistant General Counsel for Legislation and Regulation of the
Department of Commerce certified to the Chief Counsel for Advocacy of
the Small Business Administration that this proposed rule, if
promulgated as final, would not have a significant economic impact on a
substantial number of small entities. The Department does not believe
that there will be any substantive effect on the outcome of antidumping
and countervailing duty proceedings as a result of the streamlining and
simplification of their administration. With respect to the substantive
amendments implementing the Uruguay Round Agreements Act, the
Department believes that these regulations benefit both petitioners and
respondents without favoring either, and, therefore, would not have a
significant economic effects. As such, an initial regulatory
flexibility analysis was not prepared.
Paperwork Reduction Act
Notwithstanding any other provision of law, no person is required
to respond to nor shall a person be subject to a penalty for failure to
comply with a collection of information subject to the requirements of
the Paperwork Reduction Act unless that collection of information
displays a currently valid OMB Control Number. This proposed rule does
not contain any new reporting or recording requirements subject to the
Paperwork Reduction Act. The collections of information contained in
this rule are currently approved by the Office of Management and Budget
under OMB Control Numbers 0625-0105, 0625-0148, and 0625-0200. The
public reporting burdens for these collections of information are
estimated to average 40 hours for the antidumping and countervailing
duty petition requirements, and 15 hours for the initiation of
downstream product monitoring. These estimates include the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collections of information. Send comments regarding these burden
estimates or any other aspect of these collections of information,
including suggestions for reducing the burden, to OMB Desk Officer, New
Executive Office Building, Washington, D.C. 20503.
E.O. 12612
This proposed rule does not contain federalism implications
warranting the preparation of a Federalism Assessment.
List of Subjects
19 CFR Part 351
Administrative practice and procedure, Antidumping, Business and
industry, Cheese, Confidential business information, Countervailing
duties, Investigations, Reporting and recordkeeping requirments.
19 CFR Part 353
Administrative practice and procedure, Antidumping, Business and
industry, Confidential business information, Investigations, Reporting
and recordkeeping requirements.
19 CFR Part 355
Administrative practice and procedure, Business and industry,
Cheese, Confidential business information, Countervailing duties,
Freedom of Information, Investigations, Reporting and recordkeeping
requirements.
Dated: February 15, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
For the reasons stated, it is proposed to amend 19 CFR chapter III
as follows:
PARTS 353 AND 355 [REMOVED]
1. Parts 353 and 355 are removed.
2. A new Part 351 is added to read as follows:
PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES
Subpart A--Scope and Definitions
Sec.
351.101 Scope.
351.102 Definitions.
351.103 Central Records Unit.
351.104 Record of proceedings.
351.105 Public, business proprietary, privileged, and classified
information.
351.106 De minimis net countervailable subsidies and weighted-
average dumping margins disregarded.
Subpart B--Antidumping and Countervailing Duty Procedures
351.201 Self-initiation.
351.202 Petition requirements.
351.203 Determination of sufficiency of petition.
351.204 Transactions and persons examined; voluntary respondents;
exclusions.
351.205 Preliminary determination.
351.206 Critical circumstances.
351.207 Termination of investigation.
351.208 Suspension of investigation.
351.209 Violation of suspension agreement.
351.210 Final determination.
351.211 Antidumping order and countervailing duty order.
351.212 Assessment of antidumping and countervailing duties;
provisional measures deposit cap; interest on certain overpayments
and underpayments.
351.213 Administrative review of orders and suspension agreements
under section 751(a)(1) of the Act.
351.214 New shipper reviews under section 751(a)(2)(B) of the Act.
351.215 Expedited antidumping review and security in lieu of
estimated duty under section 736(c) of the Act.
351.216 Changed circumstances review under section 751(b) of the
Act.
351.217 Reviews to implement results of subsidies enforcement
proceeding under section 751(g) of the Act.
351.218 Sunset reviews under section 751(c) of the Act.
351.219 Reviews of countervailing duty orders in connection with an
investigation under section 753 of the Act.
351.220 Countervailing duty review at the direction of the President
under section 762 of the Act.
351.221 Review procedures.
351.222 Revocation of orders; termination of suspended
investigations.
351.223 Procedures for initiation of downstream product monitoring.
351.224 Disclosure of calculations and procedures for the
correction of ministerial errors.
351.225 Scope ruling.
Subpart C--Information and Argument
351.301 Time limits for submission of factual information.
351.302 Extension of time limits; return of untimely filed or
unsolicited material.
351.303 Filing, format, translation, service, and certification of
documents.
351.304 Establishing business proprietary treatment of information
[Reserved].
351.305 Access to business proprietary information [Reserved].
351.306 Use of business proprietary information [Reserved].
351.307 Verification of information.
351.308 Determinations on the basis of the facts available.
351.309 Written argument.
351.310 Hearings.
[[Page 7353]]
351.311 Countervailable subsidy practice discovered during
investigation or review.
351.312 Industrial users and consumer organizations.
Subpart D--Calculation of Export Price, Constructed Export Price, Fair
Value, and Normal Value
351.401 In general.
351.402 Calculation of export price and constructed export price;
reimbursement of antidumping and countervailing duties.
351.403 Sales used in calculating normal value; transactions
between affiliated parties.
351.404 Selection of the market to be used as the basis for normal
value.
351.405 Calculation of normal value based on constructed value.
351.406 Calculation of normal value if sales are made at less than
cost of production.
351.407 Calculation of constructed value and cost of production.
351.408 Calculation of normal value of merchandise from nonmarket
economy countries.
351.409 Differences in quantities.
351.410 Differences in circumstances of sale.
351.411 Differences in physical characteristics.
351.412 Levels of trade; adjustment for difference in level of
trade; constructed export price offset.
351.413 Disregarding insignificant adjustments.
351.414 Comparison of normal value with export price (constructed
export price).
351.415 Conversion of currency.
Subpart E--[Reserved]
Subpart F--Subsidy Determinations Regarding Cheese Subject to an In-
Quota Rate of Duty
351.601 Annual list and quarterly update of subsidies.
351.602 Determination upon request.
351.603 Complaint of price-undercutting by subsidized imports.
351.604 Access to information.
Annex I--Deadlines for Parties in Countervailing Investigations
Annex II--Deadlines for Parties in Countervailing Administrative
Reviews
Annex III--Deadlines for Parties in Antidumping Investigations
Annex IV--Deadlines for Parties in Antidumping Administrative
Reviews
Annex V--Comparison of Prior and Proposed Regulations
Annex VI--Countervailing Investigations Timeline
Annex VII--Antidumping Investigations Timeline
Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note, 1303 note, 1671 et
seq., and 3538.
PART 351--COUNTERVAILING AND ANTIDUMPING DUTIES
Subpart A--Scope and Definitions
Sec. 351.101 Scope.
(a) In general. This part contains procedures and rules
applicable to antidumping and countervailing duty proceedings under
Title VII of the Act (19 U.S.C. 1671 et seq.), and also
determinations regarding cheese subject to an in-quota rate of duty
under section 702 of the Trade Agreements Act of 1979 (19 U.S.C.
1202 note). This part reflects statutory amendments made by titles
I, II, and IV of the Uruguay Round Agreements Act, Public Law 103-
465, which, in turn, implement into United States law the provisions
of the following agreements annexed to the Agreement Establishing
the World Trade Organization: Agreement on Implementation of Article
VI of the General Agreement on Tariffs and Trade 1994; Agreement on
Subsidies and Countervailing Measures; and Agreement on Agriculture.
(b) Countervailing duty investigations involving imports not
entitled to a material injury determination. Under section 701(c) of
the Act, certain provisions of the Act do not apply to
countervailing duty proceedings involving imports from a country
that is not a Subsidies Agreement country and is not entitled to a
material injury determination by the Commission. Accordingly,
certain provisions of this Part referring to the Commission may not
apply to such proceedings.
(c) Application to governmental importations. To the extent
authorized by section 771(20) of the Act, merchandise imported by, or
for the use of, a department or agency of the United States Government
is subject to the imposition of countervailing duties or antidumping
duties under this part.
Sec. 351.102 Definitions.
(a) Introduction. The Act contains many technical terms applicable
to antidumping and countervailing duty proceedings. This section:
(1) Defines terms that appear in the Act but are not defined in the
Act;
(2) Defines terms that appear in this Part but do not appear in the
Act; and
(3) Elaborates on the meaning of certain terms that are defined in
the Act.
In the case of terms that are not defined in this section or other
sections of this Part, readers should refer to the relevant provisions
of the Act.
(b) Definitions.
Act. ``Act'' means the Tariff Act of 1930, as amended.
Administrative review. ``Administrative review'' means a review
under section 751(a)(1) of the Act.
Affiliated persons; affiliated parties. ``Affiliated persons'' and
``affiliated parties'' have the same meaning as in section 771(33) of
the Act. In determining whether control over another person exists,
within the meaning of section 771(33) of the Act, the Secretary will
consider the following factors, among others:
(1) Corporate or family groupings;
(2) Franchise or joint venture agreements;
(3) Debt financing; and
(4) Close supplier relationships.
Aggregate basis. ``Aggregate basis'' means the calculation of a
country-wide subsidy rate based solely on information provided by the
foreign government.
Anniversary month. ``Anniversary month'' means the calendar month
in which the anniversary of the date of publication of an order or
suspension of investigation occurs.
APO. ``APO'' means an administrative protective order described in
section 777(c)(1) of the Act.
Applicant. ``Applicant'' means a representative of an interested
party that has applied for access to business proprietary information
under an APO.
Article 4/Article 7 Review. ``Article 4/Article 7 review'' means a
review under section 751(g)(2) of the Act.
Article 8 violation review. ``Article 8 violation review'' means a
review under section 751(g)(1) of the Act.
Authorized applicant. ``Authorized applicant'' means an applicant
that the Secretary has authorized to receive business proprietary
information under an APO under section 777(c)(1) of the Act.
Changed circumstances review. ``Changed circumstances review''
means a review under section 751(b) of the Act.
Customs Service. ``Customs Service'' means the United States
Customs Service of the United States Department of the Treasury.
Department. ``Department'' means the United States Department of
Commerce.
Domestic interested party. ``Domestic interested party'' means an
interested party described in subparagraph (C), (D), (E), (F), or (G)
of section 771(9) of the Act.
Expedited antidumping review. ``Expedited antidumping review''
means a review under section 736(c) of the Act.
Factual information. ``Factual information'' means:
(1) Initial and supplemental questionnaire responses;
(2) Data or statements of fact in support of allegations;
(3) Other data or statements of facts; and
(4) Documentary evidence.
Fair value. ``Fair value'' is a term used during an antidumping
investigation, and is an estimate of normal value.
[[Page 7354]]
Importer. ``Importer'' means the person by whom, or for whose
account, subject merchandise is imported.
Investigation. Under the Act and this Part, there is a distinction
between an antidumping or countervailing duty investigation and a
proceeding. An ``investigation'' is that segment of a proceeding that
begins on the date of publication of notice of initiation of
investigation and ends on the date of publication of the earliest of:
(1) Notice of termination of investigation,
(2) Notice of rescission of investigation,
(3) Notice of a negative determination that has the effect of
terminating the proceeding, or
(4) An order.
New shipper review. ``New shipper review'' means a review under
section 751(a)(2) of the Act.
Order. An ``order'' is an order issued by the Secretary under
section 303, section 706, or section 736 of the Act or a finding under
the Antidumping Act, 1921.
Ordinary course of trade. ``Ordinary course of trade'' has the same
meaning as in section 771(15) of the Act. The Secretary may consider
sales or transactions to be outside the ordinary course of trade when
such sales or transactions have characteristics that are extraordinary
for the market in question (such as sales or transactions involving
off-quality merchandise or merchandise produced according to unusual
product specifications), merchandise sold at aberrational prices or
with abnormally high profits, merchandise sold pursuant to unusual
terms of sale, or merchandise sold to an affiliated party at a non-
arm's length price.
Party to the proceeding. ``Party to the proceeding'' means any
interested party that actively participates, through written
submissions of factual information or written argument, in a segment of
a proceeding. Participation in a prior segment of a proceeding will not
confer on any interested party ``party to the proceeding'' status in a
subsequent segment.
Person. ``Person'' includes any interested party as well as any
other individual, enterprise, or entity, as appropriate.
Proceeding. A ``proceeding'' begins on the date of the filing of a
petition under section 702(b) or section 732(b) of the Act or the
publication of a notice of initiation in a self-initiated investigation
under section 702(a) or section 732(a) of the Act, and ends on the date
of publication of the earliest notice of:
(1) Dismissal of petition,
(2) Rescission of initiation,
(3) Termination of investigation,
(4) A negative determination that has the effect of terminating the
proceeding,
(5) Revocation of an order, or
(6) Termination of a suspended investigation.
Rates. ``Rates'' means the individual weighted-average dumping
margins, the individual countervailable subsidy rates, the country-wide
subsidy rate, or the all-others rate, as applicable. In an antidumping
proceeding involving imports from a nonmarket economy country,
``rates'' may consist of a single dumping margin applicable to all
exporters and producers.
Respondent interested party. ``Respondent interested party'' means
an interested party described in subparagraph (A) or (B) of section
771(9) of the Act.
Sale; likely sale. A ``sale'' includes a contract to sell and a
lease that is equivalent to a sale. A ``likely sale'' means a person's
irrevocable offer to sell.
Secretary. ``Secretary'' means the Secretary of Commerce or a
designee. The Secretary has delegated to the Assistant Secretary for
Import Administration the authority to make determinations under Title
VII of the Act and this Part.
Section 753 review. ``Section 753 review'' means a review under
section 753 of the Act.
Section 762 review. ``Section 762 review'' means a review under
section 762 of the Act.
Segment of proceeding.
(1) In general. An antidumping or countervailing duty proceeding
consists of one or more segments. ``Segment of a proceeding'' or
``segment of the proceeding'' refers to a portion of the proceeding
that is reviewable under section 516A of the Act.
(2) Examples. An antidumping or countervailing duty investigation
or a review of an order or suspended investigation each would
constitute a segment of a proceeding.
Sunset review. ``Sunset review'' means a review under section
751(c) of the Act.
Third country. For purposes of subpart D, ``third country'' means a
country other than the exporting country and the United States. Under
section 773(a) of the Act and subpart D, in certain circumstances the
Secretary may determine normal value on the basis of sales to a third
country.
URAA. ``URAA'' means the Uruguay Round Agreements Act.
Sec. 351.103 Central Records Unit.
(a) In general. Import Administration's Central Records Unit is
located at Room B-099, U.S. Department of Commerce, Pennsylvania Avenue
and 14th Street, NW., Washington, D.C. 20230. The office hours of the
Central Records Unit are between 8:30 a.m. and 5:00 p.m. on business
days. Among other things, the Central Records Unit is responsible for
maintaining an official and public record for each antidumping and
countervailing duty proceeding (see Sec. 351.104), the Subsidies
Library (see section 775(2) and section 777(a)(1) of the Act), and the
service list for each proceeding (see paragraph (c) of this section).
(b) Filing of documents with the Department. While persons are free
to provide Department officials with courtesy copies of documents, no
document will be considered as having been received by the Secretary
unless it is submitted to the Central Records Unit and is stamped by
the Central Records Unit with the date and time of receipt.
(c) Service list. The Central Records Unit will maintain and make
available a service list for each segment of a proceeding. Each
interested party that asks to be included on the service list for a
segment of a proceeding must designate a person to receive service of
documents filed in that segment. The service list for an application
for a scope ruling is described in Sec. 351.225(n).
Sec. 351.104 Record of proceedings.
(a) Official record. (1) In general. The Secretary will maintain in
the Central Records Unit an official record of each antidumping and
countervailing duty proceeding. The Secretary will include in the
official record all factual information, written argument, or other
material developed by, presented to, or obtained by the Secretary
during the course of a proceeding that pertains to the proceeding. The
official record will include government memoranda pertaining to the
proceeding, memoranda of ex parte meetings, determinations, notices
published in the Federal Register, and transcripts of hearings. The
official record will contain material that is public, business
proprietary, privileged, and classified. For purposes of section
516A(b)(2) of the Act, the record is the official record of each
segment of the proceeding.
(2) Material returned.
(i) The Secretary, in making any determination under this part,
will not use factual information, written argument, or other material
that the Secretary returns to the submitter.
(ii) The official record will include a copy of a returned
document, solely for purposes of establishing and documenting the basis
for returning the
[[Page 7355]]
document to the submitter, if the document was returned because:
(A) the document, although otherwise timely, contains untimely
filed new factual information (see Sec. 351.301(b));
(B) the submitter made a nonconforming request for business
proprietary treatment of factual information (see Sec. 351.304);
(C) the Secretary denied a request for business proprietary
treatment of factual information (see Sec. 351.304);
(D) the submitter is unwilling to permit the disclosure of business
proprietary information under APO (see Sec. 351.304).
(iii) In no case will the official record include any document that
the Secretary returns to the submitter as untimely filed, or any
unsolicited questionnaire response unless the response is a voluntary
response accepted under Sec. 351.204(d) (see Sec. 351.302(d)).
(b) Public record. The Secretary will maintain in the Central
Records Unit a public record of each proceeding. The record will
consist of all material contained in the official record (see paragraph
(a) of this section) that the Secretary decides is public information
under Sec. 351.105(b), government memoranda or portions of memoranda
that the Secretary decides may be disclosed to the general public, and
public versions of all determinations, notices, and transcripts. The
public record will be available to the public for inspection and
copying in the Central Records Unit (see Sec. 351.103). The Secretary
will charge an appropriate fee for providing copies of documents.
(c) Protection of records. Unless ordered by the Secretary or
required by law, no record or portion of a record will be removed from
the Department.
Sec. 351.105. Public, business proprietary, privileged, and classified
information.
(a) Introduction. There are four categories of information in an
antidumping or countervailing duty proceeding: public, business
proprietary, privileged, and classified. In general, public information
is information that may be made available to the public, whereas
business proprietary information may be disclosed (if at all) only to
authorized applicants under an APO. Privileged and classified
information may not be disclosed at all, even under an APO. This
section describes the four categories of information.
(b) Public information. The Secretary normally will consider the
following to be public information:
(1) Factual information of a type that has been published or
otherwise made available to the public by the person submitting it;
(2) Factual information that is not designated as business
proprietary by the person submitting it;
(3) Factual information which, although designated as business
proprietary by the person submitting it, is in a form which cannot be
associated with or otherwise used to identify activities of a
particular person or which the Secretary determines is not properly
designated as business proprietary;
(4) Publicly available laws, regulations, decrees, orders, and
other official documents of a country, including English translations;
and
(5) Written argument relating to the proceeding that is not
designated as business proprietary.
(c) Business proprietary information. The Secretary normally will
consider the following factual information to be business proprietary
information, if so designated by the submitter:
(1) Business or trade secrets concerning the nature of a product or
production process;
(2) Production costs (but not the identity of the production
components unless a particular component is a trade secret);
(3) Distribution costs (but not channels of distribution);
(4) Terms of sale (but not terms of sale offered to the public);
(5) Prices of individual sales, likely sales, or other offers (but
not components of prices, such as transportation, if based on published
schedules, dates of sale, product descriptions (other than business or
trade secrets described in paragraph (c)(1) of this section), or order
numbers);
(6) Names of particular customers, distributors, or suppliers (but
not destination of sale or designation of type of customer,
distributor, or supplier, unless the destination or designation would
reveal the name);
(7) In an antidumping proceeding, the exact amount of the dumping
margin on individual sales;
(8) In a countervailing duty proceeding, the exact amount of the
benefit applied for or received by a person from each of the programs
under investigation or review (but not descriptions of the operations
of the programs, or the amount if included in official public
statements or documents or publications, or the ad valorem
countervailable subsidy rate calculated for each person under a
program);
(9) The names of particular persons from whom business proprietary
information was obtained;
(10) The position of a domestic producer or workers regarding a
petition; and
(11) Any other specific business information the release of which
to the public would cause substantial harm to the competitive position
of the submitter.
(d) Privileged information. The Secretary will consider information
privileged if, based on principles of law concerning privileged
information, the Secretary decides that the information should not be
released to the public or to parties to the proceeding. Privileged
information is exempt from disclosure to the public or to
representatives of interested parties.
(e) Classified information. Classified information is information
that is classified under Executive Order No. 12356 of April 2, 1982 (47
FR 14874 and 15557, 3 CFR 1982 Comp. p. 166), or successor executive
order, if applicable. Classified information is exempt from disclosure
to the public or to representatives of interested parties.
Sec. 351.106 De minimis net countervailable subsidies and weighted-
average dumping margins disregarded.
(a) Introduction. Prior to the enactment of the URAA, the
Department had a well-established and judicially sanctioned practice of
disregarding net countervailable subsidies or weighted-average dumping
margins that were de minimis. The URAA codified in the Act the
particular de minimis standards to be used in antidumping and
countervailing duty investigations. This section discussed the
application of the de minimis standards in antidumping or
countervailing duty proceedings.
(b) Investigations. (1) In general. In making a preliminary or
final antidumping or countervailing duty determination in an
investigation (see sections 703(b), 733(b), 705(a), and 735(a) of the
Act), the Secretary will apply the de minimis standard set forth in
section 703(b)(4) or section 733(b)(3) of the Act (whichever is
applicable).
(2) Transition rule. (i) If:
(A) The Secretary resumes an investigation that has been suspended
(see section 704(i)(1)(B) or section 734(i)(1)(B) of the Act); and
(B) the investigation was initiated before January 1, 1995, then
(ii) The Secretary will apply the de minimis standard in effect at
the time that the investigation was initiated.
(c) Reviews and other determinations. (1) In general. In making any
determination other than a preliminary or final antidumping or
countervailing duty determination in an investigation (see paragraph
(b) of this section), the
[[Page 7356]]
Secretary will treat as de minimis any weighted-average dumping margin
or countervailable subsidy rate that is less than 0.5% ad valorem, or
the equivalent specific rate.
(2) Assessment of antidumping duties. The Secretary will instruct
the Customs Service to liquidate without regard to antidumping duties
all entries of subject merchandise during the relevant period of review
made by any person for which the Secretary calculates an assessment
rate under Sec. 351.212(b)(1) that is less than 0.5 percent ad valorem,
or the equivalent specific rate.
Subpart B--Antidumping and Countervailing Duty Procedures
Sec. 351.201 Self-initiation.
(a) Introduction. Antidumping and countervailing duty
investigations may be initiated as the result of a petition filed by a
domestic interested party or at the Secretary's own initiative. This
section contains rules regarding the actions the Secretary will take
when the Secretary self-initiates an investigation.
(b) In general. When the Secretary self-initiates an investigation
under section 702(a) or section 732(a) of the Act, the Secretary will
publish in the Federal Register notice of ``Initiation of Antidumping
(Countervailing Duty) Investigation.'' In addition, the Secretary will
notify the Commission at the time of initiation of the investigation,
and will make available to employees of the Commission directly
involved in the proceeding the information upon which the Secretary
based the initiation and which the Commission may consider relevant to
its injury determination.
(c) Persistent dumping monitoring. To the extent practicable, the
Secretary will expedite any antidumping investigation initiated as the
result of a monitoring program established under section 732(a)(2) of
the Act.
Sec. 351.202 Petition requirements.
(a) Introduction. The Secretary normally initiates antidumping and
countervailing duty investigations based on petitions filed by a
domestic interested party. This section contains rules concerning the
contents of a petition, filing requirements, notification of foreign
governments, pre-initiation communications with the Secretary, and
assistance to small businesses in preparing petitions.
(b) Contents of petition. A petition requesting the imposition of
antidumping or countervailing duties must contain the following, to the
extent reasonably available to the petitioner:
(1) The name and address of the petitioner and any person the
petitioner represents;
(2) The identity of the industry on behalf of which the petitioner
is filing, including the names and addresses of all other known persons
in the industry;
(3) Information relating to the degree of industry support for the
petition, including:
(i) the total volume and value of U.S. production of the domestic
like product, and
(ii) the volume and value of the domestic like product produced by
the petitioner and each domestic producer identified;
(4) A statement indicating whether the petitioner has filed for
relief from imports of the subject merchandise under section 337 of the
Act (19 U.S.C. 1337, 1671a), sections 201 or 301 of the Trade Act of
1974 (19 U.S.C. 2251 or 2411), or section 232 of the Trade Expansion
Act of 1962 (19 U.S.C. 1862);
(5) A detailed description of the subject merchandise that defines
the requested scope of the investigation, including the technical
characteristics and uses of the merchandise and its current U.S. tariff
classification number;
(6) The name of the country in which the subject merchandise is
manufactured or produced and, if the merchandise is imported from a
country other than the country of manufacture or production, the name
of any intermediate country from which the merchandise is imported;
(7)(i) In the case of an antidumping proceeding:
(A) The names and addresses of each person the petitioner believes
sells the subject merchandise at less than fair value and the
proportion of total exports to the United States that each person
accounted for during the most recent 12-month period (if numerous,
provide information at least for persons that, based on publicly
available information, individually accounted for two percent or more
of the exports);
(B) All factual information (particularly documentary evidence)
relevant to the calculation of the export price and the constructed
export price of the subject merchandise and the normal value of the
foreign like product (if unable to furnish information on foreign sales
or costs, provide information on production costs in the United States,
adjusted to reflect production costs in the country of production of
the subject merchandise);
(C) If the merchandise is from a country that the Secretary has
found to be a nonmarket economy country, factual information relevant
to the calculation of normal value, using a method described in
Sec. 351.408; or
(ii) In the case of a countervailing duty proceeding:
(A) The names and addresses of each person the petitioner believes
benefits from a countervailable subsidy and exports the subject
merchandise to the United States and the proportion of total exports to
the United States that each person accounted for during the most recent
12-month period (if numerous, provide information at least for persons
that, based on publicly available information, individually accounted
for two percent or more of the exports);
(B) The alleged countervailable subsidy and factual information
(particularly documentary evidence) relevant to the alleged
countervailable subsidy, including any law, regulation, or decree under
which it is provided, the manner in which it is paid, and the value of
the subsidy to exporters or producers of the subject merchandise;
(C) If the petitioner alleges an upstream subsidy under section
771A of the Act, factual information regarding:
(1) Countervailable subsidies, other than an export subsidy, that
an authority of the affected country provides to the upstream supplier;
(2) The competitive benefit the countervailable subsidies bestow on
the subject merchandise; and
(3) The significant effect the countervailable subsidies have on
the cost of producing the subject merchandise;
(8) The volume and value of the subject merchandise imported during
the most recent two-year period and any other recent period that the
petitioner believes to be more representative or, if the subject
merchandise was not imported during the two-year period, information as
to the likelihood of its sale for importation;
(9) The name and address of each person the petitioner believes
imports or, if there were no importations, is likely to import the
subject merchandise;
(10) Factual information regarding material injury, threat of
material injury, or material retardation, and causation;
(11) If the petitioner alleges ``critical circumstances'' under
section 703(e)(1) or section 733(e)(1) of the Act and Sec. 351.206,
factual information regarding:
(i) Whether imports of the subject merchandise are likely to
undermine seriously the remedial effect of any order issued under
section 706(a) or section 736(a) of the Act;
(ii) Massive imports of the subject merchandise in a relatively
short period; and
[[Page 7357]]
(iii) (A) In an antidumping proceeding, either
(1) A history of dumping; or
(2) The importer's knowledge that the exporter was selling the
subject merchandise at less than its fair value, and that there would
be material injury by reason of such sales; or
(B) In a countervailing duty proceeding, whether the
countervailable subsidy is inconsistent with the Subsidies Agreement;
and
(12) Any other factual information on which the petitioner relies.
