[Federal Register Volume 62, Number 96 (Monday, May 19, 1997)]
[Rules and Regulations]
[Pages 27296-27424]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12201]



[[Page 27295]]

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Part II





Department of Commerce





_______________________________________________________________________



International Trade Administration



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19 CFR Part 351 et al.



Antidumping Duties; Countervailing Duties; Final rule

  Federal Register / Vol. 62, No. 96 / Monday, May 19, 1997 / Rules and 
Regulations  

[[Page 27296]]


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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Parts 351, 353, and 355

[Docket No. 950306068-6361-04]
RIN 0625-AA45


Antidumping Duties; Countervailing Duties

AGENCY: International Trade Administration, Commerce.

ACTION: Final rule.

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SUMMARY: The Department of Commerce (``the Department'') hereby revises 
its regulations on antidumping and countervailing duty proceedings to 
conform the Department's existing regulations to the Uruguay Round 
Agreements Act, which implemented the results of the Uruguay Round 
multilateral trade negotiations. In addition to conforming changes, in 
these regulations the Department has sought to: 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: The effective date of this final rule is June 18, 1997. See 
Sec. 351.701 for applicability dates.

FOR FURTHER INFORMATION CONTACT: Michael Rill (202) 482-3058. For 
information concerning matters relating to the scope of orders or 
changed circumstances reviews, contact the Office of Policy (202) 482-
4412.

SUPPLEMENTARY INFORMATION:

Background

    The publication of this notice of final rules completes a 
significant portion of the process of developing regulations under the 
Uruguay Round Agreements Act (``URAA''). This process began when the 
Department took the unusual step of requesting advance public comments 
in order to ensure that, at the earliest possible stage, we could 
consider and take into account the views of the private sector entities 
that are affected by the antidumping (``AD'') and countervailing duty 
(``CVD'') laws. On February 27, 1996, the Department published proposed 
rules dealing with AD and CVD procedures and AD methodology (``AD 
Proposed Regulations''). The Department received over five hundred 
written public comments regarding the AD Proposed Regulations. On June 
7, 1996, the Department held a public hearing, and, thereafter, 
received over one hundred additional post-hearing written public 
comments on the AD Proposed Regulations.1
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    \1\ The prior notices published by the Department as part of its 
URAA rulemaking activity are: (1) Advance Notice of Proposed 
Rulemaking and Request for Public Comments (Antidumping Duties; 
Countervailing Duties; Article 1904 of the North American Free Trade 
Agreement), 60 FR 80 (Jan. 3, 1995); (2) Advance Notice of Proposed 
Rulemaking: Extension of Comment Period (Antidumping Duties; 
Countervailing Duties; Article 1904 of the North American Free Trade 
Agreement), 60 FR 9802 (Feb. 22, 1995); (3) Interim Regulations; 
Request for Comments (Antidumping and Countervailing Duties), 60 FR 
25130 (May 11, 1995); (4) Proposed Rule; Request for Comments 
(Antidumping and Countervailing Duty Proceedings; Administrative 
Protective Order Procedures; Procedures for Imposing Sanctions for 
Violation of a Protective Order), 61 FR 4826 (Feb. 8, 1996); (5) 
Notice of Proposed Rulemaking and Request for Public Comments 
(Antidumping Duties; Countervailing Duties), 61 FR 7308 (Feb. 27, 
1996); (6) Extension of Deadline to File Public Comments on Proposed 
Antidumping and Countervailing Duty Regulations and Announcement of 
Public Hearing (Antidumping Duties; Countervailing Duties), 61 FR 
18122 (April 24, 1996); (7) Announcement of Opportunity to File 
Public Comments on the Public Hearing of Proposed Antidumping and 
Countervailing Duty Regulations (Antidumping Duties; Countervailing 
Duties), 61 FR 28821 (June 6, 1996); (8) Notice of Proposed 
Rulemaking and Request for Public Comments (Countervailing Duties), 
62 FR 8818 (Feb. 26, 1997); and (9) Extension of Deadline to File 
Public Comments on Proposed Countervailing Duty Regulations 
(Countervailing Duties), 62 FR 19719 (April 23, 1997).
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    In drafting these final rules, the Department has carefully 
reviewed and considered each of the hundreds of comments it received. 
While we have not always adopted suggestions made by commenters, we 
found the comments to be extremely useful in helping us to work our way 
through the legal and policy thickets created by the massive rewriting 
of our operating statute. Therefore, we are extremely grateful to those 
who took the time and trouble to express their views regarding how the 
Department should administer the AD and CVD laws in the future.
    In addition, in these final rules, the Department has continued to 
be guided by the objectives described in the AD Proposed Regulations. 
Specifically, these objectives are: (1) Conformity with the statutory 
amendments made by the URAA; (2) the elaboration through regulation of 
certain statements contained in the Statement of Administrative Action 
(``SAA''); 2 and (3) consistency with President Clinton's 
Regulatory Reform Initiative and his directive to identify and 
eliminate obsolete and burdensome regulations.
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    \2\ Statement of Administrative Action Accompanying H.R. 5110, 
H.R. Doc. No. 316, Vol. 1, 103d Cong., 2d Sess. (1994).
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Explanation of the Final Rules