(c) Simultaneous filing and certification. The petitioner must file
a copy of the petition with the Commission and the Secretary on the
same day and so certify in submitting the petition to the Secretary.
Factual information in the petition must be certified, as provided in
Sec. 351.303(g).
(d) Business proprietary status of information. The Secretary will
treat as business proprietary any factual information for which the
petitioner requests business proprietary treatment and which meets the
requirements of Sec. 351.304.
(e) Amendment of petition. The Secretary may allow timely amendment
of the petition. The petitioner must file an amendment with the
Commission and the Secretary on the same day and so certify in
submitting the amendment to the Secretary. If the amendment consists of
new allegations, the timeliness of the new allegations will be governed
by Sec. 351.301.
(f) Notification of representative of the exporting country. Upon
receipt of a petition, the Secretary will deliver a public version of
the petition (see Sec. 351.304(c)) to a representative in Washington,
DC, of the government of any exporting country named in the petition.
(g) Petition based upon derogation of an international undertaking
on official export credits. In the case of a petition described in
section 702(b)(3) of the Act, the petitioner must file a copy of the
petition with the Secretary of the Treasury, as well as with the
Secretary and the Commission, and must so certify in submitting the
petition to the Secretary.
(h) Assistance to small businesses; additional information.
(1) The Secretary will provide technical assistance to eligible
small businesses, as defined in section 339 of the Act, to enable them
to prepare and file petitions. The Secretary may deny assistance if the
Secretary concludes that the petition, if filed, could not satisfy the
requirements of section 702(c)(1)(A) or section 732(c)(1)(A) of the Act
(whichever is applicable) (see Sec. 351.203).
(2) For additional information concerning petitions, contact the
Deputy Assistant Secretary for Investigations, Import Administration,
International Trade Administration, Room 3099, U.S. Department of
Commerce, Pennsylvania Avenue and 14th Street, NW, Washington, DC
20230; (202) 482-5497.
(i) Pre-initiation communications. (1) In general. During the
period before the Secretary's decision whether to initiate an
investigation, communications with the Department will be governed by
section 702(b)(4)(B) or section 732(b)(3)(B) of the Act (whichever is
applicable). The Secretary will not consider the filing of a notice of
appearance to constitute a communication.
(2) Consultations with foreign governments in countervailing duty
proceedings. In a countervailing duty proceeding, the Secretary will
invite the government of any exporting country named in the petition
for consultations with respect to the petition.
(The information collection requirements in paragraph (a) of this
section have been approved by the Office of Management and Budget
under control number 0625-0105.)
Sec. 351.203 Determination of sufficiency of petition.
(a) Introduction. When a petition is filed under Sec. 351.202, the
Secretary must determine that the petition satisfies the relevant
statutory requirements before initiating an antidumping or
countervailing duty investigation. This section sets forth rules
regarding a determination as to the sufficiency of a petition
(including the determination that a petition is supported by the
domestic industry), the deadline for making the determination, and the
actions to be taken once the Secretary has made the determination.
(b) Determination of sufficiency. (1) In general. Normally, not
later than 20 days after a petition is filed, the Secretary, on the
basis of sources readily available to the Secretary, will examine the
accuracy and adequacy of the evidence provided in the petition and
determine whether to initiate an investigation under section
702(c)(1)(A) or section 732(c)(1)(A) of the Act (whichever is
applicable).
(2) Extension where polling required. If the Secretary is required
to poll or otherwise determine support for the petition under section
702(c)(4)(D) or section 732(c)(4)(D) of the Act, the Secretary may, in
exceptional circumstances, extend the 20-day period by the amount of
time necessary to collect and analyze the required information. In no
case will the period between the filing of a petition and the
determination whether to initiate an investigation exceed 40 days.
(c) Notice of initiation and distribution of petition. (1) Notice
of initiation. If the initiation determination of the Secretary under
section 702(c)(1)(A) or section 732(c)(1)(A) of the Act is affirmative,
the Secretary will initiate an investigation and publish in the Federal
Register notice of ``Initiation of Antidumping (Countervailing Duty)
Investigation.'' The Secretary will notify the Commission at the time
of initiation of the investigation and will make available to employees
of the Commission directly involved in the proceeding the information
upon which the Secretary based the initiation and which the Commission
may consider relevant to its injury determinations.
(2) Distribution of petition. As soon as practicable after
initiation of an investigation, the Secretary will provide a public
version of the petition to all known exporters (including producers who
sell for export to the United States) of the subject merchandise. If
the Secretary determines that there is a particularly large number of
exporters involved, instead of providing the public version to all
known exporters, the Secretary may provide the public version to a
trade association of the exporters or, alternatively, may consider the
requirement of the preceding sentence to have been satisfied by the
delivery of a public version of the petition to the government of the
exporting country under Sec. 351.202(f).
(d) Insufficiency of petition. If an initiation determination of
the Secretary under section 702(c)(1)(A) or section 732(c)(1)(A) of the
Act is negative, the Secretary will dismiss the petition, terminate the
proceeding, notify the petitioner in writing of the reasons for the
determination, and publish in the Federal Register notice of
``Dismissal of Antidumping (Countervailing Duty) Petition.''
(e) Determination of industry support. In determining industry
support for a petition under section 702(c)(4) or section 732(c)(4) of
the Act, the following rules will apply:
(1) Measuring production. The Secretary normally will measure
production over a twelve-month period specified by the Secretary, and
may measure production based on either value or volume. Where a party
to the proceeding establishes that production data for the relevant
period, as specified by the Secretary, is unavailable, production
levels may be established by
[[Page 7358]]
reference to alternative data that the Secretary determines to be
indicative of production levels.
(2) Positions treated as business proprietary information. Upon
request, the Secretary may treat the position of a domestic producer or
workers regarding the petition and any production information supplied
by the producer or workers as business proprietary information under
Sec. 351.105(b)(10).
(3) Positions expressed by workers. The Secretary will consider the
positions of workers and management regarding the petition to be of
equal weight. The Secretary will assign a single weight to the
positions of both workers and management according to the production of
the domestic like product of the firm in which the workers and
management are employed. If the management of a firm expresses a
position in direct opposition to the position of the workers in that
firm, the Secretary will treat the production of that firm as
representing neither support for, nor opposition to, the petition.
(4) Certain positions disregarded. (i) The Secretary will disregard
the position of a domestic producer that opposes the petition if such
producer is related to a foreign producer or to a foreign exporter
under section 771(4)(B)(ii) of the Act, unless such domestic producer
demonstrates to the Secretary's satisfaction that its interests as a
domestic producer would be adversely affected by the imposition of an
antidumping order or a countervailing duty order, as the case may be;
and
(ii) The Secretary may disregard the position of a domestic
producer that is an importer of the subject merchandise, or that is
related to such an importer, under section 771(4)(B)(ii) of the Act.
(5) Special rule for regional industries. Under section
702(c)(4)(C) or section 732(c)(4)(C) of the Act, the applicable region
will be the region specified in the petition.
(6) Polling the industry. In conducting a poll of the industry
under section 702(c)(4)(D)(i) or section 732(c)(4)(D)(i) of the Act,
the Secretary will include unions, groups of workers, and trade or
business associations described in paragraphs (9)(D) and (9)(E) of
section 771 of the Act.
(f) Time limits where petition involves same merchandise as that
covered by an order that has been revoked. Under section 702(c)(1)(C)
or section 732(c)(1)(C) of the Act, and in expediting an investigation
involving subject merchandise for which a prior order was revoked or a
suspended investigation was terminated, the Secretary will consider
``section 751(d)'' as including a predecessor provision.
Sec. 351.204 Transactions and persons examined; voluntary respondents;
exclusions.
(a) Introduction. Because the Act does not specify the precise
period of time that the Secretary should examine in an antidumping or
countervailing duty investigation, this section sets forth rules
regarding the period of investigation (``POI''). In addition, this
section includes rules regarding the selection of persons to be
examined, the treatment of voluntary respondents that are not selected
for individual examination, and the exclusion of persons that the
Secretary ultimately finds are not dumping or are not receiving
countervailable subsidies.
(b) Period of investigation. (1) Antidumping investigation. In an
antidumping investigation, the Secretary normally will examine
merchandise sold during the four most recently completed fiscal
quarters (or, in an investigation involving merchandise imported from a
nonmarket economy country, the two most recently completed fiscal
quarters) as of the month preceding the month in which the petition was
filed or in which the Secretary self-initiated an investigation.
However, the Secretary may examine merchandise sold during any
additional or alternate period that the Secretary concludes is
appropriate.
(2) Countervailing duty investigation. In a countervailing duty
investigation, the Secretary normally will rely on information
pertaining to the most recently completed fiscal year for the
government and exporters or producers in question. If the government
and the exporters or producers have different fiscal years, the
Secretary normally will rely on information pertaining to the most
recently completed calendar year. If the investigation is conducted on
an aggregate basis under section 777A(e)(2)(B) of the Act, the
Secretary normally will rely on information pertaining to the most
recently completed fiscal year for the government in question. However,
the Secretary may rely on information for any additional or alternate
period that the Secretary concludes is appropriate.
(c) Exporters and producers examined. (1) In general. In an
investigation, the Secretary will attempt to determine an individual
weighted-average dumping margin or individual countervailable subsidy
rate for each known exporter or producer of the subject merchandise.
However, the Secretary may decline to examine a particular exporter or
producer if that exporter or producer and the petitioner agree.
(2) Limited investigation. Notwithstanding paragraph (c)(1) of this
section, the Secretary may limit the investigation by using a method
described in subsection (a), (c), or (e) of section 777A of the Act.
(d) Voluntary respondents. (1) In general. If the Secretary limits
the number of exporters or producers to be individually examined under
section 777A(c)(2) or section 777A(e)(2)(A) of the Act, the Secretary
will examine voluntary respondents (exporters or producers, other than
those selected for individual examination) in accordance with section
782(a) of the Act.
(2) Acceptance of voluntary respondents. After receiving a
voluntary response filed in accordance with section 782(a) of the Act,
the Secretary will determine, as soon as practicable, whether to
examine the voluntary respondent individually. A voluntary respondent
accepted for individual examination will be subject to the same
requirements as an exporter or producer initially selected by the
Secretary for individual examination, including, where applicable, the
use of the facts available under section 776 of the Act and
Sec. 351.308.
(3) Exclusion of voluntary respondents' rates from all-others rate.
In calculating an all-others rate under section 705(c)(5) or section
735(c)(5) of the Act, the Secretary will exclude weighted-average
dumping margins or countervailable subsidy rates calculated for
voluntary respondents.
(e) Exclusions. (1) In general. The Secretary will exclude from an
affirmative final determination under section 705(a) or section 735(a)
of the Act or an order under section 706(a) or section 736(a) of the
Act, any exporter or producer for which the Secretary determines an
individual weighted-average dumping margin or individual net
countervailable subsidy rate of zero or de minimis.
(2) Preliminary determinations. In an affirmative preliminary
determination under section 703(b) or section 733(b) of the Act, an
exporter or producer for which the Secretary preliminarily determines
an individual weighted-average dumping margin or individual net
countervailable subsidy of zero or de minimis will not be excluded from
the preliminary determination or the investigation. However, the
exporter or producer will not be subject to provisional measures under
section 703(d) or section 733(d) of the Act.
(3) Countervailing duty investigations conducted on an aggregate
basis and requests for exclusion from
[[Page 7359]]
countervailing duty order. Where the Secretary conducts a
countervailing duty investigation on an aggregate basis under section
777A(e)(2)(B) of the Act, the Secretary will consider and investigate
requests for exclusion to the extent practicable. An exporter or
producer that desires exclusion from an order must submit:
(i) A certification by the exporter or producer that it received
zero or de minimis net countervailable subsidies during the period of
investigation;
(ii) If the exporter or producer received a countervailable
subsidy, calculations demonstrating that the amount of net
countervailable subsidies received was de minimis during the period of
investigation;
(iii) If the exporter is not the producer of the subject
merchandise, certifications from the suppliers and producers of the
subject merchandise that those persons received zero or de minimis net
countervailable subsidies during the period of the investigation; and
(iv) A certification from the government of the affected country
that the government did not provide the exporter or producer with more
than de minimis net countervailable subsidies during the period of
investigation.
Sec. 351.205 Preliminary determination.
(a) Introduction. A preliminary determination in an antidumping or
countervailing duty investigation constitutes the first point at which
the Secretary may provide a remedy if the Secretary preliminarily finds
that dumping or countervailable subsidization has occurred. The remedy
(sometimes referred to as ``provisional measures'') usually takes the
form of a bonding requirement to ensure payment if antidumping or
countervailing duties ultimately are imposed. Whether the Secretary's
preliminary determination is affirmative or negative, the investigation
continues. This section contains rules regarding deadlines for
preliminary determinations, postponement of preliminary determinations,
notices of preliminary determinations, and the effects of affirmative
preliminary determinations.
(b) Deadline for preliminary determination. The deadline for a
preliminary determination under section 703(b) or section 733(b) of the
Act will be:
(1) Normally not later than 140 days in an antidumping
investigation (65 days in a countervailing duty investigation) after
the date on which the Secretary initiated the investigation (see
section 703(b)(1) or section 733(b)(1)(A) of the Act);
(2) Not later than 190 days in an antidumping investigation (130
days in a countervailing duty investigation) after the date on which
the Secretary initiated the investigation if the Secretary postpones
the preliminary determination at petitioner's request or because the
Secretary determines that the investigation is extraordinarily
complicated (see section 703(c)(1) or section 733(c)(1) of the Act);
(3) In a countervailing duty investigation, not later than 250 days
after the date on which the proceeding began if the Secretary postpones
the preliminary determination due to an upstream subsidy allegation (up
to 310 days if the Secretary also postponed the preliminary
determination at the request of the petitioner or because the Secretary
determined that the investigation is extraordinarily complicated) (see
section 703(c)(1) and section 703(g)(1) of the Act);
(4) Within 90 days after initiation in an antidumping
investigation, and on an expedited basis in a countervailing duty
investigation, where verification has been waived (see section
703(b)(3) or section 733(b)(2) of the Act);
(5) In a countervailing duty investigation, on an expedited basis
and within 65 days after the date on which the Secretary initiated the
investigation if the sole subsidy alleged in the petition was the
derogation of an international undertaking on official export credits
(see section 702(b)(3) and section 703(b)(2) of the Act);
(6) In a countervailing duty investigation, not later than 60 days
after the date on which the Secretary initiated the investigation if
the only subsidy under investigation is a subsidy with respect to which
the Secretary received notice from the United States Trade
Representative of a violation of Article 8 of the Subsidies Agreement
(see section 703(b)(5) of the Act); and
(7) In an antidumping investigation, within the deadlines set forth
in section 733(b)(1)(B) of the Act if the investigation involves short
life cycle merchandise (see section 733(b)(1)(B) and section 739 of the
Act).
(c) Contents of preliminary determination and publication of
notice. A preliminary determination will include a preliminary finding
on critical circumstances, if appropriate, under section 703(e)(1) or
section 733(e)(1) of the Act (whichever is applicable). The Secretary
will publish in the Federal Register notice of ``Affirmative (Negative)
Preliminary Antidumping (Countervailing Duty) Determination,''
including the rates, if any, and an invitation for argument consistent
with Sec. 351.309.
(d) Effect of affirmative preliminary determination. If the
preliminary determination is affirmative, the Secretary will take the
actions described in section 703(d) or section 733(d) of the Act
(whichever is applicable). In making information available to the
Commission under section 703(d)(3) or section 733(d)(3) of the Act, the
Secretary will make available to the Commission and to employees of the
Commission directly involved in the proceeding the information upon
which the Secretary based the preliminary determination and which the
Commission may consider relevant to its injury determination.
(e) Postponement at the request of the petitioner. A petitioner
must submit a request for postponement of the preliminary determination
(see section 703(c)(1)(A) or section 733(c)(1)(A) of the Act) 25 days
or more before the scheduled date of the preliminary determination, and
must state the reasons for the request. The Secretary will grant the
request, unless the Secretary finds compelling reasons to deny the
request.
(f) Notice of postponement. (1) If the Secretary decides to
postpone the preliminary determination at the request of the petitioner
or because the investigation is extraordinarily complicated, the
Secretary will notify all parties to the proceeding not later than 20
days before the scheduled date of the preliminary determination, and
will publish in the Federal Register notice of ``Postponement of
Preliminary Antidumping (Countervailing Duty) Determination,'' stating
the reasons for the postponement (see section 703(c)(2) or section
733(c)(2) of the Act).
(2) If the Secretary decides to postpone the preliminary
determination due to an allegation of upstream subsidies, the Secretary
will notify all parties to the proceeding not later than the scheduled
date of the preliminary determination and will publish in the Federal
Register notice of ``Postponement of Preliminary Countervailing Duty
Determination,'' stating the reasons for the postponement.
Sec. 351.206 Critical circumstances.
(a) Introduction. Generally, antidumping or countervailing duties
are imposed on entries of merchandise made on or after the date on
which the Secretary first imposes provisional measures (most often the
date on which notice of an affirmative preliminary determination is
published in the Federal Register). However, if the Secretary finds
that ``critical circumstances'' exist, duties may be
[[Page 7360]]
imposed retroactively on merchandise entered up to 90 days before the
imposition of provisional measures. This section contains procedural
and substantive rules regarding allegations and findings of critical
circumstances.
(b) In general. If a petitioner submits to the Secretary a written
allegation of critical circumstances, with reasonably available factual
information supporting the allegation, 21 days or more before the
scheduled date of the Secretary's final determination, or on the
Secretary's own initiative in a self-initiated investigation, the
Secretary will make a finding whether critical circumstances exist, as
defined in section 705(a)(2) or section 735(a)(3) of the Act (whichever
is applicable).
(c) Preliminary finding. (1) If the petitioner submits an
allegation of critical circumstances 30 days or more before the
scheduled date of the Secretary's final determination, the Secretary,
based on the available information, will make a preliminary finding
whether there is a reasonable basis to believe or suspect that critical
circumstances exist, as defined in section 703(e)(1) or section
733(e)(1) of the Act (whichever is applicable).
(2) The Secretary will issue the preliminary finding:
(i) Not later than the preliminary determination, if the allegation
is submitted 20 days or more before the scheduled date of the
preliminary determination; or
(ii) Within 30 days after the petitioner submits the allegation, if
the allegation is submitted later than 20 days before the scheduled
date of the preliminary determination. The Secretary will notify the
Commission and publish in the Federal Register notice of the
preliminary finding.
(d) Suspension of liquidation. If the Secretary makes an
affirmative preliminary finding of critical circumstances, the
provisions of section 703(e)(2) or section 733(e)(2) of the Act
(whichever is applicable) regarding the retroactive suspension of
liquidation will apply.
(e) Final finding. For any allegation of critical circumstances
submitted 21 days or more before the scheduled date of the Secretary's
final determination, the Secretary will make a final finding on
critical circumstances, and will take appropriate action under section
705(c)(4) or section 735(c)(4) of the Act (whichever is applicable).
(f) Findings in self-initiated investigations. In a self-initiated
investigation, the Secretary will make preliminary and final findings
on critical circumstances without regard to the time limits in
paragraphs (c) and (e) of this section.
(g) Information regarding critical circumstances. The Secretary may
request the Commissioner of Customs to compile information on an
expedited basis regarding entries of the subject merchandise if, at any
time after the initiation of an investigation, the Secretary makes the
findings described in section 702(e) or section 732(e) of the Act
(whichever is applicable) regarding the possible existence of critical
circumstances.
(h) Massive imports. (1) In determining whether imports of the
subject merchandise have been massive under section 705(a)(2)(B) or
section 735(a)(3)(B) of the Act, the Secretary normally will examine:
(i) The volume and value of the imports;
(ii) Seasonal trends; and
(iii) The share of domestic consumption accounted for by the
imports.
(2) In general, unless the imports during the ``relatively short
period'' (see paragraph (i) of this section) have increased by at least
15 percent over the imports during an immediately preceding period of
comparable duration, the Secretary will not consider the imports
massive.
(i) Relatively short period. Under section 705(a)(2)(B) or section
735(a)(3)(B) of the Act, the Secretary normally will consider a
``relatively short period'' as the period beginning on the date the
proceeding begins and ending at least three months later. However, if
the Secretary finds that importers, or exporters or producers, had
reason to believe, at some time prior to the beginning of the
proceeding, that a proceeding was likely, then the Secretary may
consider a period of not less than three months from that earlier time.
Sec. 351.207 Termination of investigation.
(a) Introduction. ``Termination'' is a term of art that refers to
the end of an antidumping or countervailing duty proceeding in which an
order has not yet been issued. The Act establishes a variety of
mechanisms by which an investigation may be terminated, most of which
are dealt with in this section. For rules regarding the termination of
a suspended investigation following a review under section 751 of the
Act, see Sec. 351.222.
(b) Withdrawal of petition; self-initiated investigations. (1) In
general. The Secretary may terminate an investigation under section
704(a)(1)(A) or section 734(a)(1)(A) (withdrawal of petition) or under
section 704(k) or section 734(k) (self-initiated investigation) of the
Act, provided that the Secretary concludes that termination is in the
public interest. If the Secretary terminates an investigation, the
Secretary will publish in the Federal Register notice of ``Termination
of Antidumping (Countervailing Duty) Investigation,'' together with,
when appropriate, a copy of any correspondence with the petitioner
forming the basis of the withdrawal and the termination. (For the
treatment in a subsequent investigation of records compiled in an
investigation in which the petition was withdrawn, see section
704(a)(1)(B) or section 734(a)(1)(B) of the Act.)
(2) Withdrawal of petition based on acceptance of quantitative
restriction agreements. In addition to the requirements of paragraph
(b)(1) of this section, if a termination is based on the acceptance of
an understanding or other kind of agreement to limit the volume of
imports into the United States of the subject merchandise, the
Secretary will apply the provisions of section 704(a)(2) or section
734(a)(2) of the Act (whichever is applicable) regarding public
interest and consultations with consuming industries and producers and
workers.
(c) Lack of interest. The Secretary may terminate an investigation
based upon lack of interest (see section 782(h)(1) of the Act). Where
the Secretary terminates an investigation under this paragraph, the
Secretary will publish the notice described in paragraph (b)(1) of this
section.
(d) Negative determination. An investigation terminates
automatically upon publication in the Federal Register of the
Secretary's negative final determination or the Commission's negative
preliminary or final determination.
(e) End of suspension of liquidation. When an investigation
terminates, if the Secretary previously ordered suspension of
liquidation, the Secretary will order the suspension ended on the date
of publication of the notice of termination referred to in paragraph
(b) of this section or on the date of publication of a negative
determination referred to in paragraph (d) of this section, and will
instruct the Customs Service to release any cash deposit or bond.
Sec. 351.208 Suspension of investigation.
(a) Introduction. In addition to the imposition of duties, the Act
also permits the Secretary to suspend an antidumping or countervailing
duty investigation by accepting a suspension agreement (referred to in
the WTO
[[Page 7361]]
Agreements as an ``undertaking''). Briefly, in a suspension agreement,
the exporters and producers or the foreign government agree to modify
their behavior so as to eliminate dumping or subsidization or the
injury caused thereby. If the Secretary accepts a suspension agreement,
the Secretary will ``suspend'' the investigation and thereafter will
monitor compliance with the agreement. This section contains rules for
entering into suspension agreements and procedures for suspending an
investigation.
(b) In general. The Secretary may suspend an investigation under
section 704 or section 734 of the Act and this section.
(c) Definition of ``substantially all.'' Under section 704 and
section 734 of the Act, exporters that account for ``substantially
all'' of the merchandise means exporters and producers that have
accounted for not less than 85 percent by value or volume of the
subject merchandise during the period for which the Secretary is
measuring dumping or countervailable subsidization in the investigation
or such other period that the Secretary considers representative.
(d) Monitoring. In monitoring a suspension agreement under section
704(c), section 734(c), or section 734(l) of the Act (agreements to
eliminate injurious effects or to restrict the volume of imports), the
Secretary will not be obliged to ascertain on a continuing basis the
prices in the United States of the subject merchandise or of domestic
like products.
(e) Exports not to increase during interim period. The Secretary
will not accept a suspension agreement under section 704(b)(2) or
section 734(b)(1) of the Act (elimination of dumping or countervailable
subsidization or the cessation of exports) unless the agreement ensures
that the quantity of the subject merchandise exported during the
interim period set forth in the agreement does not exceed the quantity
of the merchandise exported during a period of comparable duration that
the Secretary considers representative.
(f) Procedure for suspension of investigation.
(1) Submission of proposed suspension agreement. (i) In general. As
appropriate, the exporters and producers or, in an investigation
involving a nonmarket economy country, the government, must submit to
the Secretary a proposed suspension agreement within:
(A) In an antidumping investigation, 15 days after the date of
issuance of the preliminary determination, or
(B) In a countervailing duty investigation, 5 days after the date
of issuance of the preliminary determination. Where a proposed
suspension agreement is submitted in an antidumping investigation, an
exporter or producer or, in an antidumping investigation involving a
nonmarket economy country, the government, may request postponement of
the final determination under section 735(a)(2) of the Act (see
Sec. 351.210(e)). Where the final determination in a countervailing
duty investigation is postponed under section 703(g)(2) or section
705(a)(1) of the Act (see Sec. 351.210(b)(3) and Sec. 351.210(i)), the
time limits in paragraphs (f)(1)(i), (f)(2)(i), (f)(3), and (g)(1) of
this section applicable to countervailing duty investigations will be
extended to coincide with the time limits in such paragraphs applicable
to antidumping investigations.
(ii) Special rule for regional industry determination. If the
Commission makes a regional industry determination in its final
affirmative determination under section 705(b) or section 735(b) of the
Act but not in its preliminary affirmative determination under section
703(a) or section 733(a) of the Act, the exporters and producers or, in
an investigation involving a nonmarket economy country, the government,
must submit to the Secretary any proposed suspension agreement within
15 days of the publication in the Federal Register of the antidumping
or countervailing duty order.
(2) Notification and consultation. In fulfilling the requirements
of section 704 or section 734 of the Act (whichever is applicable), the
Secretary will take the following actions:
(i) In general. The Secretary will notify all parties to the
proceeding of the proposed suspension of an investigation and provide
to the petitioner a copy of the suspension agreement preliminarily
accepted by the Secretary (the agreement must contain the procedures
for monitoring compliance and a statement of the compatibility of the
agreement with the requirements of section 704 or section 734 of the
Act) within:
(A) In an antidumping investigation, 30 days after the date of
issuance of the preliminary determination, or
(B) In a countervailing duty investigation, 15 days after the date
of issuance of the preliminary determination; or
(ii) Special rule for regional industry determination. If the
Commission makes a regional industry determination in its final
affirmative determination under section 705(b) or section 735(b) of the
Act but not in its preliminary affirmative determination under section
703(a) or section 733(a) of the Act, the Secretary, within 15 days of
the submission of a proposed suspension agreement under paragraph
(f)(1)(ii) of this section, will notify all parties to the proceeding
of the proposed suspension agreement and provide to the petitioner a
copy of the agreement preliminarily accepted by the Secretary (such
agreement must contain the procedures for monitoring compliance and a
statement of the compatibility of the agreement with the requirements
of section 704 or section 734 of the Act); and
(iii) Consultation. The Secretary will consult with the petitioner
concerning the proposed suspension of the investigation.
(3) Opportunity for comment. The Secretary will provide all
interested parties and United States government agencies an opportunity
to submit written argument and factual information concerning the
proposed suspension of the investigation within:
(i) In an antidumping investigation, 50 days after the date of
issuance of the preliminary determination,
(ii) In a countervailing duty investigation, 35 days after the date
of issuance of the preliminary determination, or
(iii) In a regional industry case described in paragraph (f)(1)(ii)
of this section, 35 days after the date of issuance of an order.
(g) Acceptance of suspension agreement.
(1) The Secretary may accept an agreement to suspend an
investigation within:
(i) In an antidumping investigation, 60 days after the date of
issuance of the preliminary determination,
(ii) In a countervailing duty investigation, 45 days after the date
of issuance of the preliminary determination, or
(iii) In a regional industry case described in paragraph (f)(1)(ii)
of this section, 45 days after the date of issuance of an order.
(2) If the Secretary accepts an agreement to suspend an
investigation, the Secretary will take the actions described in section
704(f), section 704(m)(3), section 734(f), or section 734(l)(3) of the
Act (whichever is applicable), and will publish in the Federal Register
notice of ``Suspension of Antidumping (Countervailing Duty)
Investigation,'' including the text of the agreement. If the Secretary
has not
[[Page 7362]]
already published notice of an affirmative preliminary determination,
the Secretary will include that notice. In accepting an agreement, the
Secretary may rely on factual or legal conclusions the Secretary
reached in or after the affirmative preliminary determination.
(h) Continuation of investigation. (1) A request to the Secretary
under section 704(g) or section 734(g) of the Act for the continuation
of the investigation must be made in writing. In addition, the request
must be simultaneously filed with the Commission, and the requester
must so certify in submitting the request to the Secretary.
(2) If the Secretary and the Commission make affirmative final
determinations in an investigation that has been continued, the
suspension agreement will remain in effect in accordance with the
factual and legal conclusions in the Secretary's final determination.
If either the Secretary or the Commission makes a negative final
determination, the agreement will have no force or effect.
(i) Merchandise imported in excess of allowed quantity. (1) The
Secretary may instruct the Customs Service not to accept entries, or
withdrawals from warehouse, for consumption of subject merchandise in
excess of any quantity allowed by a suspension agreement under section
704 or section 734 of the Act, including any quantity allowed during
the interim period (see paragraph (e) of this section).
(2) Imports in excess of the quantity allowed by a suspension
agreement, including any quantity allowed during the interim period
(see paragraph (e) of this section), may be exported or destroyed under
Customs Service supervision, except that if the agreement is under
section 704(c)(3) or section 734(l) of the Act (restrictions on the
volume of imports), the excess merchandise, with the approval of the
Secretary, may be held for future opening under the agreement by
placing it in a foreign trade zone or by entering it for warehouse.
Sec. 351.209 Violation of suspension agreement.
(a) Introduction. A suspension agreement remains in effect until
the underlying investigation is terminated (see Secs. 351.207 and
351.222). However, if the Secretary finds that a suspension agreement
has been violated or no longer meets the requirements of the Act, the
Secretary may either cancel or revise the agreement. This section
contains rules regarding cancellation and revisions of suspension
agreements.
(b) Immediate determination. If the Secretary determines that a
signatory has violated a suspension agreement, the Secretary, without
providing interested parties an opportunity to comment, will:
(1) Order the suspension of liquidation in accordance with section
704(i)(1)(A) or section 734(i)(1)(A) of the Act (whichever is
applicable) of all entries of the subject merchandise entered, or
withdrawn from warehouse, for consumption on or after the later of (i)
90 days before the date of publication of the notice of cancellation of
the agreement or (ii) the date of first entry, or withdrawal from
warehouse, for consumption of the merchandise the sale or export of
which was in violation of the agreement;
(2) If the investigation was not completed under section 704(g) or
section 734(g) of the Act, resume the investigation as if the Secretary
had made an affirmative preliminary determination on the date of
publication of the notice of cancellation, update previously submitted
information where the Secretary deems it appropriate to do so, and
impose provisional measures by instructing the Customs Service to
require for each entry of the subject merchandise suspended under
paragraph (b)(1) of this section a cash deposit or bond at the rates
determined in the affirmative preliminary determination;
(3) If the investigation was completed under section 704(g) or
section 734(g) of the Act, issue an antidumping order or countervailing
duty order (whichever is applicable), and, for all entries subject to
suspension of liquidation under paragraph (b)(1) of this section,
instruct the Customs Service to require for each entry of the
merchandise suspended under this paragraph a cash deposit at the rates
determined in the affirmative final determination;
(4) Notify all persons who are or were parties to the proceeding,
the Commission, and, if the Secretary determines that the violation was
intentional, the Commissioner of Customs; and
(5) Publish in the Federal Register notice of ``Antidumping
(Countervailing Duty) Order (Resumption of Antidumping (Countervailing
Duty) Investigation); Cancellation of Suspension Agreement.''
(c) Determination after notice and comment. (1) If the Secretary
has reason to believe that a signatory has violated a suspension
agreement, or that an agreement no longer meets the requirements of
section 704(d)(1) or section 734(d) of the Act, but the Secretary does
not have sufficient information to determine that a signatory has
violated the agreement (see paragraph (b) of this section), the
Secretary will publish in the Federal Register notice of ``Invitation
for Comment on Antidumping (Countervailing Duty) Suspension
Agreement.''
(2) After publication of the notice inviting comment and after
consideration of comments received the Secretary will:
(i) Determine whether any signatory has violated the suspension
agreement; or
(ii) Determine whether the suspension agreement no longer meets the
requirements of section 704(d)(1) or section 734(d) of the Act.
(3) If the Secretary determines that a signatory has violated the
suspension agreement, the Secretary will take appropriate action as
described in paragraphs (b)(1) through (b)(5) of this section.
(4) If the Secretary determines that a suspension agreement no
longer meets the requirements of section 704(d)(1) or section 734(d) of
the Act, the Secretary will:
(i) Take appropriate action as described in paragraphs (b)(1)
through (b)(5) of this section; except that, under paragraph (b)(1)(ii)
of this section, the Secretary will order the suspension of liquidation
of all entries of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the later of 90 days before the
date of publication of the notice of suspension of liquidation or the
date of first entry, or withdrawal from warehouse, for consumption of
the merchandise the sale or export of which does not meet the
requirements of section 704(d)(1) of the Act;
(ii) Continue the suspension of investigation by accepting a
revised suspension agreement under section 704(b) or section 734(b) of
the Act (whether or not the Secretary accepted the original agreement
under such section) that, at the time the Secretary accepts the revised
agreement, meets the applicable requirements of section 704(d)(1) or
section 734(d) of the Act, and publish in the Federal Register notice
of ``Revision of Agreement Suspending Antidumping (Countervailing Duty)
Investigation''; or
(iii) Continue the suspension of investigation by accepting a
revised suspension agreement under section 704(c), section 734(c), or
section 734(l) of the Act (whether or not the Secretary accepted the
original agreement under such section) that, at the time the Secretary
accepts the revised agreement, meets the applicable requirements of
section 704(d)(1) or section 734(d) of the Act, and publish in the
Federal Register
[[Page 7363]]
notice of ``Revision of Agreement Suspending Antidumping
(Countervailing Duty) Investigation.'' If the Secretary continues to
suspend an investigation based on a revised agreement accepted under
section 704(c), section 734(c), or section 734(l) of the Act, the
Secretary will order suspension of liquidation to begin. The suspension
will not end until the Commission completes any requested review of the
revised agreement under section 704(h) or section 734(h) of the Act. If
the Commission receives no request for review within 20 days after the
date of publication of the notice of the revision, the Secretary will
order the suspension of liquidation ended on the 21st day after the
date of publication, and will instruct the Customs Service to release
any cash deposit or bond. If the Commission undertakes a review under
section 704(h) or section 734(h) of the Act, the provisions of sections
704(h)(2) and (3) and sections 734(h)(2) and (3) of the Act will apply.
(5) If the Secretary decides neither to consider the suspension
agreement violated nor to revise the agreement, the Secretary will
publish in the Federal Register notice of the Secretary's decision
under paragraph (c)(2) of this section, including a statement of the
factual and legal conclusions on which the decision is based.
(d) Additional signatories. If the Secretary decides that a
suspension agreement no longer will completely eliminate the injurious
effect of exports to the United States of subject merchandise under
section 704(c)(1) or section 734(c)(1) of the Act, or that the
signatory exporters no longer account for substantially all of the
subject merchandise, the Secretary may revise the agreement to include
additional signatory exporters.
(e) Definition of ``violation.'' Under this section, ``violation''
means noncompliance with the terms of a suspension agreement caused by
an act or omission of a signatory, except, at the discretion of the
Secretary, an act or omission which is inadvertent or inconsequential.
Sec. 351.210 Final determination.
(a) Introduction. A ``final determination'' in an antidumping or
countervailing duty investigation constitutes a final decision by the
Secretary as to whether dumping or countervailable subsidization is
occurring. If the final determination is negative, the proceeding,
including the injury investigation conducted by the Commission,
terminates. If the final determination is affirmative, in most
instances the Commission issues a final injury determination. In
addition, if the preliminary determination was negative but the final
determination is affirmative, the Secretary will impose provisional
measures. This section contains rules regarding deadlines for, and
postponement of, final determinations, contents of final
determinations, and the effects of final determinations.
(b) Deadline for final determination. The deadline for a final
determination under section 705(a)(1) or section 735(a)(1) of the Act
will be:
(1) Normally, not later than 75 days after the date of the
Secretary's preliminary determination (see section 705(a)(1) or section
735(a)(1) of the Act);
(2) In an antidumping investigation, not later than 135 days after
the date of publication of the preliminary determination if the
Secretary postpones the final determination at the request of:
(i) The petitioner, if the preliminary determination was negative
(see section 735(a)(2)(B) of the Act); or
(ii) Exporters or producers who account for a significant
proportion of exports of the subject merchandise, if the preliminary
determination was affirmative (see section 735(a)(2)(A) of the Act);
(3) In a countervailing duty investigation, not later than 165 days
after the preliminary determination, if, after the preliminary
determination, the Secretary decides to investigate an upstream subsidy
allegation and concludes that additional time is needed to investigate
the allegation (see section 703(g)(2) of the Act); or
(4) In a countervailing duty investigation, the same date as the
date of the final antidumping determination, if:
(i) In a situation where the Secretary simultaneously initiated
antidumping and countervailing duty investigations on the subject
merchandise (from the same or other countries), the petitioner requests
that the final countervailing duty determination be postponed to the
date of the final antidumping determination; and
(ii) If the final countervailing duty determination is not due on a
later date because of postponement due to an allegation of upstream
subsidies under section 703(g) of the Act (see section 705(a)(1) of the
Act).
(c) Contents of final determination and publication of notice. The
final determination will include, if appropriate, a final finding on
critical circumstances under section 705(a)(2) or section 735(a)(3) of
the Act (whichever is applicable). The Secretary will publish in the
Federal Register notice of ``Affirmative (Negative) Final Antidumping
(Countervailing Duty) Determination,'' including the rates, if any.
(d) Effect of affirmative final determination. If the final
determination is affirmative, the Secretary will take the actions
described in section 705(c)(1) or section 735(c)(1) of the Act
(whichever is applicable). In addition, in the case of a countervailing
duty investigation involving subject merchandise from a country that is
not a Subsidies Agreement country, the Secretary will instruct the
Customs Service to require a cash deposit, as provided in section
706(a)(3) of the Act, for each entry of the subject merchandise
entered, or withdrawn from warehouse, for consumption on or after the
date of publication of the order under section 706(a) of the Act.
(e) Request for postponement of final antidumping determination. A
request to postpone a final antidumping determination under section
735(a)(2) of the Act (see paragraph (b)(2) of this section) must be
submitted in writing within the scheduled date of the final
determination. The Secretary may grant the request, unless the
Secretary finds compelling reasons to deny the request.
(f) Deferral of decision concerning upstream subsidization to
review. Notwithstanding paragraph (b)(3) of this section, if the
petitioner so requests in writing and the preliminary countervailing
duty determination was affirmative, the Secretary, instead of
postponing the final determination, may defer a decision concerning
upstream subsidization until the conclusion of the first administrative
review of a countervailing duty order, if any (see section
703(g)(2)(B)(i) of the Act).
(g) Notification of postponement. If the Secretary postpones a
final determination under paragraph (b)(2), (b)(3), or (b)(4) of this
section, the Secretary will notify promptly all parties to the
proceeding of the postponement, and will publish in the Federal
Register notice of ``Postponement of Final Antidumping (Countervailing
Duty) Determination,'' stating the reasons for the postponement.
(h) Termination of suspension of liquidation in a countervailing
duty investigation. If the Secretary postpones a final countervailing
duty determination, the Secretary will end any suspension of
liquidation ordered in the preliminary determination not later than 120
days after the date of publication of the preliminary determination,
and will not resume it unless and until the Secretary publishes a
countervailing duty order.
[[Page 7364]]
(i) Postponement of final countervailing duty determination for
simultaneous investigations. A request by the petitioner to postpone a
final countervailing duty determination to the date of the final
antidumping determination must be submitted in writing within five days
of the date of publication of the preliminary countervailing duty
determination (see section 705(a)(1) and paragraph (b)(4) of this
section).
(j) Commission access to information. If the final determination is
affirmative, the Secretary will make available to the Commission and to
employees of the Commission directly involved in the proceeding the
information upon which the Secretary based the final determination and
that the Commission may consider relevant to its injury determination
(see section 705(c)(1)(A) or section 735(c)(1)(A) of the Act).
(k) Effect of negative final determination. An investigation
terminates upon publication in the Federal Register of the Secretary's
or the Commission's negative final determination, and the Secretary
will take the relevant actions described in section 705(c)(2) or
section 735(c)(2) of the Act (whichever is applicable).
Sec. 351.211 Antidumping order and countervailing duty order.
(a) Introduction. The Secretary issues an order when both the
Secretary and the Commission (except in the case of merchandise from a
non-Subsidies Agreement country) have made final affirmative
determinations. The issuance of an order ends the investigative phase
of a proceeding. Generally, upon the issuance of an order, importers no
longer may post bonds as security for antidumping or countervailing
duties, but instead must make a cash deposit of estimated duties. An
order remains in effect until it is revoked. This section contains
rules regarding the issuance of orders in general, as well as special
rules for orders where the Commission has found a regional industry to
exist.
(b) In general. Not later than seven days after receipt of notice
of an affirmative final injury determination by the Commission under
section 705(b) or section 735(b) of the Act, or, in a countervailing
duty proceeding involving subject merchandise from a country not
entitled to an injury test (see Sec. 351.101(b)), simultaneously with
publication of an affirmative final countervailing duty determination
by the Secretary, the Secretary will publish in the Federal Register an
``Antidumping Order'' or ``Countervailing Duty Order'' that:
(1) Instructs the Customs Service to assess antidumping duties or
countervailing duties (whichever is applicable) on the subject
merchandise, in accordance with the Secretary's instructions at the
completion of each review requested under Sec. 351.213(b)
(administrative review), Sec. 351.214(b) (new shipper review), or
Sec. 351.215(b) (expedited antidumping review), or if a review is not
requested, in accordance with the Secretary's assessment instructions
under Sec. 351.212(c);
(2) Instructs the Customs Service to require a cash deposit of
estimated antidumping or countervailing duties at the rates included in
the Secretary's final determination; and
(3) Orders the suspension of liquidation ended for all entries of
the subject merchandise entered, or withdrawn from warehouse, for
consumption before the date of publication of the Commission's final
determination, and instructs the Customs Service to release the cash
deposit or bond on those entries, if in its final determination, the
Commission found a threat of material injury or material retardation of
the establishment of an industry, unless the Commission in its final
determination also found that, absent the suspension of liquidation
ordered under section 703(d)(2) or section 733(d)(2) of the Act, it
would have found material injury (see section 706(b) or section 736(b)
of the Act).
(c) Special rule for regional industries. (1) In general. If the
Commission, in its affirmative final injury determination, finds a
regional industry under section 771(4)(C) of the Act, the Secretary
will, to the maximum extent possible, modify the contents of an order
in a manner consistent with section 706(c) or section 736(d) of the Act
(whichever is applicable).
(2) Request for exception from the assessment of duties. An
exporter or producer seeking an exception from the assessment of
antidumping or countervailing duties (see section 706(c) or section
736(d) of the Act) must submit a certification that it did not export
subject merchandise for sale in the region concerned during the period
of investigation, and that it will not do so in the future so long as
the antidumping or countervailing duty order is in effect. In addition,
each such exporter or producer must submit a certification from each of
its U.S. importers of the subject merchandise that no subject
merchandise of that exporter or producer was entered into the United
States outside such region and then sold into the region during or
after the period of investigation. These certificates must be submitted
to the Secretary no later than fifteen days after the issuance of the
Commission's affirmative final determination.
Sec. 351.212 Assessment of antidumping and countervailing duties;
provisional measures deposit cap; interest on certain overpayments and
underpayments.
(a) Introduction. Unlike the systems of some other countries, the
United States uses a ``retrospective'' assessment system under which
final liability for antidumping and countervailing duties is determined
after merchandise is imported. Generally, the amount of duties to be
assessed is determined in a review of the order covering a discrete
period of time. If a review is not requested, duties are assessed at
the rate established in the completed review covering the most recent
prior period or, if no review has been completed, the cash deposit rate
applicable at the time merchandise was entered. This section contains
rules regarding the assessment of duties, the provisional measures
deposit cap, and interest on over- or undercollections of estimated
duties.
(b) Assessment of antidumping and countervailing duties as the
result of a review.
(1) Antidumping duties. If the Secretary has conducted a review of
an antidumping order under Sec. 351.213 (administrative review),
Sec. 351.214 (new shipper review), or Sec. 351.215 (expedited
antidumping review), the Secretary normally will calculate an
assessment rate for each importer of subject merchandise covered by the
review. The Secretary normally will calculate the assessment rate by
dividing the dumping margin found on the subject merchandise examined
by the entered value of such merchandise for normal customs duty
purposes. The Secretary then will instruct the Customs Service to
assess antidumping duties by applying the assessment rate to the
entered value of the merchandise.
(2) Countervailing duties. If the Secretary has conducted a review
of a countervailing duty order under Sec. 351.213 (administrative
review) or Sec. 351.214 (new shipper review), the Secretary normally
will instruct the Customs Service to assess countervailing duties by
applying the rates included in the final results of the review to the
entered value of the merchandise.
(c) Automatic assessment of antidumping and countervailing duties
if no review is requested.
(1) If the Secretary does not receive a timely request for an
administrative review of an order (see paragraph (b)(1), (b)(2), or
(b)(3) of Sec. 351.213), the
[[Page 7365]]
Secretary, without additional notice, will instruct the Customs Service
to (i) assess antidumping duties or countervailing duties, as the case
may be, on the subject merchandise described in Sec. 351.213(e) at
rates equal to the rates determined in the most recently completed
segment of the proceeding, and (ii) to continue to collect the cash
deposits previously ordered.
(2) If the Secretary receives a timely request for an
administrative review of an order (see paragraph (b)(1), (b)(2), or
(b)(3) of Sec. 351.213), the Secretary will instruct the Customs
Service to assess antidumping duties or countervailing duties, and to
continue to collect cash deposits, on the merchandise not covered by
the request in accordance with paragraph (c)(1) of this section.
(3) The automatic assessment provisions of paragraphs (c)(1) and
(c)(2) of this section will not apply to subject merchandise that is
the subject of a new shipper review (see Sec. 351.214) or an expedited
antidumping review (see Sec. 351.215).
(d) Provisional measures deposit cap. This paragraph applies to
subject merchandise entered, or withdrawn from warehouse, for
consumption before the date of publication of the Commission's notice
of an affirmative final injury determination or, in a countervailing
duty proceeding that involves merchandise from a country that is not
entitled to an injury test, the date of the Secretary's notice of an
affirmative final countervailing duty determination. If the amount of
duties that would be assessed by applying the rates included in the
Secretary's affirmative preliminary or affirmative final antidumping or
countervailing duty determination (``provisional duties'') is different
from the amount of duties that would be assessed by applying the
assessment rate under paragraphs (b)(1) and (b)(2) of this section
(``final duties''), the Secretary will instruct the Customs Service to
disregard the difference to the extent that the provisional duties are
less than the final duties, and to assess antidumping or countervailing
duties at the assessment rate if the provisional duties exceed the
final duties.
(e) Interest on certain overpayments and underpayments. Under
section 778 of the Act, the Secretary will instruct the Customs Service
to calculate interest for each entry on or after the publication of the
order from the date that a cash deposit is required to be deposited for
the entry through the date of liquidation of the entry.
Sec. 351.213 Administrative review of orders and suspension agreements
under section 751(a)(1) of the Act.
(a) Introduction. As noted in Sec. 351.212(a), the United States
has a ``retrospective'' assessment system under which final liability
for antidumping and countervailing duties is determined after
merchandise is imported. Although duty liability may be determined in
the context of other types of reviews, the most frequently used
procedure for determining final duty liability is the administrative
review procedure under section 751(a)(1) of the Act. This section
contains rules regarding requests for administrative reviews and the
conduct of such reviews.
(b) Request for administrative review. (1) Each year during the
anniversary month of the publication of an antidumping or
countervailing duty order, a domestic interested party or an interested
party described in section 771(9)(B) of the Act (foreign government)
may request in writing that the Secretary conduct an administrative
review under section 751(a)(1) of the Act of specified individual
exporters or producers covered by an order (except for a countervailing
duty order in which the investigation or prior administrative review
was conducted on an aggregate basis), if the requesting person states
why the person desires the Secretary to review those particular
exporters or producers.
(2) During the same month, an exporter or producer covered by an
order (except for a countervailing duty order in which the
investigation or prior administrative review was conducted on an
aggregate basis) may request in writing that the Secretary conduct an
administrative review of only that person.
(3) During the same month, an importer of the merchandise may
request in writing that the Secretary conduct an administrative review
of only an exporter or producer (except for a countervailing duty order
in which the investigation or prior administrative review was conducted
on an aggregate basis) of the subject merchandise imported by that
importer.
(4) Each year during the anniversary month of the publication of a
suspension of investigation, an interested party may request in writing
that the Secretary conduct an administrative review of all producers or
exporters covered by an agreement on which the suspension of
investigation was based.
(c) Deferral of administrative review. (1) In general. The
Secretary may defer the initiation of an administrative review, in
whole or in part, for one year if:
(i) The request for administrative review is accompanied by a
request that the Secretary defer the review, in whole or in part; and
(ii) The exporter or producer for which deferral is requested,
importers of subject merchandise of that exporter or producer, domestic
interested parties, or, in a countervailing duty proceeding, the
foreign government do not object to the deferral.
(2) Timeliness of objection to deferral. An objection to a deferral
of the initiation of administrative review under paragraph (c)(1)(ii)
of this section must be submitted within 15 days after the end of the
anniversary month in which the administrative review is requested.
(3) Procedures and deadlines. If the Secretary defers the
initiation of an administrative review, the Secretary will publish
notice of the deferral in the Federal Register. The Secretary will
initiate the administrative review in the month immediately following
the next anniversary month, and the deadline for issuing preliminary
results of review (see paragraph (h)(1) of this section) will run from
the last day of the next anniversary month.
(d) Rescission of administrative review. (1) Withdrawal of request
for review. The Secretary may rescind an administrative review under
this section, in whole or in part, if a party that requested a review
withdraws the request not later than 90 days after the date of
publication of notice of initiation of the requested review.
(2) Self-initiated review. The Secretary may rescind an
administrative review that was self-initiated by the Secretary.
(3) No shipments. The Secretary may rescind an administrative
review, in whole or only with respect to a particular exporter or
producer, if the Secretary concludes that, during the period covered by
the review, there were no entries, exports, or sales of the subject
merchandise, as the case may be.
(4) Notice of rescission. If the Secretary rescinds an
administrative review (in whole or in part), the Secretary will publish
in the Federal Register notice of ``Rescission of Antidumping
(Countervailing Duty) Administrative Review'' or, if appropriate,
``Partial Rescission of Antidumping (Countervailing Duty)
Administrative Review.''
(e) Period of review. (1) Antidumping proceedings. (i) Except as
provided in paragraph (e)(1)(ii) of this section, an administrative
review under this section normally will cover, as appropriate, entries,
exports, or sales of the subject
[[Page 7366]]
merchandise during the 12 months immediately preceding the most recent
anniversary month.
(ii) For requests received during the first anniversary month after
publication of an order or suspension of investigation, an
administrative review under this section will cover, as appropriate,
entries, exports, or sales during the period from the date of
suspension of liquidation under this part or suspension of
investigation to the end of the month immediately preceding the first
anniversary month.
(2) Countervailing duty proceedings. (i) Except as provided in
paragraph (e)(2)(ii) of this section, an administrative review under
this section normally will cover entries or exports of the subject
merchandise during the most recently completed calendar year. If the
review is conducted on an aggregate basis, the Secretary normally will
cover entries or exports of the subject merchandise during the most
recently completed fiscal year for the government in question.
(ii) For requests received during the first anniversary month after
publication of an order or suspension of investigation, an
administrative review under this section will cover entries or exports,
as appropriate, during the period from the date of suspension of
liquidation under this part or suspension of investigation to the end
of the most recently completed calendar or fiscal year as described in
paragraph (e)(2)(i) of this section.
(f) Voluntary respondents. In an administrative review, the
Secretary will examine voluntary respondents in accordance with section
782(a) of the Act and Sec. 351.204(d).