General Background

Consolidation of Antidumping and Countervailing Duty Regulations
    As described in the AD Proposed Regulations, in response to the 
President's Regulatory Reform Initiative and to reduce the amount of 
duplicative material in the regulations, the Department proposed to 
consolidate the AD and CVD regulations into a new part 351, and to 
remove parts 353 and 355. The Department did not receive any comments 
concerning the consolidation of the regulations, and, upon further 
review, we believe that the consolidation reduces duplication and makes 
the AD/CVD regulations easier to use. Accordingly, we are promulgating 
a single part 351, and are removing parts 353 and 355.
    The structure of part 351 is as follows. Subpart A (Scope and 
Definitions) is based on former subpart A of parts 353 and 355. Among 
other things, the regulations contained in subpart A deal with general 
definitions applicable to AD/CVD proceedings, the record for such 
proceedings, de minimis standards for countervailable subsidies and 
dumping margins, and the rates to be applied in the case of 
nonproducing exporters or AD proceedings involving nonmarket economy 
countries.
    Subpart B (Antidumping and Countervailing Duty Procedures) is based 
on former subpart B of parts 353 and 355. As indicated by the title, 
subpart B deals with procedural aspects of AD and CVD proceedings. 
Where the procedures for AD and CVD proceedings are different, the 
regulations in subpart B so specify.
    Subpart C (Information and Argument) is based on former subpart C 
of parts 353 and 355. Subpart C establishes rules for AD/CVD 
proceedings regarding such matters as the submission of information, 
the treatment of business proprietary information, the verification of 
information, and determinations based on the facts available. Certain 
portions of subpart C dealing with the treatment of business 
proprietary information and administrative protective order procedures 
were the subject of a separate notice of proposed rulemaking

[[Page 27297]]