(g) Procedures. The Secretary will conduct an administrative review
under this section in accordance with Sec. 351.221.
(h) Time limits. (1) In general. The Secretary will issue
preliminary results of review (see Sec. 351.221(b)(4)) within 245 days
after the last day of the anniversary month of the order or suspension
agreement for which the administrative review was requested, and final
results of review (see Sec. 351.221(b)(5)) within 120 days after the
date on which notice of the preliminary results was published in the
Federal Register.
(2) Exception. If the Secretary determines that it is not
practicable to complete the review within the time specified in
paragraph (h)(1) of this section, the Secretary may extend the 245-day
period to 365 days and may extend the 120-day period to 180 days. If
the Secretary does not extend the time for issuing preliminary results,
the Secretary may extend the time for issuing final results from 120
days to 300 days.
(i) Possible cancellation or revision of suspension agreement. If
during an administrative review the Secretary determines or has reason
to believe that a signatory has violated a suspension agreement or that
the agreement no longer meets the requirements of section 704 or
section 734 of the Act (whichever is applicable), the Secretary will
take appropriate action under section 704(i) or section 734(i) of the
Act and Sec. 351.209. The Secretary may suspend the time limit in
paragraph (h) of this section while taking action under Sec. 351.209.
(j) Absorption of antidumping duties. (1) During any administrative
review covering all or part of a period falling between the first and
second or third and fourth anniversary of the publication of an
antidumping order under Sec. 351.211, or a determination under
Sec. 351.218(d) (sunset review), the Secretary, if requested within 30
days of the initiation of the review, will determine whether
antidumping duties have been absorbed by an exporter or producer
subject to the review if the subject merchandise is sold in the United
States through an importer which is affiliated with such exporter or
producer. The Secretary will notify the Commission of its findings
regarding such duty absorption.
(2) For transition orders defined in section 751(c)(6) of the Act,
the Secretary will apply paragraph (j)(1) of this section to any
administrative review initiated in 1996 or 1998.
(k) Administrative reviews of countervailing duty orders conducted
on an aggregate basis.
(1) Request for zero rate. Where the Secretary conducts an
administrative review of a countervailing duty on an aggregate basis
under section 777A(e)(2)(B) of the Act, the Secretary will consider and
review requests for individual assessment and cash deposit rates of
zero to the extent practicable. An exporter or producer that desires a
zero rate must submit:
(i) A certification by the exporter or producer that it received
zero or de minimis net countervailable subsidies during the period of
review;
(ii) If the exporter or producer received a countervailable
subsidy, calculations demonstrating that the amount of net
countervailable subsidies received was de minimis during the period of
review;
(iii) If the exporter is not the producer of the subject
merchandise, certifications from the suppliers and producers of the
subject merchandise that those persons received zero or de minimis net
countervailable subsidies during the period of the review; and
(iv) A certification from the government of the affected country
that the government did not provide the exporter or producer with more
than de minimis net countervailable subsidies during the period of
review.
(2) Application of country-wide subsidy rate. With the exception of
assessment and cash deposit rates of zero determined under paragraph
(k)(1) of this section, if, in the final results of an administrative
review under this section of a countervailing duty order, the Secretary
calculates a single country-wide subsidy rate under section
777A(e)(2)(B) of the Act, that rate will supersede, for cash deposit
purposes, all rates previously determined in the countervailing duty
proceeding in question.
Sec. 351.214 New shipper reviews under section 751(a)(2)(B) of the
Act.
(a) Introduction. The URAA established a new procedure by which so-
called ``new shippers'' can obtain their own individual dumping margin
or countervailable subsidy rate on an expedited basis. In general, a
new shipper is an exporter or producer that did not export, and is not
affiliated with an exporter or producer that did export, to the United
States during the period of investigation. This section contains rules
regarding requests for new shipper reviews and procedures for
conducting such reviews. In addition, this section contains rules
regarding requests for expedited reviews by noninvestigated exporters
in certain countervailing duty proceedings and procedures for
conducting such reviews.
(b) Request for new shipper review. A request for a new shipper
review under section 751(a)(2)(B) of the Act must contain the
following:
(1) If the person requesting the review is both the exporter and
producer of the merchandise, a certification that the person requesting
the review did not export subject merchandise to the United States (or,
in the case of a regional industry, did not export the subject
merchandise for sale in the region concerned) during the period of
investigation;
(2) If the person requesting the review is the exporter, but not
the producer, of the subject merchandise:
(i) The certification described in paragraph (b)(1) of this
section; and
(ii) A certification from the person that produced or supplied the
subject merchandise to the person requesting the review that that
producer or supplier did not export the subject
[[Page 7367]]
merchandise to the United States (or, in the case of a regional
industry, did not export the subject merchandise for sale in the region
concerned) during the period of investigation;
(3)(i) A certification that, since the investigation was initiated,
such exporter or producer has not been affiliated with any exporter or
producer who exported the subject merchandise to the United States (or
in the case of a regional industry, who exported the subject
merchandise for sale in the region concerned) during the period of
investigation, including those not individually examined during the
investigation;
(ii) In an antidumping proceeding involving imports from a
nonmarket economy country, a certification that the export activities
of such exporter or producer are not controlled by the central
government;
(4) Documentation establishing:
(i) The date on which subject merchandise of the exporter or
producer making the request was first entered, or withdrawn from
warehouse, for consumption, or, if the exporter or producer cannot
establish the date of first entry, the date on which the exporter or
producer first shipped the subject merchandise for export to the United
States;
(ii) The volume of that and subsequent shipments; and
(iii) The date of the first sale to an unaffiliated customer in the
United States; and
(5) In the case of a review of a countervailing duty order, a
certification that the exporter or producer has informed the government
of the exporting country that the government will be required to
provide a full response to the Department's questionnaire.
(c) Deadline for requesting review. An exporter or producer may
request a new shipper review within one year of the date referred to in
paragraph (b)(4)(i) of this section.
(d) Time for new shipper review. (1) In general. The Secretary will
initiate a new shipper review under this section in the calendar month
immediately following the anniversary month or the semiannual
anniversary month if the request for the review is made during the 6-
month period ending with the end of the anniversary month or the
semiannual anniversary month (whichever is applicable).
(2) Semiannual anniversary month. The semiannual anniversary month
is the calendar month which is 6 months after the anniversary month.
(3) Example. An order is published in January. The anniversary
month would be January, and the semiannual anniversary month would be
July. If the Secretary received a request for a new shipper review at
any time during the period February-July, the Secretary would initiate
a new shipper review in August. If the Secretary received a request for
a new shipper review at any time during the period August-January, the
Secretary would initiate a new shipper review in February.
(e) Suspension of liquidation; posting bond or security. When the
Secretary initiates a new shipper review under this section, the
Secretary will direct the Customs Service to suspend liquidation of any
unliquidated entries of the subject merchandise from the relevant
exporter or producer, and to allow, at the option of the importer, the
posting, until the completion of the review, of a bond or security in
lieu of a cash deposit for each entry of the subject merchandise.
(f) Rescission of new shipper review.
(1) Withdrawal of request for review. The Secretary may rescind a
new shipper review under this section, in whole or in part, if a party
that requested a review withdraws its request not later than 60 days
after the date of publication of notice of initiation of the requested
review.
(2) No shipments. The Secretary may rescind a new shipper review,
in whole or in part, if the Secretary concludes that:
(i) There have been no entries, exports, or sales, as appropriate,
during the normal period of review referred to in paragraph (g) of this
section; and
(ii) An expansion of the normal period of review to include
entries, exports, or sales would be likely to prevent the completion of
the review within the time limits set forth in paragraph (i) of this
section.
(3) Notice of Rescission. If the Secretary rescinds a new shipper
review (in whole or in part), the Secretary will publish in the Federal
Register notice of ``Rescission of Antidumping (Countervailing Duty)
New Shipper Review'' or, if appropriate, ``Partial Rescission of
Antidumping (Countervailing Duty) New Shipper Review.''
(g) Period of review. (1) Antidumping proceeding. In an antidumping
proceeding, a new shipper review under this section normally will
cover, as appropriate, entries, exports, or sales during the following
time periods:
(i) If the new shipper review was initiated in the month
immediately following the anniversary month, the twelve-month period
immediately preceding the anniversary month; or
(ii) If the new shipper review was initiated in the month
immediately following the semiannual anniversary month, the period of
review will be the six-month period immediately preceding the
semiannual anniversary month.
(2) Countervailing duty proceeding. In a countervailing duty
proceeding, the period of review for a new shipper review under this
section will be the same period as that specified in Sec. 351.213(e)(2)
for an administrative review.
(h) Procedures. The Secretary will conduct a new shipper review
under this section in accordance with Sec. 351.221.
(i) Time limits. (1) In general. Unless the time limit is waived
under paragraph (j)(3) of this section, the Secretary will issue
preliminary results of review (see Sec. 351.221(b)(4)) within 180 days
after the date on which the new shipper review was initiated, and final
results of review (see Sec. 351.221(b)(5)) within 90 days after the
date on which the preliminary results were issued.
(2) Exception. If the Secretary concludes that a new shipper review
is extraordinarily complicated, the Secretary may extend the 180-day
period to 300 days, and may extend the 90-day period to 150 days.
(j) Multiple reviews. Notwithstanding any other provision of this
subpart, if a review (or a request for a review) under Sec. 351.213
(administrative review), Sec. 351.214 (new shipper review),
Sec. 351.215 (expedited antidumping review), or Sec. 351.216 (changed
circumstances review) covers merchandise of an exporter or producer
subject to a review (or to a request for a review) under this section,
the Secretary may, after consulting with the exporter or producer:
(1) Rescind, in whole or in part, a review in progress under this
subpart;
(2) Decline to initiate, in whole or in part, a review under this
subpart; or
(3) Where the requesting party agrees in writing to waive the time
limits of paragraph (i) of this section, conduct concurrent reviews, in
which case all other provisions of this section will continue to apply
with respect to the exporter or producer.
(k) Expedited reviews in countervailing duty proceedings for
noninvestigated exporters. (1) Request for review. If, in a
countervailing duty investigation, the Secretary limited the number of
exporters or producers to be individually examined under section
777A(e)(2)(A) of the Act, an exporter that was not selected for
individual examination by the Secretary or that
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was not accepted as a voluntary respondent (see Sec. 351.204(d)) may
request a review under this section. A request must be accompanied by a
certification that:
(i) The requester exported the subject merchandise to the United
States during the period of investigation; and
(ii) The requester is not affiliated with an exporter or producer
that was individually examined in the investigation.
(2) Deadline for requesting review. An exporter must submit a
request for a review under paragraph (k)(1) of this section within 30
days of the date of publication in the Federal Register of the
countervailing duty order.
(3) Conduct of review. The Secretary will initiate and conduct a
review in accordance with the provisions of this section applicable to
new shipper reviews, except that the Secretary will not permit the
posting of a bond or security in lieu of a cash deposit under paragraph
(e) of this section.
Sec. 351.215 Expedited antidumping review and security in lieu of
estimated duty under section 736(c) of the Act.
(a) Introduction. Exporters and producers individually examined in
an investigation normally cannot obtain a review of entries until an
administrative review is requested. In addition, when an antidumping
order is published, importers normally must begin to make a cash
deposit of estimated antidumping duties upon the entry of subject
merchandise. Section 736(c), however, establishes a special procedure
under which exporters or producers may request an expedited review, and
bonds, rather than cash deposits, may continue to be posted for a
limited period of time if several criteria are satisfied. This section
contains rules regarding requests for expedited antidumping reviews and
the procedures applicable to such reviews.
(b) In general. If the Secretary determines that the criteria of
section 736(c)(1) of the Act are satisfied, the Secretary:
(1) May permit, for not more than 90 days after the date of
publication of an antidumping order, the posting of a bond or other
security instead of the deposit of estimated antidumping duties
required under section 736(a)(3) of the Act; and
(2) Will initiate an expedited antidumping review. Before making
such a determination, the Secretary will make business proprietary
information available, and will provide interested parties with an
opportunity to file written comments, in accordance with section
736(c)(4) of the Act.
(c) Procedures. The Secretary will conduct an expedited antidumping
review under this section in accordance with Sec. 351.221.
Sec. 351.216 Changed circumstances review under section 751(b) of the
Act.
(a) Introduction. Section 751(b) of the Act provides for what is
known as a ``changed circumstances'' review. This section contains
rules regarding requests for changed circumstances reviews and
procedures for conducting such reviews.
(b) Requests for changed circumstances review. At any time, an
interested party may request a changed circumstances review, under
section 751(b) of the Act, of an order or a suspended investigation.
(c) Limitation on changed circumstances review. Unless the
Secretary finds that good cause exists, the Secretary will not review a
final determination in an investigation (see section 705(a) or section
735(a) of the Act) or a suspended investigation (see section 704 or
section 734 of the Act) less than 24 months after the date of
publication of notice of the final determination or the suspension of
the investigation.
(d) Procedures. If the Secretary decides that changed circumstances
sufficient to warrant a review exist, the Secretary will conduct a
changed circumstances review in accordance with Sec. 351.221.
(e) Time limits. The Secretary will issue final results of review
(see Sec. 351.221(b)(5)) within 270 days after the date on which the
changed circumstances review is initiated.
Sec. 351.217 Reviews to implement results of subsidies enforcement
proceeding under section 751(g) of the Act.
(a) Introduction. Section 751(g) provides a mechanism for
incorporating into an ongoing countervailing duty proceeding the
results of certain subsidy-related disputes under the WTO Subsidies
Agreement. Where the United States, in the WTO, has successfully
challenged the ``nonactionable'' (e.g., noncountervailable) status of a
foreign subsidy, or where the United States has successfully challenged
a prohibited or actionable subsidy, the Secretary may conduct a review
to determine the effect, if any, of the successful outcome on an
existing countervailing duty order or suspended investigation. This
section contains rules regarding the initiation and conduct of reviews
under section 751(g).
(b) Violations of Article 8 of the Subsidies Agreement. If:
(1) The Secretary receives notice from the Trade Representative of
a violation of Article 8 of the Subsidies Agreement;
(2) The Secretary has reason to believe that merchandise subject to
an existing countervailing duty order or suspended investigation is
benefiting from the subsidy or subsidy program found to have been in
violation of Article 8; and
(3) No administrative review is in progress, the Secretary will
initiate an Article 8 violation review of the order or suspended
investigation to determine whether the subject merchandise benefits
from the subsidy or subsidy program found to have been in violation of
Article 8 of the Subsidies Agreement.
(c) Withdrawal of subsidy or imposition of countermeasures. If the
Trade Representative notifies the Secretary that, under Article 4 or
Article 7 of the Subsidies Agreement:
(1)(i)(A) The United States has imposed countermeasures; and
(B) Such countermeasures are based on the effects in the United
States of imports of merchandise that is the subject of a
countervailing duty order; or
(ii) A WTO member country has withdrawn a countervailable subsidy
provided with respect to merchandise subject to a countervailing duty
order, then
(2) the Secretary will initiate an Article 4/Article 7 review of
the order to determine if the amount of estimated duty to be deposited
should be adjusted or the order should be revoked.
(d) Procedures. The Secretary will conduct an Article 8 violation
review or an Article 4/Article 7 review under this section in
accordance with Sec. 351.221.
(e) Expedited reviews. The Secretary will conduct reviews under
this section on an expedited basis.
Sec. 351.218 Sunset reviews under section 751(c) of the Act.
(a) Introduction. The URAA added a new procedure, commonly referred
to as ``sunset reviews,'' in section 751(c) of the Act. In general, no
later than once every five years, the Secretary must determine whether
dumping or countervailable subsidies would be likely to continue or
resume if an order were revoked or a suspended investigation were
terminated. The Commission must conduct a similar review to determine
whether injury would be likely to continue or resume in the absence of
an order or suspended investigation. If the determinations under
section 751(c) of both the Secretary and the Commission are
affirmative, the order (or suspended investigation) remains in place.
If either determination is negative, the order will be revoked (or the
suspended investigation will be terminated). This
[[Page 7369]]
section contains rules regarding the procedures for sunset reviews.
(b) In general. The Secretary will conduct a sunset review, under
section 751(c) of the Act, of each antidumping and countervailing duty
order and suspended investigation, and, under section 752(b) or section
752(c) (whichever is applicable), will determine whether revocation of
an antidumping or countervailing duty order or termination of a
suspended investigation would be likely to lead to continuation or
recurrence of dumping or a countervailable subsidy.
(c) Notice of initiation of review; early initiation. No later than
30 days before the fifth anniversary date of an order or suspension of
an investigation (see section 751(c)(1) of the Act), the Secretary will
publish a notice of initiation of a sunset review (see section
751(c)(2) of the Act). The Secretary may publish a notice of initiation
at an earlier date if a domestic interested party demonstrates to the
Secretary's satisfaction that an early initiation would promote
administrative efficiency. However, if the Secretary determines that
the domestic interested party that requested early initiation is a
related party or an importer under section 771(4)(B) of the Act and
Sec. 351.203(e)(4), the Secretary may decline the request for early
initiation.
(d) Conduct of review. Upon receipt of responses to the notice of
initiation that the Secretary deems adequate to conduct a sunset
review, the Secretary will conduct a sunset review in accordance with
Sec. 351.221.
(e) Time limits. (1) In general. Unless the review has been
completed under section 751(c)(3) of the Act (no or inadequate
response) or, under section 751(c)(4)(B) of the Act, all respondent
interested parties waived their participation in the Secretary's sunset
review, the Secretary will issue final results of review within 240
days after the date on which the review was initiated. If the Secretary
concludes that the sunset review is extraordinarily complicated (see
section 751(c)(5)(C) of the Act), the Secretary may extend the period
for issuing final results by not more than 90 days.
(2) Transition orders. The time limits described in paragraph
(e)(1) of this section will not apply to a sunset review of a
transition order (see section 751(c)(6) of the Act).
Sec. 351.219 Reviews of countervailing duty orders in connection with
an investigation under section 753 of the Act.
(a) Introduction. Section 753 of the Act is a transition provision
for countervailing duty orders that were issued under section 303 of
the Act without an injury determination by the Commission. Under the
Subsidies Agreement, one country may not impose countervailing duties
on imports from another WTO Member without first making a determination
that such imports have caused injury to a domestic industry. Section
753 provides a mechanism for providing an injury test with respect to
those ``no injury'' orders under section 303 that apply to merchandise
from WTO Members. This section contains rules regarding (i) requests
for section 753 investigations by a domestic interested party; and (ii)
the procedures that the Department will follow in reviewing a
countervailing duty order and providing the Commission with advice
regarding the amount and nature of a countervailable subsidy.
(b) Notification of domestic interested parties. The Secretary will
notify directly domestic interested parties as soon as possible after
the opportunity arises for requesting an investigation by the
Commission under section 753 of the Act.
(c) Initiation and conduct of section 753 review. Where the
Secretary deems it necessary in order to provide to the Commission
information on the amount or nature of a countervailable subsidy (see
section 753(b)(2) of the Act), the Secretary may initiate a section 753
review of the countervailing duty order in question. The Secretary will
conduct a section 753 review in accordance with Sec. 351.221.
Sec. 351.220 Countervailing duty review at the direction of the
President under section 762 of the Act.
At the direction of the President or a designee, the Secretary will
conduct a review under section 762(a)(1) of the Act to determine if a
countervailable subsidy is being provided with respect to merchandise
subject to an understanding or other kind of quantitative restriction
agreement accepted under section 704(a)(2) or section 704(c)(3) of the
Act. The Secretary will conduct a review under this section in
accordance with Sec. 351.221. If the Secretary's final results of
review under this section and the Commission's final results of review
under section 762(a)(2) of the Act are both affirmative, the Secretary
will issue a countervailing duty order and order suspension of
liquidation in accordance with section 762(b) of the Act.
Sec. 351.221 Review procedures.
(a) Introduction. The procedures for reviews are similar to those
followed in investigations. This section details the procedures
applicable to reviews in general, as well as procedures that are unique
to certain types of reviews.
(b) In general. After receipt of a timely request for a review, or
on the Secretary's own initiative when appropriate, the Secretary will:
(1) Promptly publish in the Federal Register notice of initiation
of the review;
(2) Before or after publication of notice of initiation of the
review, send to appropriate interested parties or other persons (or, if
appropriate, a sample of interested parties or other persons)
questionnaires requesting factual information for the review;
(3) Conduct, if appropriate, a verification under Sec. 351.307;
(4) Issue preliminary results of review, based on the available
information, and publish in the Federal Register notice of the
preliminary results of review that include:
(i) The rates determined, if the review involved the determination
of rates; and
(ii) An invitation for argument consistent with Sec. 351.309;
(5) Issue final results of review and publish in the Federal
Register notice of the final results of review that include the rates
determined, if the review involved the determination of rates;
(6) If the type of review in question involves a determination as
to the amount of duties to be assessed, promptly after publication of
the notice of final results instruct the Customs Service to assess
antidumping duties or countervailing duties (whichever is applicable)
on the subject merchandise covered by the review, except as otherwise
provided in Sec. 351.106(c) with respect to de minimis duties; and
(7) If the review involves a revision to the cash deposit rates for
estimated antidumping duties or countervailing duties, instruct the
Customs Service to collect cash deposits at the revised rates on future
entries.
(c) Special rules. (1) Administrative reviews and new shipper
reviews. In an administrative review under section 751(a)(1) of the Act
and Sec. 351.213 and a new shipper review under section 751(a)(2)(B) of
the Act and Sec. 351.214 the Secretary:
(i) Will publish the notice of initiation of the review no later
than the last day of the month following the anniversary month or the
semiannual anniversary month (as the case may be); and
(ii) Normally will send questionnaires no later than 30 days after
the date of publication of the notice of initiation.
(2) Expedited antidumping review. In an expedited antidumping
review under section 736(c) of the Act and Sec. 351.215, the Secretary:
[[Page 7370]]
(i) Will include in the notice of initiation of the review an
invitation for argument consistent with Sec. 351.309, and a statement
that the Secretary is permitting the posting of a bond or other
security instead of a cash deposit of estimated antidumping duties;
(ii) Will instruct the Customs Service to accept, instead of the
cash deposit of estimated antidumping duties under section 736(a)(3) of
the Act, a bond for each entry of the subject merchandise entered, or
withdrawn from warehouse, for consumption on or after the date of
publication of the notice of initiation of the investigation and
through the date not later than 90 days after the date of publication
of the order; and
(iii) Will not issue preliminary results of review.
(3) Changed circumstances review. In a changed circumstances review
under section 751(b) of the Act and Sec. 351.216, the Secretary:
(i) Will include in the preliminary results of review and the final
results of review a description of any action the Secretary proposed
based on the preliminary or final results; and
(ii) May combine the notice of initiation of the review and the
preliminary results of review in a single notice if the Secretary
concludes that expedited action is warranted.
(4) Article 8 Violation review and Article 4/Article 7 review. In
an Article 8 Violation review or an Article 4/Article 7 review under
section 751(g) of the Act and Sec. 351.217, the Secretary:
(i) Will include in the notice of initiation of the review an
invitation for argument consistent with Sec. 351.309 and will notify
all parties to the proceeding at the time the Secretary initiates the
review;
(ii) Will not issue preliminary results of review; and
(iii) In the final results of review will indicate the amount, if
any, by which the estimated duty to be deposited should be adjusted,
and, in an Article 4/Article 7 review, any action, including
revocation, that the Secretary will take based on the final results.
(5) Sunset review. In a sunset review under section 751(c) of the
Act and Sec. 351.218:
(i) The notice of initiation of the review will contain a request
for the information described in section 751(c)(2) of the Act; and
(ii) The Secretary, without issuing preliminary results of review,
may issue final results of review under paragraphs (3) or (4) of
subsection 751(c) of the Act if the conditions of those paragraphs are
satisfied.
(6) Section 753 review. In a section 753 review under section 753
of the Act and Sec. 351.219, the Secretary:
(i) Will include in the notice of initiation of the review an
invitation for argument consistent with Sec. 351.309, and will notify
all parties to the proceeding at the time the Secretary initiates the
review; and
(ii) May decline to issue preliminary results of review.
(7) Countervailing duty review at the direction of the President.
In a countervailing duty review at the direction of the President under
section 762 of the Act and Sec. 351.220, the Secretary:
(i) Will include in the notice of initiation of the review a
description of the merchandise, the period under review, and a summary
of the available information which, if accurate, would support the
imposition of countervailing duties;
(ii) Notify the Commission of the initiation of the review and the
preliminary results of review;
(iii) Include in the preliminary results of review the
countervailable subsidy, if any, during the period of review and a
description of official changes in the subsidy programs made by the
government of the affected country that affect the estimated
countervailable subsidy; and
(iv) Include in the final results of review the counter vailable
subsidy, if any, during the period of review and a description of
official changes in the subsidy programs, made by the government of the
affected country not later than the date of publication of the notice
of preliminary results, that affect the estimated countervailable
subsidy.
Sec. 351.222 Revocation of orders; termination of suspended
investigations.
(a) Introduction. ``Revocation'' is a term of art that refers to
the end of an antidumping or countervailing proceeding in which an
order has been issued. ``Termination'' is the companion term for the
end of a proceeding in which the investigation was suspended due to the
acceptance of a suspension agreement. Generally, a revocation or
termination may occur only after the Department or the Commission have
conducted one or more reviews under section 751 of the Act. This
section contains rules regarding requirements for a revocation or
termination; and procedures that the Department will follow in
determining whether to revoke an order or terminate a suspended
investigation.
(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) It is not likely that those persons will in the future sell
the subject merchandise at less than normal value.
(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) It is not likely that those persons will in the future sell
the subject merchandise at less than normal value; and
(iii) 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 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.
(c) Revocation or termination based on absence of countervailable
subsidy. (1) The Secretary may revoke a countervailing duty order or
terminate a suspended countervailing duty investigation if the
Secretary concludes that:
(i) The government of the affected country has eliminated all
countervailable subsidies on the subject merchandise by abolishing for
the subject merchandise, for a period of at least three consecutive
years, all programs that the Secretary has found countervailable;
(ii) It is not likely that the government of the affected country
will in the future reinstate for the subject merchandise those programs
or substitute other countervailable programs; and
(iii) Exporters and producers of the subject merchandise are not
continuing to receive any net countervailable subsidy from an abolished
program referred to in paragraph (c)(1)(i) of this section.
(2) The Secretary may revoke a countervailing duty order or
terminate a suspended countervailing duty investigation if the
Secretary concludes that:
(i) All exporters and producers covered at the time of revocation
by the
[[Page 7371]]
order or the suspension agreement have not applied for or received any
net countervailable subsidy on the subject merchandise for a period of
at least five consecutive years; and
(ii) It is not likely that those persons will in the future apply
for or receive any net countervailable subsidy on the subject
merchandise from those programs the Secretary has found countervailable
in any proceeding involving the affected country or from other
countervailable programs.