and request for public comments on February 8, 1996. 61 FR 4826. A 
separate notice of final regulations will be published for these 
portions of subpart C.
    Subpart D (Calculation of Export Price, Constructed Export Price, 
Fair Value, and Normal Value) is based on former subpart D of part 353. 
Subpart D deals with methodologies for identifying and measuring 
dumping.
    Subpart E is designated ``[Reserved].'' Proposed rules to be 
included in subpart E were published in a separate notice of proposed 
rulemaking and request for public comments on February 26, 1997. 62 FR 
8818. The Department will publish a separate notice of final 
regulations after reviewing and considering public comments submitted 
in connection with proposed subpart E.
    Subpart F (Cheese Subject to In-Quota Rate of Duty) is based on 
subpart D of former part 355, and implements section 702 of the Trade 
Agreements Act of 1979, as amended by the URAA.
Comments on Overall Drafting Approach
    The Department received a few comments regarding the overall 
drafting approach used in the AD Proposed Regulations. One commenter 
complimented the Department on its use of introductory paragraphs 
before each regulation, but noted that in several instances the 
language of the introductory paragraph did not accurately reflect the 
content of the regulation itself. In addition, this same commenter 
noted that in several instances, the Department's use of the citation 
signal ``See'' to a particular statutory provision was ambiguous. We 
have taken this commenter's suggestions to heart, and in drafting these 
final regulations we have reviewed the introductory paragraphs and our 
citation signals in order to improve the clarity and precision of these 
regulations.
    A different commenter noted that in the AD Proposed Regulations, 
when the Department referred to a particular section of the statute, it 
referenced only the Tariff Act of 1930 (the ``Act'') itself, not the 
section of the U.S. Code where the section is codified. This commenter 
suggested that to make the regulations more ``user friendly,'' the 
Department should refer to the relevant U.S. Code section of the Act or 
to both the U.S. Code and the Act.
    While we appreciate the spirit in which this suggestion was made, 
we have not adopted it in drafting these final regulations. For years, 
the Department generally has referenced sections of the Act in its 
regulations, and we are not aware of any objections having been raised 
regarding this drafting practice (other than the instant comment). The 
absence of objections to this practice, as well as the absence of any 
other comments endorsing the use of U.S. Code citations, suggests to us 
that those who use these laws are comfortable with our practice of 
referencing sections of the Act. As for the suggestion that we 
reference both the Act and U.S. Code sections, given the numerous 
statutory references in these final regulations, the adoption of this 
suggestion would add considerably to the overall length of the 
regulations without, in our view, contributing significantly to their 
ease of use.
Explanation of Particular Provisions
    In drafting these final regulations, the Department carefully 
considered each of the comments received. In addition, we conducted our 
own independent review of those provisions of the AD Proposed 
Regulations that were not the subject of public comments. The following 
sections contain a summary of the comments we received and the 
Department's responses to those comments. In addition, these sections 
contain an explanation of any changes the Department has made to the AD 
Proposed Regulations either in response to comments or on its own 
initiative. The following sections do not contain a discussion of those 
provisions that remain unchanged from the AD Proposed Regulations and 
that were not the subject of any public comments.

Subpart A--Scope and Definitions

    Subpart A of part 351 sets forth the scope of part 351, 
definitions, and other general matters applicable to AD/CVD 
proceedings.

Section 351.102

    Section 351.102 sets forth definitions of terms that are used 
throughout part 351. With respect to most of the definitions contained 
in Sec. 351.102, we received no comments. Definitions that we have 
added or revised, or on which we received comments, are discussed 
below.
    We received one general comment suggesting that we number each of 
the definitions contained in Sec. 351.102(b) as a separate numbered 
paragraph. According to the commenter, the absence of subparagraph 
numbering will make shorthand references to a particular definition 
impossible and will render definitions difficult to locate.
    We have not adopted this suggestion, because we have followed the 
guidelines set forth in the Document Drafting Handbook 1991 ed. (Office 
of the Federal Register), which states, at page 21, that ``paragraph 
designations are not required for the terms being defined, if the terms 
are listed in alphabetical order,'' as is the case with respect to 
Sec. 351.102(b). Because the definitions in Sec. 102(b) are listed in 
alphabetical order, we do not believe that it will be difficult to 
locate a particular definition. In addition, we do not believe that the 
format we have used precludes shorthand references.
    Affiliated persons; affiliated parties: Many commenters claimed 
that because the statute and the SAA do not provide sufficient guidance 
as to when the Department will consider an affiliation to exist by 
virtue of ``control,'' the Department should provide clearer guidance 
in the regulations. In this regard, we received a number of specific 
suggestions relating to the issue of ``control,'' many of which had 
been submitted previously.
    As a general observation, the Department appreciates the desire for 
additional detail regarding the concept of affiliation. To the extent 
possible, we have attempted to provide additional guidance in this 
explanatory material. However, we continue to believe that it would be 
premature to codify much guidance in the form of a regulation. As 
explained in the AD Proposed Regulations, 61 FR at 7310, we believe 
that it is more appropriate to develop our practice regarding 
affiliation through the adjudication of actual cases.
    Turning to specific suggestions, several commenters suggested that 
the definition should state that in order for control to exist within 
the meaning of section 771(33) of the Act, a relationship must affect 
the subject merchandise or foreign like product. These commenters 
argued that the purpose of such a requirement would be to winnow out 
those relationships that, while unquestionably close enough to 
constitute control in the abstract, do not affect the production or 
sale of the product that the Department is examining. According to 
these commenters, this approach is in line with the statement in the AD 
Proposed Regulations, 61 FR at 7310, that the Department would look at 
the ability to impact production, pricing, or cost, an analysis which, 
they claimed, must be directed at the product under investigation or 
review.
    In general we agree with the suggestion that we focus on 
relationships that have the potential to impact decisions concerning 
production, pricing or cost. This does not mean however, that proof is 
required that a relationship in fact has

[[Page 27298]]

had such an impact. In this regard, section 771(33), which refers to a 
person being ``in a position to exercise restraint or direction,'' 
properly focuses the Department on the ability to exercise ``control'' 
rather than the actuality of control over specific decisions. 
Therefore, we will consider the full range of criteria identified in 
the SAA, at 838, in determining whether ``control'' exists. Moreover, 
we do not believe that we should ignore situations in which a control 
relationship, while relating directly to another product or another 
type of commercial activity, could affect decisions involving the 
production, pricing or cost of the merchandise under consideration. 
Therefore, in these types of situations, where a control relationship 
exists, the respondent will have to demonstrate that the relationship 
does not have the potential to affect the subject merchandise or 
foreign like product.
    Several commenters suggested that the Department reconsider the 
statement in the preamble to the AD Proposed Regulations, 61 FR at 
7310, that ``temporary market power, created by variations in supply 
and demand conditions, would not suffice [as evidence of control].'' 
With respect to this comment, we continue to believe that temporary 
market power generally would not constitute sufficient evidence of 
control. However, where the issue arises, the Department will conduct a 
case-by-case examination to determine whether market power is truly 
``temporary.''
    Another commenter suggested that the regulations state that in 
analyzing control, the Department will focus on long-term, rather than 
short-term, relationships. With respect to this suggestion, the 
Department normally will not consider firms to be affiliated where the 
evidence of ``control'' is limited, for example, to a two-month 
contract. On the other hand, the Department cannot rule out the 
possibility that a short-term relationship could result in control. 
Therefore, the Department will consider the temporal aspect of a 
relationship as one factor to consider in determining whether control 
exists. In this regard, we also should note that we do not intend to 
ignore a control relationship that happens to terminate at the 
beginning (or comes into existence at the end) of a period of 
investigation or review.
    A number of commenters asked that the Department refrain from 
finding an affiliation in situations where the applicable national law 
prevents one firm from exercising control over another. With respect to 
this suggestion, the Department will take national laws into account in 
examining the existence of control. However, the Department also will 
consider whether, national laws notwithstanding, there is any de facto 
control.
    Many commenters requested that the Department establish (1) 
rebuttable presumptions for when control does or does not exist; (2) 
bright-line thresholds establishing when control does not exist; and 
(3) specific examples in the regulations of relationships that do or do 
not constitute control. We have not adopted these suggestions, because 
they require the type of fact-specific determinations that the 
Department is not prepared to make at this time. As discussed above, 
the Department intends to establish guidelines concerning affiliation 
gradually as we gain experience through the resolution of issues in 
actual cases.
    One commenter suggested that the Department should find control to 
exist only if a relationship resulted in an impact on prices or other 
significant terms of sale. The Department has not adopted this 
suggestion, because we do not agree that it is appropriate to require 
evidence regarding the actual impact of a relationship. Because section 
771(33) refers to a person being ``in a position to exercise restraint 