(3) The Secretary may revoke a countervailing duty order in part if
the Secretary concludes that:
(i) One or more exporters or producers covered by the order have
not applied for or received any net countervailable subsidy on the
subject merchandise for a period of at least five consecutive years;
(ii) It is not likely that those persons will in the future apply
for or receive any net countervailable subsidy on the subject
merchandise from those programs the Secretary has found countervailable
in any proceeding involving the affected country or from other
countervailable programs; and
(iii) Except for exporters or producers that the Secretary
previously has determined have not received any net countervailable
subsidy on the subject merchandise, the exporters or producers agree in
writing to their immediate reinstatement 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,
has received any net countervailable subsidy on the subject
merchandise.
(d) Treatment of unreviewed intervening years. (1) In general. The
Secretary will not revoke an order or terminate a suspended
investigation under paragraphs (b) or (c) of this section unless the
Secretary has conducted a review under this subpart of the first and
third (or fifth) years of the three- and five-year consecutive time
periods referred to in those paragraphs. The Secretary need not have
conducted a review of an intervening year (see paragraph (d)(2) of this
section). However, except in the case of a revocation or termination
under paragraph (c)(1) of this section (government abolition of
countervailable subsidy programs), before revoking an order or
terminating a suspended investigation, the Secretary must be satisfied
that, during each of the three (or five) years, there were exports to
the United States in commercial quantities of the subject merchandise
to which a revocation or termination will apply.
(2) Intervening year. ``Intervening year'' means:
(i) The second year if revocation or termination is conditioned on
three consecutive years of no sales at less than normal value or
countervailable subsidies; or
(ii) The second, third, or fourth year if revocation or termination
is conditioned on five consecutive years of no countervailable
subsidies.
(e) Request for revocation or termination. (1) Antidumping
proceeding. During the third and subsequent annual anniversary months
of the publication of an antidumping order or suspension of an
antidumping investigation, an exporter or producer may request in
writing that the Secretary revoke an order or terminate a suspended
investigation under paragraph (b) of this section with regard to that
person if the person submits with the request:
(i) The person's certification that the person sold the subject
merchandise at not less than normal value during the period of review
described in Sec. 351.213(e)(1), and that in the future the person will
not sell the merchandise at less than normal value;
(ii) The person's certification that, during each of the three
consecutive years referred to in paragraph (b) of this section, the
person sold the subject merchandise to the United States in commercial
quantities; and
(iii) If applicable, the agreement regarding reinstatement in the
order or suspended investigation described in paragraph (b)(2)(iii) of
this section.
(2) Countervailing duty proceeding.
(i) During the third and subsequent annual anniversary months of
the publication of a countervailing duty order or suspension of a
countervailing duty investigation, the government of the affected
country may request in writing that the Secretary revoke an order or
terminate a suspended investigation under paragraph (c)(1) of this
section if the government submits with the request its certification
that it has satisfied, during the period of review described in
Sec. 351.213(e)(2), the requirements of paragraph (c)(1)(i) of this
section regarding the abolition of countervailable subsidy programs,
and that it will not reinstate for the subject merchandise those
programs or substitute other countervailable subsidy programs;
(ii) During the fifth and subsequent annual anniversary months of
the publication of a countervailing duty order or suspended
countervailing duty investigation, the government of the affected
country may request in writing that the Secretary revoke an order or
terminate a suspended investigation under paragraph (c)(2) of this
section if the government submits with the request:
(A) Certifications for all exporters and producers covered by the
order or suspension agreement that they have not applied for or
received any net countervailable subsidy on the subject merchandise for
a period of at least five consecutive years (see paragraph (c)(2)(i) of
this section);
(B) Those exporters' and producers' certifications that they will
not apply for or receive any net countervailable subsidy on the subject
merchandise from any program the Secretary has found countervailable in
any proceeding involving the affected country or from other
countervailable programs (see paragraph (c)(2)(ii) of this section);
and
(C) A certification from each exporter or producer that, during
each of the five consecutive years referred to in paragraph (c)(2) of
this section, that person sold the subject merchandise to the United
States in commercial quantities; or
(iii) During the fifth and subsequent annual anniversary months of
the publication of a countervailing duty order, an exporter or producer
may request in writing that the Secretary revoke the order with regard
to that person if the person submits with the request:
(A) A certification that the person has not applied for or received
any net countervailable subsidy on the subject merchandise for a period
of at least five consecutive years (see paragraph (c)(3)(i) of this
section), including calculations demonstrating the basis for the
conclusion that the person received zero or de minimis net
countervailable subsidies during the review period of the
administrative review in connection with which the person has submitted
the request for revocation;
(B) A certification that the person will not apply for or receive
any net countervailable subsidy on the subject merchandise from any
program the Secretary has found countervailable in any proceeding
involving the affected country or from other countervailable programs
(see paragraph (c)(3)(ii) of this section);
(C) The person's certification that, during each of the five
consecutive years referred to in paragraph (c)(3) of this section, the
person sold the subject merchandise to the United States in commercial
quantities; and
(D) The agreement described in paragraph (c)(3)(iii) of this
section (reinstatement in order).
(f) Procedures. (1) Upon receipt of a timely request for revocation
or
[[Page 7372]]
termination under paragraph (e) of this section, the Secretary will
consider the request as including a request for an administrative
review and will initiate and conduct a review under Sec. 351.213.
(2) In addition to the requirements of Sec. 351.221 regarding the
conduct of an administrative review, the Secretary will:
(i) Publish with the notice of initiation under Sec. 351.221(b)(1),
notice of ``Request for Revocation of Order (in part)'' or ``Request
for Termination of Suspended Investigation'' (whichever is applicable);
(ii) Conduct a verification under Sec. 351.307;
(iii) Include in the preliminary results of review under
Sec. 351.221(b)(4) the Secretary's decision whether there is a
reasonable basis to believe that the requirements for revocation or
termination are met;
(iv) If the Secretary decides that there is a reasonable basis to
believe that the requirements for revocation or termination are met,
publish with the notice of preliminary results of review under
Sec. 351.221(b)(4) notice of ``Intent to Revoke Order (in Part)'' or
``Intent to Terminate Suspended Investigation'' (whichever is
applicable);
(v) Include in the final results of review under Sec. 351.221(b)(5)
the Secretary's final decision whether the requirements for revocation
or termination are met; and
(vi) If the Secretary determines that the requirements for
revocation or termination are met, publish with the notice of final
results of review under Sec. 351.221(b)(5) notice of ``Revocation of
Order (in Part)'' or ``Termination of Suspended Investigation''
(whichever is applicable).
(3) If the Secretary revokes an order in whole or in part, the
Secretary will order the suspension of liquidation terminated for the
merchandise covered by the revocation on the first day after the period
under review, and will instruct the Customs Service to release any cash
deposit or bond.
(g) Revocation or termination based on changed circumstances. (1)
The Secretary may revoke an order, in whole or in part, or terminate a
suspended investigation if the Secretary concludes that:
(i) Producers accounting for substantially all of the production of
the domestic like product to which the order (or the part of the order
to be revoked) or suspended investigation pertains have expressed a
lack of interest in the order, in whole or in part, or suspended
investigation (see section 782(h) of the Act); or
(ii) Other changed circumstances sufficient to warrant revocation
or termination exist.
(2) If at any time the Secretary concludes from the available
information that changed circumstances sufficient to warrant revocation
or termination may exist, the Secretary will conduct a changed
circumstances review under Sec. 351.216.
(3) In addition to the requirements of Sec. 351.221, the Secretary
will:
(i) Publish with the notice of initiation (see Sec. 353.221(b)(1),
notice of ``Consideration of Revocation of Order (in Part)'' or
``Consideration of Termination of Suspended Investigation'' (whichever
is applicable);
(ii) If the Secretary's conclusion regarding the possible existence
of changed circumstances (see paragraph (g)(2) of this section), is not
based on a request, the Secretary, not later than the date of
publication of the notice of ``Consideration of Revocation of Order (in
Part)'' or ``Consideration of Termination of Suspended Investigation''
(whichever is applicable) (see paragraph (g)(3)(i) of this section),
will serve written notice of the consideration of revocation or
termination on each interested party listed on the Department's service
list and on any other person that the Secretary has reason to believe
is a domestic interested party;
(iii) Conduct a verification, if appropriate, under Sec. 351.307;
(iv) Include in the preliminary results of review, under
Sec. 351.221(b)(4), the Secretary's decision whether there is a
reasonable basis to believe that changed circumstances warrant
revocation or termination;
(v) If the Secretary's preliminary decision is that changed
circumstances warrant revocation or termination, publish with the
notice of preliminary results of review, under Sec. 351.221(b)(4),
notice of ``Intent to Revoke Order (in Part)'' or ``Intent to Terminate
Suspended Investigation'' (whichever is applicable);
(vi) Include in the final results of review, under
Sec. 351.221(b)(5), the Secretary's final decision whether changed
circumstances warrant revocation or termination; and
(vii) If the Secretary determines that changed circumstances
warrant revocation or termination, publish with the notice of final
results of review, under Sec. 351.221(b)(5), notice of ``Revocation of
Order (in Part)'' or ``Termination of Suspended Investigation''
(whichever is applicable).
(4) If the Secretary revokes an order, in whole or in part, under
paragraph (g) of this section, the Secretary will order the suspension
of liquidation ended for the merchandise covered by the revocation on
the effective date of the notice of revocation, and will instruct the
Customs Service to release any cash deposit or bond.
(h) Revocation or termination based on injury reconsideration. If
the Commission determines in a changed circumstances review under
section 751(b)(2) of the Act that the revocation of an order or
termination of a suspended investigation is not likely to lead to
continuation or recurrence of material injury, the Secretary will
revoke, in whole or in part, the order or terminate the suspended
investigation, and will publish in the Federal Register notice of
``Revocation of Order (in Part)'' or ``Termination of Suspended
Investigation'' (whichever is applicable).
(i) Revocation or termination based on sunset review. (1) In
general. In the case of a sunset review under Sec. 351.218, the
Secretary will revoke an order or terminate a suspended investigation,
unless:
(i) The Secretary makes a determination that revocation or
termination would be likely to lead to continuation or recurrence of a
countervailable subsidy or dumping (see section 752(b) and section
752(c) of the Act); and
(ii) The Commission makes a determination that revocation or
termination would be likely to lead to continuation or recurrence of
material injury (see section 752(a) of the Act).
(2) Exception for transition orders. Before January 1, 2000, the
Secretary will not revoke a transition order (see section 751(c)(6) of
the Act) as the result of a sunset review under Sec. 351.218.
(j) Revocation of countervailing duty order based on Commission
negative determination under section 753 of the Act. Upon being
notified by the Commission that:
(1) The Commission has determined that an industry in the United
States is not likely to be materially injured if the countervailing
duty order in question is revoked (see section 753(a)(1) of the Act);
or
(2) A domestic interested party did not make a timely request for
an investigation under section 753(a) of the Act (see section 753(a)(3)
of the Act), the Secretary will revoke the countervailing duty order in
question, and will order the refund, with interest, of any estimated
countervailing duties collected during the period liquidation was
suspended under section 753(a)(4) of the Act.
(k) Revocation based on Article 4/Article 7 review. (1) In general.
The Secretary may revoke a countervailing
[[Page 7373]]
duty order, in whole or in part, following an Article 4/Article 7
review under Sec. 351.217(c), due to the imposition of countermeasures
by the United States or the withdrawal of a countervailable subsidy by
a WTO member country (see section 751(g)(2) of the Act).
(2) Additional Requirements. In addition to the requirements of
Sec. 351.221, if the Secretary determines to revoke an order as the
result of an Article 4/Article 7 review, the Secretary will:
(i) Conduct a verification, if appropriate, under Sec. 351.307;
(ii) Include in the final results of review, under
Sec. 351.221(b)(5), the Secretary's final decision whether the order
should be revoked;
(iii) If the Secretary's final decision is that the order should be
revoked:
(A) Determine the effective date of the revocation;
(B) Publish with the notice of final results of review, under
Sec. 351.221(b)(5), a notice of ``Revocation of Order (in Part),'' that
will include the effective date of the revocation; and
(C) Order any suspension of liquidation ended for merchandise
covered by the revocation that was entered on or after the effective
date of the revocation, and instruct the Customs Service to release any
cash deposit or bond.
(l) Revocation under section 129. The Secretary may revoke an order
under section 129 of the URAA (implementation of WTO dispute
settlement).
(m) Transition rule. In the case of time periods that, under
section 291(a)(2) of the URAA, are subject to review under the
provisions of the Act prior to its amendment by the URAA, and for
purposes of determining whether the three- or five-year requirements of
paragraphs (b) and (c) of this section are satisfied, the following
rules will apply:
(1) Antidumping proceedings. The Secretary will consider sales at
not less than foreign market value to be equivalent to sales at not
less than normal value.
(2) Countervailing duty proceedings. The Secretary will consider
the absence of a subsidy, as defined in section 771(5) of the Act prior
to its amendment by the URAA, to be equivalent to the absence of a
countervailable subsidy, as defined in section 771(5) of the Act, as
amended by the URAA.
(n) Cross-reference. For the treatment in a subsequent
investigation of business proprietary information submitted to the
Secretary in connection with a changed circumstances review under
Sec. 351.216 or a sunset review under Sec. 351.218 that results in the
revocation of an order (or termination of a suspended investigation)
see section 777(b)(3) of the Act.
Sec. 351.223 Procedures for initiation of downstream product
monitoring.
(a) Introduction. Section 780 of the Act establishes a mechanism
for monitoring imports of ``downstream products.'' In general, section
780 is aimed at situations where, following the issuance of an
antidumping or countervailing duty order on a product that is used as a
component in another product, exports to the United States of that
other (or ``downstream'') product increase. Although the Department is
responsible for determining whether trade in the downstream product
should be monitored, the Commission is responsible for conducting the
actual monitoring. The Commission must report the results of its
monitoring to the Department, and the Department must consider the
reports in determining whether to self-initiate an antidumping or
countervailing duty investigation on the downstream product. This
section contains rules regarding applications for the initiation of
downstream product monitoring and decisions regarding such
applications.
(b) Contents of application. An application to designate a
downstream product for monitoring under section 780 of the Act must
contain the following information, to the extent reasonably available
to the applicant:
(1) The name and address of the person requesting the monitoring
and a description of the article it produces which is the basis for
filing its application;
(2) A detailed description of the downstream product in question;
(3) A detailed description of the component product that is
incorporated into the downstream product, including the value of the
component part in relation to the value of the downstream product, and
the extent to which the component part has been substantially
transformed as a result of its incorporation into the downstream
product;
(4) The name of the country of production of both the downstream
and component products and the name of any intermediate country from
which the merchandise is imported;
(5) The name and address of all known producers of component parts
and downstream products in the relevant countries and a detailed
description of any relationship between such producers;
(6) Whether the component part is already subject to monitoring to
aid in the enforcement of a bilateral arrangement within the meaning of
section 804 of the Trade and Tariff Act of 1984;
(7) A list of all antidumping or countervailing duty investigations
that have been suspended, or antidumping or countervailing duty orders
that have been issued, on merchandise that is related to the component
part and that is manufactured in the same foreign country in which the
component part is manufactured;
(8) A list of all antidumping or countervailing duty investigations
that have been suspended, or antidumping or countervailing duty orders
that have been issued, on merchandise that is manufactured or exported
by the manufacturer or exporter of the component part and that is
similar in description and use to the component part; and
(9) The reasons for suspecting that the imposition of antidumping
or countervailing duties has resulted in a diversion of exports of the
component part into increased production and exportation to the United
States of the downstream product.
(c) Determination of sufficiency of application. Within 14 days
after an application is filed under paragraph (b) of this section, the
Secretary will rule on the sufficiency of the application by making the
determinations described in section 780(a)(2) of the Act.
(d) Notice of Determination. The Secretary will publish in the
Federal Register notice of each affirmative or negative ``monitoring''
determination made under section 780(a)(2) of the Act, and if the
determination under section 780(a)(2)(A) of the Act and a determination
made under any clause of section 780(a)(2)(B) of the Act are
affirmative, will transmit to the Commission a copy of the
determination and the application. The Secretary will make available to
the Commission, and to its employees directly involved in the
monitoring, the information upon which the Secretary based the
initiation.
Sec. 351.224 Disclosure of calculations and procedures for the
correction of ministerial errors.
(a) Introduction. In the interests of transparency, the Department
has long had a practice of providing parties with the details of its
antidumping and countervailing duty calculations. This practice has
come to be referred to as a ``disclosure.'' This section contains rules
relating to requests for disclosure and procedures for correcting
ministerial errors.
(b) Disclosure. The Secretary will disclose to a party to the
proceeding
[[Page 7374]]
calculations performed, if any, in connection with a preliminary
determination under section 703(b) or section 733(b) of the Act, a
final determination under section 705(a) or section 735(a) of the Act,
and a final results of a review under section 736(c), section 751, or
section 753 of the Act, normally within five days after the date of any
public announcement or, if there is no public announcement of, within
five days after the date of publication of, the preliminary
determination, final determination, or final results of review
(whichever is applicable). The Secretary will disclose to a party to
the proceeding calculation performed, if any, in connection with a
preliminary results of review under section 751 or section 753 of the
Act, normally not later than ten days after the date of the public
announcement of, or, if there is no public announcement, within five
days after the date of publication of, the preliminary results of
review.
(c) Comments regarding ministerial errors. (1) In general. A party
to the proceeding to whom the Secretary has disclosed calculations
performed in connection with a preliminary determination may submit
comments concerning a significant ministerial error in such
calculations. A party to the proceeding to whom the Secretary has
disclosed calculations performed in connection with a final
determination or the final results of a review may submit comments
concerning any ministerial error in such calculations. The Secretary
will not consider comments concerning ministerial errors made in the
preliminary results of a review.
(2) Time limits for submitting comments. A party to the proceeding
must file comments concerning ministerial errors within five days after
the earlier of (i) the date on which the Secretary released disclosure
documents to that party, or (ii) the date on which the Secretary held a
disclosure meeting with that party.
(3) Replies to comments. Replies to comments submitted under
paragraph (c)(1) of this section must be filed within five days after
the date on which the comments were filed with the Secretary. The
Secretary will not consider replies to comments submitted in connection
with a preliminary determination.
(4) Extensions. A party to the proceeding may request an extension
of the time limit for filing comments concerning a ministerial error in
a final determination or final results of review under section
351.302(c) within three days after the date of any public announcement,
or, if there is no public announcement, within five days after the date
of publication of the final determination or final results of review,
as applicable. The Secretary will not extend the time limit for filing
comments concerning a significant ministerial error in a preliminary
determination.
(d) Contents of comments and replies. Comments filed under
paragraph (c)(1) of this section must explain the alleged ministerial
error by reference to applicable evidence in the official record, and
must present what, in the party's view, is the appropriate correction.
In addition, comments concerning a preliminary determination must
demonstrate how the alleged ministerial error is significant (see
paragraph (g) of this section, by illustrating the effect on individual
weighted-average dumping margin or countervailable subsidy rate, the
all-others rate, or the country-wide subsidy rate (whichever is
applicable). Replies to any comments must be limited to issues raised
in such comments.
(e) Corrections. The Secretary will analyze any comments received
and, if appropriate, correct any significant ministerial error by
amending the preliminary determination, or correct any ministerial
error by amending the final determination or the final results of
review (whichever is applicable). Where practicable, the Secretary will
announce publicly the issuance of a correction notice, and normally
will do so within 30 days after the date of public announcement, or, if
there is no public announcement, within 30 days after the date of
publication, of the preliminary determination, final determination, or
final results of review (whichever is applicable). In addition, the
Secretary will publish notice of such corrections in the Federal
Register. A correction notice will not alter the anniversary month of
an order or suspended investigation for purposes of requesting an
administrative review (see Sec. 351.213) or a new shipper review (see
Sec. 351.214) or initiating a sunset review (see Sec. 351.218).
(f) Definition of ``ministerial error.'' Under this section,
ministerial error means an error in addition, subtraction, or other
arithmetic function, clerical error resulting from inaccurate copying,
duplication, or the like, and any other similar type of unintentional
error which the Secretary considers ministerial.
(g) Definition of ``significant ministerial error.'' Under this
section, significant ministerial error means a ministerial error (see
paragraph (f) of this section), the correction of which, either singly
or in combination with other errors:
(1) Would result in a change of at least five absolute percentage
points in, but not less than 25 percent of, the weighted-average
dumping margin or the countervailable subsidy rate (whichever is
applicable) calculated in the original (erroneous) preliminary
determination; or
(2) Would result in a difference between a weighted-average dumping
margin or countervailable subsidy rate (whichever is applicable) of
zero (or de minimis) and a weighted-average dumping margin or
countervailable subsidy rate of greater than de minimis, or vice versa.
Sec. 351.225 Scope ruling.
(a) Introduction. Issues arise as to whether a particular product
is included within the scope of an antidumping or countervailing duty
order or a suspended investigation. Such issues can arise because the
descriptions of subject merchandise contained in the Department's
determinations must be written in general terms. At other times, a
domestic interested party may allege that changes to an imported
product or the place where the imported product is assembled
constitutes circumvention under section 781 of the Act. When such
issues arise, the Department issues ``scope rulings'' that clarify the
scope of an order or suspended investigation with respect to particular
products. This section contains rules regarding scope rulings, requests
for scope rulings, procedures for scope inquiries, and standards used
in determining whether a product is within the scope of an order or
suspended investigation.
(b) Self-initiation. If the Secretary determines from available
information that an inquiry is warranted to determine whether a product
is included within the scope of an antidumping or countervailing duty
order or a suspended investigation, the Secretary will initiate an
inquiry, and will notify all parties on the Department's scope service
list of its initiation of a scope inquiry.
(c) By application. Any interested party may apply for a ruling as
to whether a particular product is within the scope of an order or a
suspended investigation. The application must be served upon all
parties on the scope service list described in paragraph (n) of this
section, and must contain the following, to the extent reasonably
available to the interested party:
(1) A detailed description of the product, including its technical
characteristics and uses, and its current U.S. Tariff Classification
number;
(2) A statement of the interested party's position as to whether
the
[[Page 7375]]
product is within the scope of an order or a suspended investigation,
including:
(i) A summary of the reasons for this conclusion,
(ii) Citations to any applicable statutory authority, and
(iii) Any factual information supporting this position, including
excerpts from portions of the Secretary's or the Commission's
investigation, and relevant prior scope rulings.
(d) Ruling based upon the application. If the Secretary can
determine, based solely upon the application and the descriptions of
the merchandise referred to in paragraph (k)(1) of this section,
whether a product is included within the scope of an order or a
suspended investigation, the Secretary will issue a final ruling as to
whether the product is included within the order or suspended
investigation. The Secretary will notify all interested parties on the
Department's scope service list (see paragraph (n) of this section) of
the final ruling.
(e) Ruling where further inquiry is warranted. If the Secretary
finds that the issue of whether a product is included within the scope
of an order or a suspended investigation cannot be determined based
solely upon the application and the descriptions of the merchandise
referred to in paragraph (k)(1) of this section, the Secretary will
notify by mail all parties on the Department's scope service list of
the initiation of a scope inquiry.
(f) Notice and procedure. (1) Notice of the initiation of a scope
inquiry issued under paragraph (b) or (e) of this section will include:
(i) A description of the product that is the subject of the scope
inquiry; and
(ii) An explanation of the reasons for the Secretary's decision to
initiate a scope inquiry;
(iii) A schedule for submission of comments that normally will
allow interested parties 20 days in which to provide comments on, and
supporting factual information relating to, the inquiry, and 10 days in
which to provide any rebuttal to such comments.
(2) The Secretary may issue questionnaires and verify submissions
received, where appropriate.
(3) Whenever the Secretary finds that a scope inquiry presents an
issue of significant difficulty, the Secretary will issue a preliminary
scope ruling, based upon the available information at the time, as to
whether there is a reasonable basis to believe or suspect that the
product subject to a scope inquiry is included within the order or
suspended investigation. The Secretary will notify all parties on the
Department's scope service list (see paragraph (n) of this section) of
the preliminary scope ruling, and will invite comment. Unless otherwise
specified, interested parties will have within twenty days from the
date of receipt of the notification in which to submit comments, and
ten days thereafter in which to submit rebuttal comments.
(4) The Secretary will issue a final ruling as to whether the
product which is the subject of the scope inquiry is included within
the order or suspended investigation, including an explanation of the
factual and legal conclusions on which the final ruling is based. The
Secretary will notify all parties on the Department's scope service
list (see paragraph (n) of this section) of the final scope ruling.
(5) The Secretary will issue a final ruling under paragraph (k) of
this section (other scope rulings) normally within 120 days of the
initiation of the inquiry under this section. The Secretary will issue
a final ruling under paragraph (g), (h), (i), or (j) of this section
(circumvention rulings under section 781 of the Act) normally within
300 days from the date of the initiation of the scope inquiry.
(6) When an administrative review under Sec. 351.213, a new shipper
review under Sec. 351.214, or an expedited antidumping review under
Sec. 351.215 is in progress at the time the Secretary provides notice
of the initiation of a scope inquiry (see paragraph (e)(1) of this
section), the Secretary may conduct the scope inquiry in conjunction
with that review.
(7)(i) The Secretary will notify the Commission in writing of the
proposed inclusion of products in an order prior to issuing a final
ruling under paragraph (f)(4) of this section based on a determination
under:
(A) Section 781(a) of the Act with respect to merchandise completed
or assembled in the United States (other than minor completion or
assembly);
(B) Section 781(b) of the Act with respect to merchandise completed
or assembled in other foreign countries; or
(C) Section 781(d) of the Act with respect to later-developed
products which incorporate a significant technological advance or
significant alteration of an earlier product.
(ii) If the Secretary notifies the Commission under paragraph
(f)(7)(i) of this section, upon the written request of the Commission,
the Secretary will consult with the Commission regarding the proposed
inclusion, and any such consultation will be completed within 15 days
after the date of such request. If, after consultation, the Commission
believes that a significant injury issue is presented by the proposed
inclusion of a product within an order, the Commission may provide
written advice to the Secretary as to whether the inclusion would be
inconsistent with the affirmative injury determination of the
Commission on which the order is based.
(g) Products completed or assembled in the United States. Under
section 781(a) of the Act, the Secretary may include within the scope
of an antidumping or countervailing duty order imported parts or
components referred to in section 781(a)(1)(B) of the Act that are used
in the completion or assembly of the merchandise in the United States
at any time such order is in effect. In making this determination, the
Secretary will not consider any single factor of section 781(a)(2) of
the Act to be controlling. In determining the value of parts or
components purchased from an affiliated person under section
781(a)(1)(D) of the Act, or of processing performed by an affiliated
person under section 781(a)(2)(E) of the Act, the Secretary may
determine the value of the part or component on the basis of the cost
of producing the part of component under section 773(f)(3) of the Act.