or direction,'' we are required to examine the ability to control, not 
the actual exercise of control.
    Another commenter suggested that the Department should not consider 
``normal commercial relationships'' as giving rise to control. We have 
not adopted this suggestion, because ``normal'' is a subjective term 
that lacks any clear definition. In our view, a standard of 
``normality'' would be subject to substantial confusion, argument, and 
litigation. More importantly, there is nothing in the statute or the 
legislative history that suggests that ``normal commercial 
relationships'' cannot give rise to control. To the contrary, the SAA 
at 838 states: ``A company may be in a position to exercise restraint 
or direction, for example, through corporate or family groupings, 
franchises or joint venture agreements, debt financing, or close 
supplier relationships in which the supplier or buyer becomes reliant 
upon the other.'' Each of the relationships described in this passage 
can be characterized as ``normal'' in the sense that they are 
commercial relationships commonly entered into by firms. Nevertheless, 
notwithstanding the ``normality'' of these commercial relationships, 
the SAA indicates that they can give rise to control.
    One commenter suggested that the Department clarify that the 
provision of a loan by one firm to another on terms consistent with 
commercial considerations will not constitute control. The Department 
has not adopted this suggestion, because we do not believe that the 
fact that a loan is provided on terms consistent with commercial 
considerations is necessarily dispositive with respect to the issue of 
control. For example, in situations where the supply of credit is 
limited, the availability of a loan, regardless of the loan's terms, 
may allow the lender to exercise control over the recipient of the 
loan.
    Several commenters suggested that the Department should define 
legal or operational control as the ``enforceable ability to compel or 
restrain commercial actions.'' As a further refinement of this 
suggestion, one commenter suggested that the Department should find 
control only if one firm is capable of forcing another firm to act 
against its own interests.
    The Department has not adopted these suggestions, because we do not 
believe that ``enforceability'' is a requisite factor under section 
771(33). In addition, in the case of the second suggestion, we believe 
that focusing on the speculative question of what is or is not in a 
firm's interests would render our analysis of affiliation less, rather 
than more, predictable.
    Aggregate basis: We received one comment concerning the definition 
of the term ``aggregate basis,'' a term that describes CVD proceedings 
in which the Department, under section 777A(e)(2)(B) of the Act, 
determines a single country-wide subsidy rate applicable to all 
exporters and producers. The commenter suggested that we substitute the 
word ``principally'' for ``solely'' so that the definition would read: 
`` `Aggregate basis' means the calculation of a country-wide subsidy 
rate based principally on information provided by the foreign 
government.'' According to the commenter, the purpose of the 
modification would be to avoid confusion when the Department conducts a 
CVD investigation or review on an aggregate basis, but one or more 
producers request an individual review or exclusion.
    We have adopted this suggestion, although not for the reason 
suggested. Although section 777A(e) of the Act establishes a preference 
for individual countervailable subsidy rates, section 777A(e)(2) 
provides for alternative methods where there are a large number of 
exporters or producers involved in an investigation or review. Under 
section 777A(e)(2)(B), one of these alternatives is to determine a 
single country-wide subsidy rate. Should the Department