(h) Products completed or assembled in other foreign countries.
Under section 781(b) of the Act, the Secretary may include within the
scope of an antidumping or countervailing duty order, at any time such
order is in effect, imported merchandise completed or assembled in a
foreign country other than the country to which the order applies. In
making this determination, the Secretary will not consider any single
factor of section 781(b)(2) of the Act to be controlling. In
determining the value of parts or components purchased from an
affiliated person under section 781(b)(1)(D) of the Act, or of
processing performed by an affiliated person under section 781(b)(2)(E)
of the Act, the Secretary will apply the major input rule under section
773(f)(3) of the Act.
(i) Minor alterations of merchandise. Under section 781(c) of the
Act, the Secretary may include within the scope of an antidumping or
countervailing duty order articles altered in form or appearance in
minor respects.
(j) Later-developed merchandise. In determining whether later-
developed merchandise is within the scope of an antidumping or
countervailing duty order, the Secretary will apply section 781(d) of
the Act.
(k) Other scope determinations. With respect to those scope
determinations that are not covered under paragraphs (g) through (j) of
this section, in considering whether a particular product is included
within the scope of
[[Page 7376]]
an order or a suspended investigation, the Secretary will take into
account the following:
(1) The descriptions of the merchandise contained in the petition,
the initial investigation, and the determinations of the Secretary
(including prior scope determinations) and the Commission.
(2) When the above criteria are not dispositive, the Secretary will
further consider:
(i) The physical characteristics of the product;
(ii) The expectations of the ultimate purchasers;
(iii) The ultimate use of the product;
(iv) The channels of trade in which the product is sold; and
(v) The manner in which the product is advertised and displayed.
(l) Suspension of liquidation. (1) When the Secretary conducts a
scope inquiry under paragraph (b) or (e) of this section, and the
product in question is already subject to suspension of liquidation,
that suspension of liquidation will be continued, pending a preliminary
or a final scope ruling, at the cash deposit rate that would apply if
the product were ruled to be included within the scope of the order.
(2) If the Secretary issues a preliminary scope ruling under
paragraph (f)(3) of this section to the effect that the product in
question is included within the scope of the order, any suspension of
liquidation described in paragraph (l)(1) of this section will
continue. If liquidation has not been suspended, the Secretary will
instruct the Customs Service to suspend liquidation and to require a
cash deposit of estimated duties, at the applicable rate, for each
entry of the product entered, or withdrawn from warehouse, for
consumption on or after the date of the preliminary scope ruling. If
the Secretary issues a preliminary scope ruling to the effect that the
product in question is not included within the scope of the order, the
Secretary will order any suspension of liquidation on the product
ended, and will instruct the Customs Service to refund any cash
deposits or release any bonds relating to that product.
(3) If the Secretary issues a final scope ruling, under either
paragraph (d) or (f)(4) of this section, to the effect that the product
in question is included within the scope of the order, any suspension
of liquidation under paragraph (l)(1) or (l)(2) of this section will
continue. Where there has been no suspension of liquidation, the
Secretary will instruct the Customs Service to suspend liquidation and
to require a cash deposit of estimated duties, at the applicable rate,
for each entry of the product entered, or withdrawn from warehouse, for
consumption on or after the date of the final scope ruling. If the
Secretary's final scope ruling is to the effect that the product in
question is not included within the scope of the order, the Secretary
will order any suspension of liquidation on the subject product ended
and will instruct the Customs Service to refund any cash deposits or
release any bonds relating to this product.
(4) If, within 90 days of the initiation of a review of an order or
a suspended investigation under this subpart, the Secretary issues a
final ruling that a product is included within the scope of the order
or suspended investigation that is the subject of the review, the
Secretary, where practicable, will include sales of that product for
purposes of the review and will seek information regarding such sales.
If the Secretary issues a final ruling after 90 days of the initiation
of the review, the Secretary may consider sales of the product for
purposes of the review on the basis of non-adverse facts available.
However, notwithstanding the pendency of a scope inquiry, if the
Secretary considers it appropriate, the Secretary may request
information concerning the product that is the subject of the scope
inquiry for purposes of a review under this subpart.
(m) Orders covering identical products. Except for a scope inquiry
and a scope ruling that involves section 781(a) or section 781(b) of
the Act (assembly of parts or components in the United States or in a
third country), if more than one order or suspended investigation cover
the same subject merchandise, and if the Secretary considers it
appropriate, the Secretary may conduct a single inquiry and issue a
single scope ruling that applies to all such orders or suspended
investigations.
(n) Service of applications; scope service list. The requirements
of Sec. 351.303(f) apply to this section, except that an application
for a scope ruling must be served on all parties on the Department's
scope service list. For purposes of this section, the ``scope service
list'' will include all parties that have participated in any segment
of the proceeding. If an application for a scope ruling in one
proceeding results in a single inquiry that will apply to another
proceeding (see paragraph (m) of this section), the Secretary will
notify parties on the scope service list of the other proceeding of the
application for a scope ruling.
(o) Publication of list of scope rulings. On a quarterly basis, the
Secretary will publish in the Federal Register a list of scope rulings
issued within the last three months. This list will include the case
name, reference number, and a brief description of the ruling.
Subpart C--Information and Argument
Sec. 351.301 Time limits for submission of factual information.
(a) Introduction. The Department obtains most of its factual
information in antidumping and countervailing duty proceedings from
submissions made by interested parties during the course of the
proceeding. This section sets forth the time limits for submitting such
factual information, including information in questionnaire responses,
publicly available information to value factors in nonmarket economy
cases, allegations concerning market viability, allegations of sales at
prices below the cost of production, countervailable subsidy
allegations, and upstream subsidy allegations. Section 351.302 sets
forth the procedures for requesting an extension of such time limits.
Section 351.303 contains the procedural rules regarding filing, format,
translation, service, and certification of documents.
(b) Time limits in general. Except as provided in paragraphs (c)
and (d) of this section and Sec. 351.302, a submission of factual
information is due no later than:
(1) For a final determination in a countervailing duty
investigation or an antidumping investigation, seven days before the
date on which the verification of any person is scheduled to commence,
except that factual information requested by the verifying officials
from a person will be due no later than seven days after the date on
which the verification of that person is completed;
(2) For the final results of an administrative review, 140 days
after the last day of the anniversary month, except that factual
information requested by the verifying officials from a person will be
due no later than seven days after the date on which the verification
of that person is completed;
(3) For the final results of a changed circumstances review, sunset
review, or section 762 review, 140 days after the date of publication
of notice of initiation of the review, except that factual information
requested by the verifying officials from a person will be due no later
than seven days after the date on which the verification of that person
is completed;
(4) For the final results of a new shipper review, 100 days after
the date of publication of notice of initiation of the review, except
that factual
[[Page 7377]]
information requested by the verifying officials from a person will be
due no later than seven days after the date on which the verification
of that person is completed; and
(5) For the final results of an expedited antidumping review,
Article 8 violation review, Article 4/Article 7 review, or section 753
review, a date specified by the Secretary.
(c) Time limits for certain submissions. (1) Rebuttal,
clarification, or correction of factual information. Any interested
party may submit factual information to rebut, clarify, or correct
factual information submitted by any other interested party at any time
prior to the deadline provided in this section for submission of such
factual information or, if later, 10 days after the date such factual
information is served on the interested party or, if appropriate, made
available under APO to the authorized applicant.
(2) Questionnaire responses and other submissions on request. (i)
Notwithstanding paragraph (b) of this section, the Secretary may
request any person to submit factual information at any time during a
proceeding.
(ii) In the Secretary's written request to an interested party for
a response to a questionnaire or for other factual information, the
Secretary will specify: the time limit for the response; the
information to be provided; the form and manner in which the interested
party must submit the information; and that failure to submit requested
information in the requested form and manner by the date specified may
result in use of the facts available under section 776 of the Act and
Sec. 351.308.
(iii) Interested parties will have at least 30 days from the date
of receipt to respond to the full initial questionnaire. The time limit
for response to individual sections of the questionnaire, if the
Secretary requests a separate response to such sections, may be less
than the 30 days allotted for response to the full questionnaire. The
date of receipt will be seven days from the date on which the initial
questionnaire was transmitted.
(iv) A notification by an interested party, under section 782(c)(1)
of the Act, of difficulties in submitting information in response to a
questionnaire issued by the Secretary is due within 14 days after the
date of receipt of the initial questionnaire.
(v) A respondent interested party may request in writing that the
Secretary conduct a questionnaire presentation. The Secretary may
conduct a questionnaire presentation if the Secretary notifies the
government of the affected country and that government does not object.
(3) Submission of publicly available information to value factors
under Sec. 351.408(c). Notwithstanding paragraph (b) of this section,
interested parties may submit publicly available information to value
factors under Sec. 351.408(c) within:
(i) For a final determination in an antidumping investigation, 40
days after the date of publication of the preliminary determination;
(ii) For the final results of an administrative review, new shipper
review, or changed circumstances review, 20 days after the date of
publication of the preliminary results of review; and
(iii) For the final results of an expedited antidumping review, a
date specified by the Secretary.
(d) Time limits for certain allegations. (1) Market viability and
the basis for determining a price-based normal value. In an antidumping
investigation or administrative review, allegations regarding market
viability, including the exceptions in Sec. 351.404(c)(2), are due,
with all supporting factual information, within 40 days after the date
on which the initial questionnaire was transmitted, unless the
Secretary alters this time limit.
(2) Sales at prices below the cost of production. An allegation of
sales at prices below the cost of production made by the petitioner or
other domestic interested party is due within:
(i) In an antidumping investigation,
(A) On a country-wide basis, 20 days after the date on which the
initial questionnaire was transmitted to any person, unless the
Secretary alters this time limit; or
(B) On a company-specific basis, 20 days after a respondent
interested party files the response to the relevant section of the
questionnaire, unless the relevant questionnaire response is, in the
Secretary's view, incomplete, in which case the Secretary will
determine the time limit;
(ii) In an administrative review, new shipper review, or changed
circumstances review, on a company-specific basis, 20 days after a
respondent interested party files the response to the relevant section
of the questionnaire, unless the relevant questionnaire response is, in
the Secretary's view, incomplete, in which case the Secretary will
determine the time limit; or
(iii) In an expedited antidumping review, on a company-specific
basis, 10 days after the date of publication of the notice of
initiation of the review.
(3) Countervailable subsidy; upstream subsidy. (i) In general. A
countervailable subsidy allegation made by the petitioner or other
domestic interested party is due no later than:
(A) In a countervailing duty investigation, 40 days before the
scheduled date of the preliminary determination; or
(B) In an administrative review, new shipper review, or changed
circumstances review, 20 days after all responses to the initial
questionnaire are filed with the Department, unless the Secretary
alters this time limit.
(ii) Exception for upstream subsidy allegation in an investigation.
In a countervailing duty investigation, an allegation of upstream
subsidies made by the petitioner or other domestic interested party is
due no later than:
(A) 10 days before the scheduled date of the preliminary
determination; or
(B) 15 days before the scheduled date of the final determination.
(4) Targeted dumping. In an antidumping investigation, an
allegation of targeted dumping made by the petitioner or other domestic
interested party under Sec. 351.414(f)(3) is due no later than 30 days
before the scheduled date of the preliminary determination.
Sec. 351.302 Extension of time limits; return of untimely filed or
unsolicited material.
(a) Introduction. This section sets forth the procedures for
requesting an extension of a time limit. In addition, this section
explains that certain untimely filed or unsolicited material will be
returned to the submitter together with an explanation of the reasons
for the return of such material.
(b) Extension of time limits. Unless expressly precluded by
statute, the Secretary may, for good cause, extend any time limit
established by this Part.
(c) Requests for extension of specific time limit. Before the
applicable time limit specified under Sec. 351.301 expires, a party may
request an extension pursuant to paragraph (b) of this section. The
request must be in writing and state the reasons for the request. An
extension must be approved in writing.
(d) Return of untimely filed or unsolicited material. (1) Unless
the Secretary extends a time limit under paragraph (b) of this section,
the Secretary will not consider or retain in the official record of the
proceeding:
(i) Untimely filed factual information, written argument, or other
material that the Secretary returns to the submitter, except as
provided under Sec. 351.104(a)(2); or
(ii) Unsolicited questionnaire responses, except as provided under
Sec. 351.204(d)(2).
(2) The Secretary will return such information, argument, or other
[[Page 7378]]
material, or unsolicited questionnaire response with, to the extent
practicable, written notice stating the reasons for return.
Sec. 351.303 Filing, format, translation, service, and certification
of documents.
(a) Introduction. This section contains the procedural rules
regarding filing, format, service, translation, and certification of
documents and applies to all persons submitting documents to the
Department for consideration in an antidumping or countervailing duty
proceeding.
(b) Where to file; time of filing. Persons must address and submit
all documents to the Department with the Secretary of Commerce,
Attention: Import Administration, Central Records Unit, Room B-099,
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230, between the hours of 8:30 a.m. and 5:00 p.m. on
business days (see Sec. 351.103(b)). If the applicable time limit
expires on a non-business day, the Secretary will accept documents that
are filed on the next business day.
(c) Number of copies; filing of business proprietary and public
versions under the one-day lag rule; information in double brackets.
(1) In general. Except as provided in paragraphs (c)(2) and (c)(3) of
this section, a person must file six copies of each submission with the
Department.
(2) Application of the one-day lag rule. (i) Filing the business
proprietary version. A person must file one copy of the business
proprietary version of any document with the Department within the
applicable time limit. Business proprietary version means the version
of a document containing information for which a person claims business
proprietary treatment under Sec. 351.304.
(ii) Filing the final business proprietary version; bracketing
corrections. By the close of business one business day after the date
the business proprietary version is filed under paragraph (c)(2)(i) of
this section, a person must file six copies of the final business
proprietary version of the document with the Department. The final
business proprietary version must be identical to the business
proprietary version filed on the previous day except for any bracketing
corrections. Although a person must file six copies of the complete
final business proprietary version with the Department, the person may
serve other persons with only those pages containing bracketing
corrections.
(iii) Filing the public version. Simultaneously with the filing of
the final business proprietary version under paragraph (c)(2)(ii) of
this section, a person also must file three copies of the public
version of such document (see Sec. 351.304(c)) with the Department.
(iv) Information in double brackets. If a person serves authorized
applicants with a business proprietary version of a document that
excludes information in double brackets pursuant to Sec. 351.304(b)(2),
the person simultaneously must file with the Department one copy of
those pages in which information in double brackets has been excluded.
(3) Computer media and printouts. The Secretary may require
submission of factual information on computer media unless the
Secretary modifies such requirements under section 782(c) of the Act
(see Sec. 351.301(c)(2)(iv)). The computer medium must be accompanied
by the number of copies of any computer printout specified by the
Secretary. All information on computer media must be releasable under
APO (see Sec. 351.305).
(d) Format of copies. (1) In general. Unless the Secretary alters
the requirements of this section, documents filed with the Department
must conform to the specification and marking requirements under
paragraph (d)(2) of this section or the Secretary may refuse to accept
such documents for the official record of the proceeding.
(2) Specifications and markings. A person must submit documents on
letter-size paper, single-sided and double-spaced, and must securely
bind each copy as a single document with any letter of transmittal as
the first page of the document. A submitter must mark the first page of
each document in the upper right-hand corner with the following
information in the following format:
(i) On the first line, except for a petition, indicate the
Department case number;
(ii) On the second line, indicate the total number of pages in the
document including cover pages, appendices, and any unnumbered pages;
(iii) On the third line, indicate whether the document is for an
investigation, scope inquiry, downstream product monitoring
application, or review and, if the latter, indicate the inclusive dates
of the review, the type of review, and the section number of the Act
corresponding to the type of review;
(iv) On the fourth line, indicate the Department office conducting
the proceeding;
(v) On the fifth and subsequent lines, indicate whether any portion
of the document contains business proprietary information and, if so,
list the applicable page numbers and state either ``Document May be
Released Under APO'' or ``Document May Not be Released Under APO.'' The
top of each page containing the business proprietary information must
state ``Business Proprietary Treatment Requested'' and the warning
``Bracketing of Business Proprietary Information is Not Final for One
Business Day After Date of Filing'' (see Sec. 351.303(c)(2) and
Sec. 351.304(c)); and
(vi) For public versions of business proprietary documents required
under Sec. 351.304(c), complete the marking as required in paragraphs
(d)(2)(i)-(v) of this section for the business proprietary document,
but conspicuously mark the first page ``Public Version.''
(e) Translation to English. A document submitted in a foreign
language must be accompanied by an English translation, unless the
Secretary waives this requirement for an individual document.
(f) Service of copies on other persons. (1) In general. Except as
provided in Sec. 351.202(c) (filing of petition), Sec. 351.207(f)(1)
(submission of proposed suspension agreement), and paragraph (f)(3) of
this section, a person filing a document with the Department
simultaneously must serve a copy of the document on all other persons
on the service list by personal service or first class mail.
(2) Certificate of service. Each document filed with the Department
must include a certificate of service listing each person served
(including agents), the type of document served, and the date and
method of service on each person. The Secretary may refuse to accept
any document that is not accompanied by a certificate of service.
(3) Service requirements for certain documents. (i) Briefs. In
addition to the certificate of service requirements contained in
paragraph (f)(2) of this section, a person filing a case or rebuttal
brief with the Department simultaneously must serve a copy of that
brief on all persons on the service list and on any U.S. Government
agency that has submitted a case or rebuttal brief in the segment of
the proceeding. If, under Sec. 351.103(c), a person has designated an
agent to receive service that is located in the United States, service
on that person must be either by personal service on the same day the
brief is filed or by overnight mail or courier on the next day. If the
person has designated an agent to receive service that is located
outside the United States, service on that person must be by first
class airmail.
(ii) Request for review. In addition to the certificate of service
requirements under paragraph (f)(2) of this section, an
[[Page 7379]]
interested party that files with the Department a request for an
expedited antidumping review, an administrative review, a new shipper
review, or a changed circumstances review, must serve a copy of the
request by personal service or first class mail on each exporter or
producer specified in the request and on the petitioner by the end of
the anniversary month or within ten days of filing the request for
review, whichever is later. If the interested party that files the
request is unable to locate a particular exporter or producer, or the
petitioner, the Secretary may accept the request for review if the
Secretary is satisfied that the party made a reasonable attempt to
serve a copy of the request on such person.
(g) Certifications. A person must file with each submission
containing factual information the certification in paragraph (1) below
and, in addition, if the person has legal counsel or another
representative, the certification in paragraph (2) below:
(1) For the person's official responsible for presentation of the
factual information:
I, (name and title), currently employed by (person), certify
that (1) I have read the attached submission, and (2) the
information contained in this submission is, to the best of my
knowledge, complete and accurate.
(2) For the person's legal counsel or other representative:
I, (name), of (law or other firm), counsel or representative to
(person), certify that (1) I have read the attached submission, and
(2) based on the information made available to me by (person), I
have no reason to believe that this submission contains any material
misrepresentation or omission of fact.
Sec. 351.304 Establishing business proprietary treatment of
information. [Reserved].
Sec. 351.305 Access to business proprietary information. [Reserved].
Sec. 351.306 Use of business proprietary information. [Reserved].
Sec. 351.307 Verification of information.
(a) Introduction. Prior to making a final determination in an
investigation or issuing final results of review, the Secretary may
verify relevant factual information. This section clarifies when
verification will occur, the contents of a verification report, and the
procedures for verification.
(b) In general. (1) Subject to paragraph (b)(4) of this section,
the Secretary will verify factual information upon which the Secretary
relies in:
(i) A final determination in a continuation of a previously
suspended countervailing duty investigation (section 704(g) of the
Act), countervailing duty investigation, continuation of a previously
suspended antidumping investigation (section 705(a) of the Act), or
antidumping investigation;
(ii) The final results of an expedited antidumping review;
(iii) A revocation under section 751(d) of the Act;
(iv) The final results of an administrative review, new shipper
review, or changed circumstances review, if the Secretary decides that
good cause for verification exists; and
(v) The final results of an administrative review if:
(A) A domestic interested party, not later than 100 days after the
date of publication of the notice of initiation of review, submits a
written request for verification; and
(B) The Secretary conducted no verification under this paragraph
during either of the two immediately preceding administrative reviews.
(2) The Secretary may verify factual information upon which the
Secretary relies in a proceeding or a segment of a proceeding not
specifically provided for in paragraph (b)(1) of this section.
(3) If the Secretary decides that, because of the large number of
exporters or producers included in an investigation or administrative
review, it is impractical to verify relevant factual information for
each person, the Secretary may select and verify a sample.
(4) The Secretary may conduct verification of a person if that
person agrees to verification and the Secretary notifies the government
of the affected country and that government does not object. If the
person or the government objects to verification, the Secretary will
not conduct verification and may disregard any or all information
submitted by the person in favor of use of the facts available under
section 776 of the Act and Sec. 351.308.
(c) Verification report. The Secretary will report the methods,
procedures, and results of a verification under this section prior to
making a final determination in an investigation or issuing final
results in a review.
(d) Procedures for verification. The Secretary will notify the
government of the affected country that employees of the Department
will visit with the persons listed below in order to verify the
accuracy and completeness of submitted factual information. The
notification will, where practicable, identify any member of the
verification team who is not an officer of the U.S. Government. As part
of the verification, employees of the Department will request access to
all files, records, and personnel which the Secretary considers
relevant to factual information submitted of:
(1) Producers, exporters, or importers;
(2) Persons affiliated with the persons listed in paragraph (d)(1)
of this section, where applicable;
(3) Unaffiliated purchasers, or
(4) The government of the affected country as part of verification
in a countervailing duty proceeding.
Sec. 351.308 Determinations on the basis of the facts available.
(a) Introduction. The Secretary may make determinations on the
basis of the facts available whenever necessary information is not
available on the record, an interested party or any other person
withholds or fails to provide information requested in a timely manner
and in the form required or significantly impedes a proceeding, or the
Secretary is unable to verify submitted information. If the Secretary
finds that an interested party ``has failed to cooperate by not acting
to the best of its ability to comply with a request for information,''
the Secretary may use an inference that is adverse to the interests of
that party in selecting from among the facts otherwise available. This
section lists some of the sources of information upon which the
Secretary may base an adverse inference and explains the actions the
Secretary will take with respect to corroboration of information.
(b) In general. The Secretary may make a determination under the
Act and this Part based on the facts otherwise available in accordance
with section 776(a) of the Act.
(c) Adverse Inferences. For purposes of section 776(b) of the Act,
an adverse inference may include reliance on:
(1) Secondary information, such as information derived from:
(i) The petition;
(ii) A final determination in a countervailing duty investigation
or an antidumping investigation;
(iii) Any previous administrative review, new shipper review,
expedited antidumping review, section 753 review, or section 762
review; or
(2) Any other information placed on the record.
(d) Corroboration of secondary information. Under section 776(c) of
the Act, when the Secretary relies on secondary information, the
Secretary will, to the extent practicable, corroborate that information
from independent sources that are reasonably at the Secretary's
disposal. Independent sources may include, but are not limited to,
published price lists, official import statistics and customs data, and
[[Page 7380]]
information obtained from interested parties during the instant
investigation or review. Corroborate means that the Secretary will
examine whether the secondary information to be used has probative
value. The fact that corroboration may not be practicable in a given
circumstance will not prevent the Secretary from applying an adverse
inference as appropriate.
(e) Use of certain information. In reaching a determination under
the Act and this Part, the Secretary will not decline to consider
information that is submitted by an interested party and is necessary
to the determination but does not meet all the applicable requirements
established by the Secretary if the conditions listed under section
782(e) of the Act are met.
Sec. 351.309 Written argument.
(a) Introduction. Written argument may be submitted during the
course of an antidumping or countervailing duty proceeding. This
section sets forth the time limits for submission of case and rebuttal
briefs and provides guidance on what should be contained in these
documents.
(b) Written argument. (1) In general. In making the final
determination in a countervailing duty investigation or antidumping
investigation or the final results of an administrative review, new
shipper review, expedited antidumping review, section 753 review, or
section 762 review, the Secretary will consider written arguments in
case or rebuttal briefs filed within the time limits in this section.
(2) Written argument on request. Notwithstanding paragraph (b)(1)
of this section, the Secretary may request written argument on any
issue from any person or U.S. Government agency at any time during a
proceeding.
(c) Case brief. (1) Any interested party or U.S. Government agency
may submit a ``case brief'' within:
(i) For a final determination in a countervailing duty
investigation or antidumping investigation, 50 days after the date of
publication of the preliminary determination, unless the Secretary
alters this time limit;
(ii) For the final results of an administrative review, new shipper
review, changed circumstances review, or section 762 review, 30 days
after the date of publication of the preliminary results of review,
unless the Secretary alters the time limit; or
(iii) For the final results of an expedited antidumping review,
sunset review, Article 8 violation review, Article 4/Article 7 review,
or section 753 review, a date specified by the Secretary.
(2) The case brief must present all arguments that continue in the
submitter's view to be relevant to the Secretary's final determination
or final results, including any arguments presented before the date of
publication of the preliminary determination or preliminary results. As
part of the case brief, parties are encouraged to provide a summary of
the arguments not to exceed five pages.
(d) Rebuttal brief. (1) Any interested party or U.S. Government
agency may submit a ``rebuttal brief'' within five days after the time
limit for filing the case brief, unless the Secretary alters this time
limit.
(2) The rebuttal brief may respond only to arguments raised in case
briefs and should identify the arguments to which it is responding. As
part of the rebuttal brief, parties are encouraged to provide a summary
of the arguments not to exceed five pages.
Sec. 351.310 Hearings.
(a) Introduction. This section sets forth the procedures for
requesting a hearing, indicates that the Secretary may consolidate
hearings, and explains when the Secretary may hold closed hearing
sessions.
(b) Pre-hearing conference. The Secretary may conduct a telephone
pre-hearing conference with representatives of interested parties to
facilitate the conduct of the hearing.
(c) Request for hearing. Any interested party may request that the
Secretary hold a public hearing on arguments to be raised in case or
rebuttal briefs within 30 days after the date of publication of the
preliminary determination or preliminary results of review, unless the
Secretary alters this time limit, or in a proceeding where the
Secretary will not issue a preliminary determination, not later than a
date specified by the Secretary. To the extent practicable, a party
requesting a hearing must identify arguments to be raised at the
hearing. At the hearing, an interested party may make an affirmative
presentation only on arguments included in that party's case brief and
may make a rebuttal presentation only on arguments included in that
party's rebuttal brief.
(d) Hearings in general. (1) If an interested party submits a
request under paragraph (c) of this section, the Secretary will hold a
public hearing on the date stated in the notice of the Secretary's
preliminary determination or preliminary results of administrative
review (or otherwise specified by the Secretary in an expedited
antidumping review), unless the Secretary alters the date. Ordinarily,
the hearing will be held two days after the scheduled date for
submission of rebuttal briefs.
(2) The hearing is not subject to 5 U.S.C. 551-559, and 702
(Administrative Procedure Act). Witness testimony, if any, will not be
under oath or subject to cross-examination by another interested party
or witness. During the hearing, the chair may question any person or
witness and may request persons to present additional written argument.
(e) Consolidated hearings. At the Secretary's discretion, the
Secretary may consolidate hearings in two or more cases.
(f) Closed hearing sessions. An interested party may request a
closed session of the hearing no later than the date the case briefs
are due in order to address limited issues during the course of the
hearing. The requesting party must identify the subjects to be
discussed, specify the amount of time requested, and justify the need
for a closed session with respect to each subject. If the Secretary
approves the request for a closed session, only authorized applicants
and other persons authorized by the regulations may be present for the
closed session (see Sec. 351.305).
(g) Transcript of hearing. The Secretary will place a verbatim
transcript of the hearing in the public and official records of the
proceeding and will announce at the hearing how interested parties may
obtain copies of the transcript.
Sec. 351.311 Countervailable subsidy practice discovered during
investigation or review.
(a) Introduction. During the course of a countervailing duty
investigation or review, Department officials may discover or receive
notice of a practice that appears to provide a countervailable subsidy.
This section explains when the Secretary will examine such a practice.
(b) Inclusion in proceeding. If during a countervailing duty
investigation or a countervailing duty administrative review the
Secretary discovers a practice that appears to provide a
countervailable subsidy with respect to the subject merchandise and the
practice was not alleged or examined in the proceeding, or if, pursuant
to section 775 of the Act, the Secretary receives notice from the
United States Trade Representative that a subsidy or subsidy program is
in violation of Article 8 of the Subsidies Agreement, the Secretary
will examine the practice, subsidy, or subsidy program if the Secretary
concludes that sufficient time remains before the scheduled date for
the final determination or final results of review.
[[Page 7381]]
(c) Deferral of examination. If the Secretary concludes that
insufficient time remains before the scheduled date for the final
determination or final results of review to examine the practice,
subsidy, or subsidy program described in paragraph (b) of this section,
the Secretary will:
(1) During an investigation, allow the petitioner to withdraw the
petition without prejudice and resubmit it with an allegation with
regard to the newly discovered practice, subsidy, or subsidy program;
or
(2) During an investigation or review, defer consideration of the
newly discovered practice, subsidy, or subsidy program until a
subsequent administrative review, if any.
(d) Notice. The Secretary will notify the parties to the proceeding
of any practice the Secretary discovers, or any subsidy or subsidy
program with respect to which the Secretary receives notice from the
United States Trade Representative, and whether or not it will be
included in the then ongoing proceeding.
Sec. 351.312 Industrial users and consumer organizations.
(a) Introduction. The URAA provides for opportunity for comment by
consumer organizations and industrial users on matters relevant to a
particular determination of dumping, subsidization, or injury. This
section indicates under what circumstances such persons may submit
relevant information and argument.
(b) Opportunity to submit relevant information and argument. In an
antidumping or countervailing duty proceeding under title VII of the
Act and this Part, an industrial user of the subject merchandise or a
representative consumer organization, as described in section 777(h) of
the Act, may submit relevant factual information and written argument
to the Department under Sec. 351.301(b) and paragraphs (c) and (d) of
Sec. 351.309 concerning dumping or a countervailable subsidy. All such
submissions must be filed in accordance with Sec. 351.303.
(c) Business proprietary information. Persons described in
paragraph (b) of this section may request business proprietary
treatment of information under Sec. 351.304, but will not be granted
access under Sec. 351.305 to business proprietary information submitted
by other persons.
Subpart D--Calculation of Export Price, Constructed Export Price,
Fair Value, and Normal Value
Sec. 351.401 In general.
(a) Introduction. In general terms, an antidumping analysis
involves a comparison of export price or constructed export price in
the United States with normal value in the foreign market. This section
establishes certain general rules that apply to the calculation of
export price, constructed export price and normal value. (See section
772, section 773, and section 773A of the Act).
(b) Adjustments in general. In making adjustments to export price,
constructed export price, or normal value, the Secretary will adhere to
the following principles:
(1) Any interested party that claims an adjustment must establish
the claim to the satisfaction of the Secretary.
(2) The Secretary will not double-count adjustments.
(c) Discounts, rebates, and other price adjustments. In calculating
export price, constructed export price, and normal value (where normal
value is based on price), the Secretary will rely upon a price net of
any discounts, rebates, or post-sale adjustments to price that are
reasonably attributable to the subject merchandise or the foreign like
product (whichever is applicable).
(d) Delayed payment or pre-payment of expenses. Where cost is the
basis for determining the amount of an adjustment to export price,
constructed export price, or normal value, the Secretary will not
factor in any delayed payment or pre-payment of expenses by the
exporter or producer.
(e) Adjustments for movement expenses. In making adjustments for
movement expenses to export price or constructed export price under
section 772(c)(2)(A) of the Act, or to normal value under section
773(a)(6)(B)(ii) of the Act:
(1) The Secretary may adjust for warehousing expenses; and
(2) The ``original place of shipment'' means the original place
from which the seller shipped the goods.
(f) Treatment of affiliated producers in antidumping proceedings.
In an antidumping proceeding under this part, the Secretary will treat
two or more affiliated producers as a single entity where those
producers have production facilities for similar or identical products
that would not require substantial retooling of either facility in
order to restructure manufacturing priorities and the Secretary
concludes that there is a significant potential for the manipulation of
price or production. In identifying a significant potential for the
manipulation of price or production, the factors the Secretary may
consider include:
(1) The level of common ownership;
(2) Whether managerial employees or board members of one of the
affiliated producers sit on the board of directors of the other
affiliated person; and
(3) Whether operations are intertwined, such as through the sharing
of sales information, involvement in production and pricing decisions,
the sharing of facilities or employees, or significant transactions
between the affiliated producers.
(g) Allocation of expenses. The Secretary may consider allocated
expenses when transaction-specific reporting is not feasible, provided
the Secretary is satisfied that the allocation method used does not
cause inaccuracies or distortions.
(h) Treatment of subcontractors (``tolling'' operations). The
Secretary will not consider a toller or subcontractor to be a
manufacturer or producer where the toller or subcontractor does not
acquire ownership, and does not control the relevant sale of the
subject merchandise or foreign like product.
(i) Date of sale. In identifying the date of a sale of the subject
merchandise or foreign like product, the Secretary normally will use
the date of invoice, as recorded in the exporter or producer's records
kept in the ordinary course of business.
Sec. 351.402 Calculation of export price and constructed export price;
reimbursement of antidumping and countervailing duties.
(a) Introduction. In order to establish export price, constructed
export price, and normal value, the Secretary must make certain
adjustments to the price to the unaffiliated purchaser (often called
the ``starting price'') in both the United States and foreign markets.
This regulation clarifies how the Secretary will make certain of the
adjustments to the starting price in the United States that are
required by section 772 of the Act.
(b) Additional adjustments to constructed export price. The
Secretary will make adjustments to constructed export price under
section 772(d) of the Act for expenses associated with commercial
activities in the United States, no matter where incurred.
(c) Special rule for merchandise with value added after
importation. (1) Merchandise imported by affiliated persons. In
applying section 772(e) of the Act, merchandise imported by and value
added by a person affiliated with the exporter or producer includes
[[Page 7382]]
merchandise imported and value added for the account of such an
affiliated person.
(2) Estimation of value added. The Secretary normally will
determine that the value added in the United States by the affiliated
person is likely to exceed substantially the value of the subject
merchandise if the Secretary estimates the value added to be at least
60 percent of the price charged to the first unaffiliated purchaser for
the merchandise as sold in the United States. The Secretary normally
will estimate the value added based on the difference between the price
charged to the first unaffiliated purchaser for the merchandise as sold
in the United States and the price paid for the subject merchandise by
the affiliated person. The Secretary normally will base this
determination on averages of the prices and the value added to the
subject merchandise.
(3) Determining dumping margins. For purposes of determining
dumping margins under paragraphs (1) and (2) of section 772(e) of the
Act, the Secretary may use the weighted-average dumping margins
calculated on sales of identical or other subject merchandise sold to
unaffiliated persons.
(d) Special rule for determining profit. This paragraph sets forth
rules for calculating profit in establishing constructed export price
under section 772(f) of the Act.
(1) Basis for total expenses and total actual profit. In
calculating total expenses and total actual profit, the Secretary
normally will use the aggregate of expenses and profit for all subject
merchandise sold in the United States and all foreign like products
sold in the exporting country, including sales that have been
disregarded as being below the cost of production. (See section 773(b)
of the Act).
(2) Use of financial reports. For purposes of determining profit
under section 772(d)(3) of the Act, the Secretary may rely on any
appropriate financial reports, including public, audited financial
statements, or equivalent financial reports, and internal financial
reports prepared in the ordinary course of business.
(3) Voluntary reporting of costs of production. The Secretary will
not require the reporting of costs of production solely for purposes of
determining the amount of profit to be deducted from the constructed
export price. The Secretary will base the calculation of profit on
costs of production if such costs are reported voluntarily by the date
established by the Secretary, and provided that it is practicable to do
so and the costs of production are verifiable.
(e) Treatment of payments between affiliated persons. Where a
person affiliated with the exporter or producer incurs any of the
expenses deducted from constructed export price under section 772(d) of
the Act and is reimbursed for such expenses by the exporter, producer
or other affiliate, the Secretary normally will make an adjustment
based on the actual cost to the affiliated person. If the Secretary is
satisfied that information regarding the actual cost to the affiliated
person is unavailable to the exporter or producer, the Secretary may
determine the amount of the adjustment on any other reasonable basis,
including the amount of the reimbursement to the affiliated person if
the Secretary is satisfied that such amount reflects the amount usually
paid in the market under consideration.
(f) Reimbursement of antidumping duties and countervailing duties.
(1) In general. (i) In calculating the export price (or the constructed
export price), the Secretary will deduct the amount of any antidumping
duty or countervailing duty which the exporter or producer:
(A) Paid directly on behalf of the importer; or
(B) Reimbursed to the importer.
(ii) The Secretary will not deduct the amount of any antidumping
duty or countervailing duty paid or reimbursed if the exporter or
producer granted to the importer before initiation of the antidumping
investigation in question a warranty of nonapplicability of antidumping
duties or countervailing duties with respect to subject merchandise
which was:
(A) Sold before the date of publication of the Secretary's order
applicable to the merchandise in question; and
(B) Exported before the date of publication of the Secretary's
final antidumping determination. Ordinarily, the Secretary will deduct
the amount reimbursed only once in the calculation of the export price
(or constructed export price).
(2) Certificate. The importer must file prior to liquidation a
certificate in the following form with the appropriate District
Director of Customs:
I hereby certify that I (have) (have not) entered into any
agreement or understanding for the payment or for the refunding to
me, by the manufacturer, producer, seller, or exporter, of all or
any part of the antidumping duties or countervailing duties assessed
upon the following importations of (commodity) from (country): (List
entry numbers) which have been purchased on or after (date of
publication of antidumping notice suspending liquidation in the
Federal Register) or purchased before (same date) but exported on or
after (date of final determination of sales at less than fair
value).
(3) Presumption. The Secretary may presume from an importer's
failure to file the certificate required in paragraph (f)(2) of this
section that the exporter or producer paid or reimbursed the
antidumping duties or countervailing duties.
Sec. 351.403. Sales used in calculating normal value; transactions
between affiliated parties.
(a) Introduction. This section clarifies when the Secretary may use
offers for sale in determining normal value. Additionally, this section
clarifies the authority of the Secretary to use sales to or through an
affiliated party as a basis for normal value. (See section 773(a)(1)(B)
and section 773(a)(5) of the Act.)
(b) Sales and offers for sale. In calculating normal value, the
Secretary normally will consider offers for sale only in the absence of
sales and only if the Secretary concludes that acceptance of the offer
can be reasonably expected.
(c) Sales to an affiliated party. If an exporter or producer sold
the foreign like product to an affiliated party, the Secretary may
calculate normal value based on that sale only if satisfied that the
price is comparable to the price at which the exporter or producer sold
the foreign like product to a person who is not affiliated with the
seller.
(d) Sales through an affiliated party. If an exporter or producer
sold the foreign like product through an affiliated party, the
Secretary may calculate normal value based on the sale by such
affiliated party. (See section 773(a)(5) of the Act.)
Sec. 351.404 Selection of the market to be used as the basis for
normal value.
(a) Introduction. Although in most circumstances sales of the
foreign like product in the home market are the most appropriate basis
for determining normal value, section 773 of the Act also permits use
of sales to a third country or constructed value as the basis for
normal value. This section clarifies the rules for determining the
basis for normal value.
(b) Determination of viable market. (1) In general. The Secretary
will consider the exporting country or a third country as constituting
a viable market if the Secretary is satisfied that sales of the foreign
like product in that country are of sufficient quantity to form the
basis of normal value.
(2) Sufficient quantity. ``Sufficient quantity'' normally means
that the aggregate quantity (or, if quantity is not
[[Page 7383]]
appropriate, value) of the foreign like product sold by an exporter or
producer in a country is 5 percent or more of the aggregate quantity
(or value) of its sales of the subject merchandise to the United
States.
(c) Calculation of price-based normal value in viable market. (1)
In general. Subject to paragraph (c)(2) of this section:
(i) If the exporting country constitutes a viable market, the
Secretary will calculate normal value on the basis of price in the
exporting country (see section 773(a)(1)(B)(i) of the Act); or
(ii) If the exporting country does not constitute a viable market,
but a third country does constitute a viable market, the Secretary may
calculate normal value on the basis of price to a third country (see
section 773(a)(1)(B)(ii) of the Act).
(2) Exception. The Secretary may decline to calculate normal value
in a particular market under paragraph (c)(1) of this section if it is
established to the satisfaction of the Secretary that:
(i) In the case of the exporting country or a third country, a
particular market situation exists that does not permit a proper
comparison with the export price or constructed export price (see
section 773(a)(1)(B)(ii)(III) or section 773(a)(1)(C)(iii) of the Act;
or
(ii) In the case of a third country, the price is not
representative (see section 773(a)(1)(B)(ii)(I) of the Act).
(d) Allegations concerning market viability and the basis for
determining a price-based normal value. In an antidumping investigation
or review, allegations regarding market viability or the exceptions in
paragraph (c)(2) of this section, must be filed, with all supporting
factual information, in accordance with Sec. 351.301(d)(1).
(e) Selection of third country. For purposes of calculating normal
value based on prices in a third country, where prices in more than one
third country satisfy the criteria of section 773(a)(1)(B)(ii) of the
Act and this section, the Secretary generally will select the third
country based on the following criteria:
(1) The foreign like product exported to a particular third country
is more similar to the subject merchandise exported to the United
States than is the foreign like product exported to other third
countries;
(2) The volume of sales to a particular third country is larger
than the volume of sales to other third countries;
(3) Such other factors as the Secretary considers appropriate.
(f) Third country sales and constructed value. The Secretary
normally will calculate normal value based on sales to a third country
rather than on constructed value if adequate information is available
and verifiable (see section 773(a)(4) of the Act).
Sec. 351.405 Calculation of normal value based on constructed value.
(a) Introduction. In certain circumstances, the Secretary may
determine normal value by constructing a value based on the cost of
manufacture, selling general and administrative expenses, and profit.
The Secretary may use constructed value as the basis for normal value
where: Neither the home market nor a third country market is viable;
sales below the cost of production are disregarded; sales outside the
ordinary course of trade, or sales the prices of which are otherwise
unrepresentative, are disregarded; sales used to establish a fictitious
market are disregarded; no contemporaneous sales of comparable
merchandise are available; or in other circumstances where the
Secretary determines that home market or third country prices are
inappropriate. (See section 773(e) and section 773(f) of the Act). This
section clarifies the meaning of certain terms relating to constructed
value.
(b) Profit and selling, general, and administrative expenses. In
determining the amount to be added to constructed value for profit and
for selling, general, and administrative expenses, the following rules
will apply:
(1) Under section 773(e)(2)(A) of the Act, ``foreign country''
means the country in which the merchandise is produced or a third
country selected by the Secretary under Sec. 351.404(e), as
appropriate.
(2) Under section 773(e)(2)(B) of the Act, ``foreign country''
means the country in which the merchandise is produced.
Sec. 351.406 Calculation of normal value if sales are made at less
than cost of production.
(a) Introduction. In determining normal value, the Secretary may
disregard sales of the foreign-like product made at prices that are
less than the cost of production of that product. However, among other
criteria, such sales will be disregarded only if they are made within
an extended period of time. (See section 773(b) of the Act.) This
section clarifies the meaning of the term ``extended period of time''
as used in the Act.
(b) Extended period of time. The ``extended period of time'' under
section 773(b)(1)(A) of the Act normally will coincide with the period
in which the sales under consideration for the determination of normal
value were made.
Sec. 351.407 Calculation of constructed value and cost of production.
(a) Introduction. This section sets forth certain rules that are
common to the calculation of constructed value and the cost of
production. (See section 773(f) of the Act).
(b) Allocation of costs. In determining the appropriate method for
allocating costs among products, the Secretary may take into account
production quantities, relative sales values, and other quantitative
and qualitative factors associated with the manufacture and sale of the
subject merchandise and the foreign like product.
(c) Startup costs. (1) In identifying startup operations under
section 773(f)(1)(C)(ii) of the Act:
(i) ``New production facilities'' includes the substantially
complete retooling of an existing plant. Substantially complete
retooling involves the replacement of nearly all production machinery
or the equivalent rebuilding of existing machinery.
(ii) A ``new product'' is one requiring substantial additional
investment, including products which, though sold under an existing
nameplate, involve the complete revamping or redesign of the product.
Routine model year changes will not be considered a new product.
(iii) Mere improvements to existing products or ongoing
improvements to existing facilities will not be considered startup
operations.
(iv) An expansion of the capacity of an existing production line
will not qualify as a startup operation unless the expansion
constitutes such a major undertaking that it requires the construction
of a new facility and results in a depression of production levels due
to technical factors associated with the initial phase of commercial
production of the expanded facilities.
(2) In identifying the end of the startup period under clauses (ii)
and (iii) of section 773(f)(1)(C) of the Act:
(i) The attainment of peak production levels will not be the
standard for identifying the end of the startup period, because the
startup period may end well before a company achieves optimum capacity
utilization.
(ii) The startup period will not be extended to cover improvements
and cost reductions that may occur over the entire life cycle of a
product.
(3) In determining when a producer reaches commercial production
levels under section 773(f)(1)(C)(ii) of the Act:
(i) The Secretary will consider the actual production experience of
the merchandise in question, measuring production on the basis of units
processed.
[[Page 7384]]
(ii) To the extent necessary, the Secretary will examine factors in
addition to those specified in section 773(f)(1)(C)(ii) of the Act,
including historical data reflecting the same producer's or other
producers' experiences in producing the same or similar products. A
producer's projections of future volume or cost will be accorded little
weight.
(4) In making an adjustment for startup operations under section
773(f)(1)(C)(iii) of the Act:
(i) The Secretary will determine the duration of the startup period
on a case-by-case basis.
(ii) The difference between actual costs and the costs of
production calculated for startup costs will be amortized over a
reasonable period of time subsequent to the startup period over the
life of the product or machinery, as appropriate.
(iii) The Secretary will consider unit production costs to be items
such as depreciation of equipment and plant, labor costs, insurance,
rent and lease expenses, material costs, and overhead. The Secretary
will not consider sales expenses, such as advertising costs, or other
non-production costs, as startup costs.
Sec. 351.408 Calculation of normal value of merchandise from nonmarket
economy countries.
(a) Introduction. In identifying dumping from a nonmarket economy
country, the Secretary normally will calculate normal value by valuing
the nonmarket economy producers' factors of production in a market
economy country. (See section 773(c) of the Act.) This section
clarifies when and how this special methodology for nonmarket economies
will be applied.
(b) Economic Comparability. In determining whether a country is at
a level of economic development comparable to the nonmarket economy
under section 773(c)(2)(B) or section 773(c)(4)(A) of the Act, the
Secretary will place primary emphasis on per capita GDP as the measure
of economic comparability.
(c) Valuation of Factors of Production. For purposes of valuing the
factors of production, general expenses, profit, and the cost of
containers, coverings, and other expenses (referred to collectively as
``factors'') under section 773(c)(1) of the Act the following rules
will apply:
(1) Information used to value factors. The Secretary normally will
use publicly available information to value factors. However, where a
factor is purchased from a market economy producer and paid for in a
market economy currency, the Secretary normally will use the price paid
to the market economy supplier. In those instances where a portion of
the factor is purchased from a market economy source and the remainder
from a nonmarket economy producer, the Secretary normally will value
the factor using the price paid to the market economy supplier.
(2) Valuation in a single country. Except for labor, as provided in
paragraph (d)(3) of this section, the Secretary normally will value all
factors in a single surrogate country.
(3) Labor. For labor, the Secretary will use regression-based wage
rates reflective of the observed relationship between wages and
national income in market economy countries found to be economically
comparable to the nonmarket economy country under section 773(c)(4)(A)
of the Act. The Secretary will calculate the wage rate to be applied in
nonmarket economy proceedings each year. The calculation will be based
on current data, and will be made available to the public.
(4) Manufacturing overhead, general expenses, and profit. For
manufacturing overhead, general expenses, and profit, the Secretary
normally will use non-proprietary information gathered from producers
of identical or comparable merchandise in the surrogate country.
Sec. 351.409 Differences in quantities.
(a) Introduction. Because the quantity of merchandise sold may
affect the price, in comparing export price or constructed export price
with normal value, the Secretary normally will use sales of comparable
quantities of merchandise. Where this is not practicable, the Secretary
will make a reasonable allowance for any difference in quantities to
the extent the Secretary is satisfied that the amount of any price
differential (or lack thereof) is wholly or partly due to that
difference in quantities. (See section 773(a)(6)(C)(i) of the Act.) In
making the allowance, the Secretary will consider, among other things,
the practice of the industry in the relevant country of granting
quantity discounts in the ordinary course of trade.
(b) Sales with quantity discounts in calculating normal value. The
Secretary normally will calculate normal value based on sales with
quantity discounts only if:
(1) During the period examined, or during a more representative
period, the exporter or producer granted quantity discounts of at least
the same magnitude on 20 percent or more of sales of the foreign like
product for the relevant country; or
(2) The exporter or producer demonstrates to the Secretary's
satisfaction that the discounts reflect savings specifically
attributable to the production of the different quantities.
(c) Sales with quantity discounts in calculating weighted-average
normal value. If the exporter or producer does not satisfy the
conditions of paragraph (b) of this section, the Secretary will
calculate normal value based on weighted-average prices that include
sales at a discount.
(d) Price lists. In determining whether a discount has been
granted, the existence or lack thereof of a published price list
reflecting such a discount will not be controlling. Ordinarily, the
Secretary will give weight to a price list only if, in the line of
trade and market under consideration, the exporter or producer
demonstrates that it has adhered to its price list.
(e) Relationship to level of trade adjustment. If adjustments are
claimed for both differences in quantities and differences in level of
trade, the Secretary will not make an adjustment for differences in
quantities unless the Secretary is satisfied that the effect on price
comparability of differences in quantities has been identified and
established separately from the effect on price comparability of
differences in the levels of trade.
Sec. 351.410 Differences in circumstances of sale.
(a) Introduction. In calculating normal value the Secretary may
make adjustments to account for certain differences in the
circumstances of sales in the United States and foreign markets. (See
section 773(a)(6)(C)(iii) of the Act). This section clarifies certain
terms used in the statute regarding circumstances of sale adjustments
and describes the adjustment when commissions are paid only in one
market.
(b) Direct selling expenses. Under this section, ``direct selling
expenses'' are expenses, such as commissions, credit expenses,
guarantees, and warranties, that result from, and bear a direct
relationship to, the particular sale in question.
(c) Assumed expenses. Assumed expenses are selling expenses that
are assumed by the seller on behalf of the buyer, such as advertising
expenses.
(d) Reasonable allowance. In deciding what is a reasonable
allowance for any difference in circumstances of sale, the Secretary
normally will consider the cost of such difference to the exporter or
producer but, if appropriate, may also consider the effect of such
difference on the market value of the merchandise.
[[Page 7385]]
(e) Commissions paid in one market. The Secretary normally will
make a reasonable allowance for other selling expenses if the Secretary
makes a reasonable allowance for commissions in one of the markets
under consideration, and no commission is paid in the other market
under consideration. The Secretary will limit the amount of such
allowance to the amount of the other selling expenses incurred in the
one market or the commissions allowed in the other market, whichever is
less.
Sec. 351.411 Differences in physical characteristics.
(a) Introduction. In comparing United States sales with foreign
market sales, the Secretary may determine that the merchandise sold in
the United States does not have the same physical characteristics as
the merchandise sold in the foreign market, and that the difference has
an effect on prices. In calculating normal value, the Secretary will
make a reasonable allowance for such differences. (See section
773(a)(6)(C)(ii) of the Act).
(b) Reasonable allowance. In deciding what is a reasonable
allowance for differences in physical characteristics, the Secretary
will consider only differences in variable costs associated with the
physical differences. Where appropriate, the Secretary may also
consider differences in the market value. The Secretary will not
consider differences in cost of production when compared merchandise
has identical physical characteristics.
Sec. 351.412 Levels of trade; adjustment for differences in level of
trade; constructed export price offset.
(a) Introduction. In comparing United States sales with foreign
market sales the Secretary may determine that sales in the two markets
were not made at the same level of trade, and that the difference has
an effect on the comparability of the prices. The Secretary is
authorized to adjust normal value to account for such a difference.
(See section 773(a)(7) of the Act).
(b) Identifying levels of trade and differences in levels of trade.
In identifying the sales to be used in calculating normal value (see
section 773(a)(1)(B) of the Act), and in making an adjustment for
differences in level of trade or a constructed export price offset (see
section 773(a)(7) of the Act), the Secretary will identify the level of
trade as follows:
(1) In the case of export price and normal value, the Secretary
will identify the level of trade based on the starting price;
(2) In the case of constructed export price, the Secretary will
identify the level of trade based on the price after the deduction of
expenses and profit under section 772(d) of the Act;
(c) Adjustment for difference in level of trade. (1) In general.
The Secretary will adjust normal value for a difference in level of
trade if:
(i) The Secretary calculates normal value on the basis of a sale
that the Secretary determines is made at a different level of trade
from the export price or the constructed export price (whichever is
applicable); and
(ii) The Secretary determines that the difference in level of trade
has an effect on price comparability.
(2) Identifying different levels of trade. The Secretary will
determine that sales are made at different levels of trade if such
sales involve the performance of different selling functions and
activities. In making this determination, the Secretary will consider
all selling functions and activities performed by the seller. The fact
that there is some overlap in selling functions and activities will not
preclude a determination that sales are made at different levels of
trade. Where the selling functions and activities are substantially the
same, however, sales normally will be considered to have been made at
the same level of trade.
(3) Effect on price comparability. The Secretary will determine
that a difference in level of trade has an effect on price
comparability only if it is established to the satisfaction of the
Secretary that, with respect to the sales used to calculate normal
value, there is a pattern of consistent price differences between sales
made at different levels of trade.
(4) Amount of adjustment. The Secretary normally will calculate the
amount of a level of trade adjustment by:
(i) Calculating an average of the prices of the sales used to
calculate normal value at each level of trade in the exporting country
or the third country (whichever is applicable), after making any other
adjustments required by section 773(a)(6) of the Act and this subpart;
(ii) Calculating the average of the percentage differences between
such average prices; and
(iii) Applying the average percentage difference to the prices of
sales made at the level of trade that is different from the level of
trade of the export price or the constructed export price (whichever is
applicable).
(d) Constructed export price offset. In making the constructed
export price offset under section 773(a)(7)(B) of the Act, ``indirect
selling expenses'' means expenses, other than direct selling expenses
or assumed selling expenses (see Sec. 351.410), that the seller would
incur regardless of whether particular sales were made, but that
reasonably may be attributed, in whole or in part, to such sales.
Sec. 351.413 Disregarding insignificant adjustments.
Ordinarily, under section 777A(a)(2) of the Act, an ``insignificant
adjustment'' is any individual adjustment having an ad valorem effect
of less than 0.33 percent, or any group of adjustments having an ad
valorem effect of less than 1.0 percent, of the export price,
constructed export price, or normal value, as the case may be. Groups
of adjustments are adjustments for differences in circumstances of sale
under Sec. 351.410, adjustments for differences in the physical
characteristics of the merchandise under Sec. 351.411, and adjustments
for differences in the levels of trade under Sec. 351.412.
Sec. 351.414 Comparison of normal value with export price (constructed
export price).
(a) Introduction. The Secretary normally will average prices used
as the basis for normal value and, in an investigation, prices used as
the basis for export price or constructed export price as well. This
section explains when and how the Secretary will average prices in
making comparisons of export price or constructed export price with
normal value. (See section 777A(d) of the Act).
(b) Description of methods of comparison. (1) Average-to-average
method. The ``average-to-average'' method involves a comparison of the
weighted average of the normal values with the weighted average of the
export prices (and constructed export prices) for comparable
merchandise.
(2) Transaction-to-transaction method. The ``transaction-to-
transaction'' method involves a comparison of the normal values of
individual transactions with the export prices (or constructed export
prices) of individual transactions for comparable merchandise.
(3) Average-to-transaction method. The ``average-to-transaction''
method involves a comparison of the weighted average of the normal
values to the export prices (or constructed export prices) of
individual transactions for comparable merchandise.
(c) Preferences. (1) In an investigation, the Secretary normally
will use the average-to-average method. The Secretary will use the
transaction-to-
[[Page 7386]]
transaction method only in unusual situations, such as when there are
very few sales of subject merchandise and the merchandise sold in each
market is identical or very similar or is custom-made.
(2) In a review, the Secretary normally will use the average-to-
transaction method.
(d) Application of the average-to-average method. (1) In general.
In applying the average-to-average method, the Secretary will identify
those sales of the subject merchandise to the United States that are
comparable, and will include such sales in an ``averaging group.'' The
Secretary will calculate a weighted average of the export prices and
the constructed export prices of the sales included in the averaging
group, and will compare this weighted average to the weighted average
of the normal values of such sales.
(2) Identification of the averaging group. An averaging group will
consist of subject merchandise that is identical or virtually identical
in all physical characteristics and that is sold to the United States
at the same level of trade. In identifying sales to be included in an
averaging group, the Secretary also will take into account, where
appropriate, the region of the United States in which the merchandise
is sold, and such other factors as the Secretary considers relevant.
(3) Time period over which weighted average is calculated. When
applying the average-to-average method, the Secretary normally will
calculate weighted averages for the entire period of investigation or
review, as the case may be. However, when normal values, export prices,
or constructed export prices differ significantly over the course of
the period of investigation or review, the Secretary may calculate
weighted averages for such shorter period as the Secretary deems
appropriate.
(e) Application of the average-to-transaction method. (1) In
general. In applying the average-to-transaction method in a review,
when normal value is based on the weighted average of sales of the
foreign like product, the Secretary will limit the averaging of such
prices to sales incurred during the contemporaneous month.
(2) Contemporaneous month. Normally, the Secretary will select as
the contemporaneous month the first of the following which applies:
(i) The month during which the particular U.S. sale under
consideration is made;
(ii) If there are no sales of the foreign like product during this
month, the most recent of the three months prior to the month of the
U.S. sale in which there was a sale of the foreign like product.
(iii) If there are no sales of the foreign like product during any
of these months, the earlier of the two months following the month of
the U.S. sale in which there was a sale of the foreign like product.
(f) Targeted dumping. (1) In general. Notwithstanding paragraph
(c)(1) of this section, the Secretary may apply the average-to-
transaction method, as described in paragraph (e) of this section, in
an antidumping investigation if:
(i) There is targeted dumping in the form of a pattern of export
prices (or constructed export prices) for comparable merchandise that
differ significantly among purchasers, regions, or periods of time; and
(ii) The Secretary explains why such differences cannot be taken
into account using the average-to-average method or the transaction-to-
transaction method.
In applying paragraph (f)(1)(i) of this section, the Secretary will
use, among other things, standard statistical techniques in determining
whether there is a pattern of prices that differ significantly.
(2) Limitation of average-to-transaction method to targeted
dumping. Where the criteria for identifying targeted dumping under
paragraph (f)(1) of this section are satisfied, the Secretary normally
will limit the application of the average-to-transaction method to
those sales that constitute targeted dumping under paragraph (f)(1)(i)
of this section.
(3) Allegations concerning targeted dumping. The Secretary will not
consider targeted dumping absent an allegation, normally filed within
the time indicated in Sec. 351.301(d)(4). Allegations must include all
supporting factual information, and an explanation as to why the
average-to-average or transaction-to-transaction method could not take
into account any alleged price differences.
(g) Requests for information. In an investigation, the Secretary
will request information relevant to the identification of averaging
groups under paragraph (d)(2) of this section and to the analysis of
possible targeted dumping under paragraph (f) of this section. If a
response to a request for such information is such as to warrant the
application of the facts otherwise available, within the meaning of
section 776 of the Act and Sec. 351.308, the Secretary may apply the
average-to-transaction method to all the sales of the producer or
exporter concerned.
Sec. 351.415 Conversion of currency.
(a) In general. In an antidumping proceeding, the Secretary will
convert foreign currencies into United States dollars using the rate of
exchange on the date of sale of the subject merchandise.
(b) Exception. If the Secretary establishes that a currency
transaction on forward markets is directly linked to an export sale
under consideration, the Secretary will use the exchange rate specified
with respect to such foreign currency in the forward sale agreement to
convert the foreign currency.
(c) Exchange rate fluctuations. The Secretary will ignore
fluctuations in exchange rates.
(d) Sustained movement in foreign currency value. In an antidumping
investigation, if there is a sustained movement increasing the value of
the foreign currency relative to the United States dollar, the
Secretary will allow exporters 60 days to adjust their prices to
reflect such sustained movement.
Subpart E--[Reserved]
Subpart F--Subsidy Determinations Regarding Cheese Subject to an
In-Quota Rate of Duty
Sec. 351.601 Annual list and quarterly update of subsidies.
The Secretary will make the determinations called for by section
702(a) of the Trade Agreements Act of 1979, as amended (19 U.S.C. 1202
note) based on the available information, and will publish the annual
list and quarterly updates described in such section in the Federal
Register.
Sec. 351.602 Determination upon request.
(a) Request for determination. (1) Any person, including the
Secretary of Agriculture, who has reason to believe there have been
changes in or additions to the latest annual list published under
Sec. 351.601 may request in writing that the Secretary determine under
section 702(a)(3) of the Trade Agreements Act of 1979 whether there are
any changes or additions. The person must file the request with the
Central Records Unit (see Sec. 351.103). The request must allege either
a change in the type or amount of any subsidy included in the latest
annual list or quarterly update or an additional subsidy not included
in that list or update provided by a foreign government, and must
contain the following, to the extent reasonably available to the
requesting person:
(i) The name and address of the person;
(ii) The article of cheese subject to an in-quota rate of duty
allegedly benefitting from the changed or additional subsidy;
[[Page 7387]]
(iii) The country of origin of the article of cheese subject to an
in-quota rate of duty; and
(iv) The alleged subsidy or changed subsidy and relevant factual
information (particularly documentary evidence) regarding the alleged
changed or additional subsidy including the authority under which it is
provided, the manner in which it is paid, and the value of the subsidy
to producers or exporters of the article.
(2) The requirements of Sec. 351.303 (c) and (d) apply to this
section.
(b) Determination. Not later than 30 days after receiving an
acceptable request, the Secretary will:
(1) In consultation with the Secretary of Agriculture, determine
based on the available information whether there has been any change in
the type or amount of any subsidy included in the latest annual list or
quarterly update or an additional subsidy not included in that list or
update is being provided by a foreign government;
(2) Notify the Secretary of Agriculture and the person making the
request of the determination; and
(3) Promptly publish in the Federal Register notice of any changes
or additions.
Sec. 351.603 Complaint of price-undercutting by subsidized imports.
Upon receipt of a complaint filed with the Secretary of Agriculture
under section 702(b) of the Trade Agreements Act concerning price-
undercutting by subsidized imports, the Secretary will promptly
determine, under section 702(a)(3) of the Trade Agreements Act of 1979,
whether or not the alleged subsidies are included in or should be added
to the latest annual list or quarterly update.
Sec. 351.604 Access to information.
Subpart C of this part applies to factual information submitted in
connection with this subpart.
Annex I.--Deadlines for Parties in Countervailing Investigations
Deadlines for Parties in Countervailing Investigations
----------------------------------------------------------------------------------------------------------------
Day Event Proposed regulation
----------------------------------------------------------------------------------------------------------------
0 days................................. Date of Initiation 1........... ......................................
31 days 2.............................. Extension request for responses 351.301(c)(2)(iv).
to questionnaires.
37 days................................ Application for an 351.305(b)(3).
Administrative Protective
Order.
40 days................................ Request for postponement by 351.205(e).
petitioner.
45 days................................ Allegation of critical 351.206(c)(2)(i).
circumstances.
47 days................................ Questionnaire Response Due..... 351.301(c)(2)(iii).
No deadline in an investigation........ Exclusion requests............. 351.204(e)(3).
55 days................................ Allegation of upstream 351.301(d)(3)(ii)(B).
subsidies.
65 days (Can be extended).............. Preliminary Determination...... 351.205(b)(1).
70 days................................ Submission of proposed 351.208(f)(1).
suspension agreement.
75 days 3.............................. Submission of information...... 351.301(b)(1).
75 days................................ Ministerial error comments..... 351.224(c)(2).
77 days................................ Request to align a CVD case 351.210(i).
with a concurrent AD case.
80 days................................ Replies to ministerial error 351.224(c)(3).
comments.
102 days............................... Request for a hearing.......... 351.310(c).
115 days (Can be changed).............. Closed hearing sessions........ 351.310(f).
115 days (Can be changed).............. Submission of briefs........... 351.309(c)(1)(i).
119 days............................... Critical circumstances 351.206(e).
allegation.
120 days............................... Submission of rebuttal briefs.. 351.309(d).
125 days............................... Allegation of upstream 351.301(d)(3)(ii)(B).
subsidies.
140 days (Can be extended)............. Final Determination............ 351.210.
170 days............................... Ministerial error comments..... 351.224(c)(2).
175 days............................... Replies to ministerial error 351.224(c)(3).
comments.
175 days............................... Request for exception from the 351.211(d).
assessment of duties.
192 days............................... Termination of suspension of 351.210(h).
liquidation.
212 days............................... Order issued................... 351.211.
----------------------------------------------------------------------------------------------------------------
\1\ All of the following references to days are keyed to the date of initiation.
\2\ This assumes that the Department will send out the questionnaire within 15 days of the initiation.
\3\ Assuming about 17 days between the preliminary determination and verification
Annex II.--Deadlines for Parties in Countervailing Administrative
Reviews
Deadlines for Parties in Countervailing Administrative Reviews
----------------------------------------------------------------------------------------------------------------
Day Event Proposed Regulation
----------------------------------------------------------------------------------------------------------------
0 days\1\.............................. Last Day of the Anniversary 351.213(b).
Month.
30 days................................ Publication of Initiation...... None.
37 days................................ Application for an 351.305(b)(3).
Administrative Protective
Order.
66 days................................ Extension request for responses 351.301(c)(2)(iv).
to questionnaires.
82 days................................ Questionnaire response......... 351.301(c)(2)(iii).
120 days............................... Withdrawal of Request for 351.213(d)(1).
Review.
170 days............................... Submission of information...... 351.301(b)(2).
245 days (Can be extended)............. Preliminary Results............ 351.213(h)(1)
255 days............................... Ministerial error comments..... 351.224(c)(2).
260 days............................... Replies to ministerial error 351.224(c)(3).
comments.
282 days............................... Request for a hearing.......... 351.310(c).
282 days (Can be changed).............. Closed hearing sessions........ 351.310(f).
282 days (Can be changed).............. Submission of briefs........... 351.309(c)(1)(ii).
[[Page 7388]]
287 days............................... Submission of rebuttal briefs.. 351.309(d).
365 days (Can be extended)............. Final Results.................. 351.213(h)(1).
375 days............................... Ministerial error comments..... 351.224(c)(2).
380 days............................... Replies to ministerial error 351.224(c)(3).
comments.
----------------------------------------------------------------------------------------------------------------
\1\ This assumes that the Department will send out the questionnaire within 45 days of the last day of the
anniversary month.
Annex III.--Deadlines for Parties in Antidumping Investigations
Deadlines for Parties in Antidumping Investigations
----------------------------------------------------------------------------------------------------------------
Day Event Proposed regulation
----------------------------------------------------------------------------------------------------------------
Day 0.................................. Date of Initiation\1\.......... ......................................
37 days................................ Application for an 351.305(b)(3).
Administrative Protective
Order.
50 days\2\............................. Extension request for responses 351.301(c)(2)(iv).
to questionnaires.
50 days................................ Section A response............. None.
54 days................................ Country-wide cost allegation... 351.301(d)(2)(i)(A).
65 days................................ Section B and C responses...... 351.301(c)(2)(iii).
65 days................................ Section D and E response....... See 351.301(c)(2)(ii).
77 days................................ Viability arguments............ 351.301(d)(1).
85 days................................ Company-specific cost 351.301(d)(2)(i)(B).
allegations.
115 days............................... Request for Postponement by 351.205(e).
Petitioner.
120 days............................... Allegation of critical 351.206(c)(2)(i).
circumstances.
140 days (Can be extended)............. Preliminary Determination...... 351.205(b)(1).
150 days............................... Ministerial error comments..... 351.224(c)(2).
155 days............................... Replies to ministerial error 351.224(c)(3).
comments.
155 days............................... Submission of proposed 351.208(f)(1).
suspension agreement.
161 days\3\............................ Submission of information...... 351.301(b)(1).
177 days............................... Request for a hearing.......... 351.310(c).
187 days............................... Submission of publicly 351.301(c)(3).
available information to value
factors (NME's).
194 days............................... Critical circumstance 351.206(e).
allegation.
197 days (Can be changed).............. Closed hearing sessions........ 351.310(f).
197 days (Can be changed).............. Submission of briefs........... 351.309(c)(i).
202 days............................... Submission of rebuttal briefs.. 351.309(9).
215 days............................... Request for postponement of the 351.210(e).
final determination.
215 days (Can be extended)............. Final Determination............ 351.210.
225 days............................... Ministerial error comments..... 351.224(c)(2).
230 days............................... Replies to ministerial error 351.224(c)(3).
comments.
230 days............................... Request for exception from 351.211(d)(2).
assessment of duties.
267 days............................... Order issued................... 351.211(b).
282 days............................... Suspension agreement for 351.208(f)(1)(ii).
regional industry.
----------------------------------------------------------------------------------------------------------------
\1\ All of the following references to days are keyed to the date of initiation.
\2\ This assumes that the Department will send out the questionnaire within 5 days of the ITC vote.
\3\ Assuming about 28 days between the preliminary determination and verification.
Annex IV.--Deadlines for Parties in Antidumping Administrative
Reviews
Deadlines for Parties in Antidumping Administrative Reviews
----------------------------------------------------------------------------------------------------------------
Day Event Proposed Regulation
----------------------------------------------------------------------------------------------------------------
0 days \1\............................. Last Day of the Anniversary Sec. 351.213(b).
Month.
30 days................................ Publication of Initiation...... None.
37 days................................ Application for an 351.305 (b)(3).
Administrative Protective
Order.
60 days................................ Request to Examine Absorption 351.213(j).
of Duties (AD).
66 days................................ Extension request for responses 351.301(c)(2)(iv).
to questionnaires.
66 days................................ Section A response............. None .
77 days................................ Country-wide cost allegation... 351.301(d)(2)(i)(A).
82 days................................ Sections B and C response...... 351.301(c)(2)(iii).
82 days................................ Sections D and E response...... None.
92 days................................ Viability arguments............ 351.301(d)(1).
102 days............................... Company-specific cost 351.301(d)(2)(i)(B).
allegations.
120 days............................... Withdrawal of Request for 351.213(d)(1).
Review.
170 days............................... Submission of information...... 351.301(b)(2).
245 days (Can be extended)............. Preliminary Results............ 351.213(h)(1).
255 days............................... Ministerial error comments..... 351.224(c)(2).
260 days............................... Replies to ministerial error 351.224(c)(3).
comments.
272 days............................... Submission of publicly 351.301(c)(3)(ii).
available information to value
factors (NME's).
282 days............................... Request for a hearing.......... 351.310(c).
282 days (Can be changed).............. Closed hearing sessions........ 351.310(f).
282 days (Can be changed).............. Submission of briefs........... 351.309(c)(1)(ii).
287 days............................... Submission of rebuttal briefs.. 351.309(d).
[[Page 7389]]
365 days (Can be extended)............. Final results.................. 351.213(h)(1).
375 days............................... Ministerial error comments..... 351.224(c)(2).
380 days............................... Replies to ministerial error 351.224(c)(3).
comments.
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\1\ This assumes that the Department will send out the questionnaire within 45 days of the last day of the
anniversary month.
Annex V.--Comparison of Prior and Proposed Regulations
Comparison of Prior and Proposed Regulations
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Prior Proposed Description
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PART 353--ANTIDUMPING DUTIES
Subpart A--Scope and Definitions
353.1.................................. 351.101................................ Scope of regulations.
353.2.................................. 351.102................................ Definitions.
353.3.................................. 351.104................................ Record of proceedings.
353.4.................................. 351.105................................ Public, proprietary,
privileged and classified.
353.5.................................. Removed................................ Trade and Tariff Act of 1984
amendments.
353.6.................................. 351.106................................ De minimis weighted-average
dumping margin.
Subpart B--Antidumping Duty Procedures
353.11................................. 351.201................................ Self-initiation.
353.12................................. 351.202................................ Petition requirements.
353.13................................. 351.203................................ Determination of sufficiency
of petition.
353.14................................. 351.204(e)............................. Exclusion from antidumping
duty order.
353.15................................. 351.205................................ Preliminary determination.
353.16................................. 351.206................................ Critical circumstances.
353.17................................. 351.207................................ Termination of investigation.
353.18................................. 351.208................................ Suspension of investigation.
353.19................................. 351.209................................ Violation of suspension
agreement.
353.20................................. 351.210................................ Final determination.
353.21................................. 351.211................................ Antidumping duty order.
353.21(c).............................. 351.204(e)............................. Exclusion from antidumping
duty order.
353.22(a)-(d).......................... 351.213, 351.221....................... Administrative reviews under
751(a) of the Act.
353.22(e).............................. 351.212(c)............................. Automatic assessment of
duties.
353.22(f).............................. 351.216, 351.221(c)(3)................. Changed circumstances reviews.
353.22(g).............................. 351.215, 351.221(c)(2)................. Expedited antidumping review.
353.23................................. 351.212(d)............................. Provisional measures deposit
cap.
353.24................................. 351.212(e)............................. Interest on overpayments and
underpayments.
353.25................................. 351.222................................ Revocation of orders;
termination of suspended
investigations.
353.26................................. 351.402(f)............................. Reimbursement of duties.
353.27................................. 351.223................................ Downstream product monitoring.
353.28................................. 351.224................................ Correction of ministerial
errors.
353.29................................. 351.225................................ Scope rulings.
Subpart C--Information and Argument
353.31(a)-(c).......................... 351.301................................ Time limits for submission of
factual information.
353.31(a)(3)........................... 351.302(d), 351.104(a)(2).............. Return of untimely material.
353.31(b)(3)........................... 351.302(c)............................. Request for extension of time.
353.31(d)-(i).......................... 351.303................................ Filing, format, translation,
service and certification.
353.32................................. 351.304................................ Request for proprietary
treatment of information.
353.33................................. 351.104, 351.304(a)(2)................. Information exempt from
disclosure.
353.34................................. 351.305, 351.306....................... Disclosure of information
under protective order.
353.35................................. Removed................................ Ex parte meeting.
353.36................................. 351.307................................ Verification.
353.37................................. 351.308................................ Determinations on the basis of
the facts available.
353.38(a)-(e).......................... 351.309................................ Written argument.
353.38(f).............................. 351.310................................ Hearings.
Subpart D--Calculation of Export Price, Constructed Export Price, Fair Value and Normal Value
353.41................................. 351.402................................ Calculation of export price.
353.42(a).............................. 351.102................................ Fair value (definition).
353.42(b).............................. 351.104(c)............................. Transactions and persons
examined.
353.43................................. 351.403(b)............................. Sales used in calculating
normal value.
353.44................................. Removed................................ Sales at varying prices.
353.45................................. 351.403................................ Transactions between
affiliated parties.
353.46................................. 351.404................................ Selection of home market as
the basis for normal value.
353.47................................. Removed................................ Intermediate countries.
353.48................................. 351.404................................ Basis for normal value if home
market sales are inadequate.
353.49................................. 351.404................................ Sales to a third country.
353.50................................. 351.405, 351.407....................... Calculation of normal value
based on constructed value.
353.51................................. 351.406, 351.407....................... Sales at less than the cost of
production.
353.52................................. 351.408................................ Nonmarket economy countries.
353.53................................. Removed................................ Multinational corporations.
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353.54................................. 351.401(b)............................. Claims for adjustments.
353.55................................. 351.409................................ Differences in quantities.
353.56................................. 351.410................................ Differences in circumstances
of sale.
353.57................................. 351.411................................ Differences in physical
characteristics.
353.58................................. 351.412................................ Levels of trade.
353.59(a).............................. 351.413................................ Insignificant adjustments.
353.59(b).............................. 351.414................................ Use of averaging.
353.60................................. 351.415................................ Conversion of currency.
PART 355--COUNTERVAILING DUTIES
Subpart A--Scope and Definitions
355.1.................................. 351.001................................ Scope of regulations.
355.2.................................. 351.002................................ Definitions.
355.3.................................. 351.004................................ Record of proceeding.
355.4.................................. 351.005................................ Public, proprietary,
privileged and classified.
355.5.................................. 351.003(a)............................. Subsidy library.
355.6.................................. Removed................................ Trade and Tariff Act of 1984
amendments.
355.7.................................. 351.006................................ De minimis net subsidies.
Subpart B--Countervailing Duty Procedures
355.11................................. 351.101................................ Self-initiation.
355.12................................. 351.102................................ Petition requirements.
355.13................................. 351.103................................ Determination of sufficiency
of petition.
355.14................................. 351.104(e)............................. Exclusion from countervailing
duty order.
355.15................................. 351.105................................ Preliminary determination.
355.16................................. 351.106................................ Critical circumstances.
355.17................................. 351.107................................ Termination of investigation.
355.18................................. 351.108................................ Suspension of investigation.
355.19................................. 351.109................................ Violation of agreement.
355.20................................. 351.110................................ Final determination.
355.21................................. 351.111................................ Countervailing duty order.
355.21(c).............................. 351.104(e)............................. Exclusion from countervailing
duty order.
355.22(a)-(c).......................... 351.113, 351.121....................... Administrative reviews under
751(a) of the Act.
355.22(d).............................. Removed................................ Calculation of individual
rates.
355.22(e).............................. 351.113(h)............................. Possible cancellation or
revision of suspension
agreements.
355.22(f).............................. Removed................................ Review of individual producer
or exporter.
355.22(g).............................. 351.112(c)............................. Automatic assessment of
duties.
355.22(h).............................. 351.116, 351.121(c)(3)................. Changed circumstances review.
355.22(i).............................. 351.120, 351.221(c)(7)................. Review at the direction of the
President.
355.23................................. 351.112(d)............................. Provisional measures deposit
cap.
355.24................................. 351.112(e)............................. Interest on overpayments and
underpayments.
355.25................................. 351.112................................ Revocation of orders;
termination of suspended
investigations.
355.27................................. 351.123................................ Downstream product monitoring.
355.28................................. 351.124................................ Correction of ministerial
errors.
355.29................................. 351.125................................ Scope determinations.
Subpart C--Information and Argument
355.31(a)-(c).......................... 351.301................................ Time limits for submission of
factual information.
355.31(a)(3)........................... 351.302(d), 351.104(a)(2).............. Return of untimely material.
355.31(b)(3)........................... 351.302(c)............................. Request for extension of time.
355.31(d)-(i).......................... 351.303................................ Filing, format, translation,
service and certification.
355.32................................. 351.304................................ Request for proprietary
treatment of information.
355.33................................. 351.104, 351.304(a)(2)................. Information exempt from
disclosure.
355.34................................. 351.305, 351.306....................... Disclosure of information
under protective order.
355.35................................. Removed................................ Ex parte meeting.
355.36................................. 351.307................................ Verification.
355.37................................. 351.308................................ Determinations on the basis of
the facts available.
355.38(a)-(e).......................... 351.309................................ Written argument.
355.38(f).............................. 351.310................................ Hearings.
355.39................................. 351.311................................ Subsidy practice discovered
during investigation or
review.
Subpart D--Quota Cheese Subsidy Determinations
355.41................................. Removed................................ Definition of subsidy.
355.42................................. 351.601................................ Annual list and quarterly
update.
355.43................................. 351.602................................ Determination upon request.
355.44................................. 351.603................................ Complaint of price-
undercutting.
355.45................................. 351.604................................ Access to information.
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