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have to use the country-wide rate method of section 777A(e)(2)(B), the 
Department will not review firms individually, although, where 
practicable, the Department will consider requests for an individual 
zero rate in an administrative review under Sec. 351.213(k). In 
addition, while the Department will consider requests for exclusions 
from firms that claim to have received no countervailable subsidies, 
the Department will not calculate subsidy rates to be applied to 
merchandise produced or exported by such firms. Instead, the Department 
merely will determine whether or not a firm requesting exclusion 
receives countervailable subsidies in more than de minimis amounts. If 
the firm does not, the Department will exclude the firm. If the firm 
does receive more than de minimis countervailable subsidies, the 
Department will not exclude the firm, and will apply to that firm the 
country-wide subsidy rate.
    Thus, the definition of ``aggregate basis'' is not inaccurate 
insofar as it relates to the calculation of individual rates and the 
granting of exclusions. On the other hand, the definition, as drafted, 
fails to reflect the fact that even in a CVD proceeding in which the 
Department calculates a single country-wide rate, it may have to obtain 
information from one or more firms with respect to certain types of 
subsidies, such as equity infusions. Therefore, we have substituted the 
word ``principally'' for ``solely'' to reflect this fact.
    Country-wide subsidy rate: One commenter suggested that we add to 
Sec. 351.102(b) a definition of ``country-wide subsidy rate.'' The 
proposed definition included a statement that the Secretary shall use 
``the smallest applicable and feasible jurisdictional unit consistent 
with'' the definition of ``country'' in section 771(3) of the Act. The 
thrust of the comment was that the Department should calculate separate 
``country-wide subsidy rates'' for individual subnational 
jurisdictions, such as provinces or states. A different commenter 
opposed this suggestion.
    We have not adopted this suggestion, because the statute does not 
require the Department to calculate state- or province-specific subsidy 
rates. The Department rejected province-specific rates in Certain 
Softwood Lumber Products from Canada, 57 FR 22570, 22578-80 (1992), and 
the Department's position was sustained in Certain Softwood Lumber 
Products from Canada, No. USA-92-1904-01, Slip op. 139-43 (FTA Panel 
May 6, 1993). We do not believe that any of the statutory amendments 
made by the URAA warrants a different outcome. Moreover, there is no 
indication in the legislative history that Congress intended any change 
to the Department's practice in this regard.
    Ordinary course of trade: We received several comments concerning 
the Department's proposed definition of the term ``ordinary course of 
trade.'' Some of these comments dealt with the definition in general, 
while other comments focussed on particular aspects of the definition.
    The definition in general: One commenter stated that the definition 
should establish a presumption that sales are in the ordinary course of 
trade until a party demonstrates otherwise on a sale-by-sale basis 
(with the exception of home-market sales at prices below cost of 
production). This commenter also argued that the standards for making 
such a claim should be exacting, and that no general unsupported 
conclusions should suffice to exclude selected transactions. This 
commenter also urged the Department to omit from the regulation 
examples of sales that might be outside the ordinary course of trade, 
stating that each case should turn on its facts.
    We have adopted this suggestion in part. We have not adopted the 
suggestion regarding the establishment of a presumption, because we 
believe that judicial precedent is sufficiently clear that the party 
making the claim bears the burden of proving that sales are outside the 
ordinary course of trade. See, e.g., Koyo Seiko Co., Ltd. v. United 
States, Slip op. 96-101 (Ct. Int'l Trade June 19, 1996), pp. 22-25, and 
cases cited therein. In addition, we have not adopted the suggestion 
that we delete references to particular types of sales that might be 
considered as outside the ordinary course of trade. Given the 
illustrative examples of such sales in the SAA, we believe that it is 
appropriate to provide guidance to parties by describing certain types 
of transactions that, depending on the facts, might be deemed to be 
outside the ordinary course of trade.
    However, we have modified the definition so as to emphasize the 
fact-specific nature of ordinary course of trade analyses. As revised, 
the definition states that, as required by judicial precedent, the 
Secretary will evaluate ``all the circumstances particular to the sales 
in question.''
    Another commenter expressed satisfaction with the proposed 
definition, but suggested that the Department's placement of the closed 
parenthesis in the definition was incorrect. We agree that we misplaced 
the closed parenthesis. However, we have corrected the error by 
restating the parenthetical as a separate sentence.
    Abnormally high profits: Several commenters objected to the 
reference in the proposed definition to ``merchandise sold * * * with 
abnormally high profits.'' According to one commenter, neither the 
statute nor the SAA refers to ``abnormally high profits'' as a factor 
in considering whether merchandise is sold in the ordinary course of 
trade. In addition, this commenter asserted that the inclusion of this 
factor in the definition would invite respondents to argue for the 
exclusion of allegedly overly profitable sales.
    Another commenter acknowledged that the SAA does discuss sales with 
``abnormally high profits'' as being outside the ordinary course of 
trade, but that it does so in the context of constructed value profit. 
This same commenter also argued that the proposed definition is overtly 
biased in favor of respondents, because it does not provide for the 
exclusion of sales with abnormally ``low'' profits as being outside the 
ordinary course of trade. A third commenter, also noting that the 
proposed definition does not refer to sales with abnormally ``low'' 
profits, requested that the Department either delete the reference to 
abnormally high profits or revise the definition to refer to 
``merchandise sold at aberrational prices or profits.''
    We have not adopted these suggestions. With respect to the 
propriety of including in the definition any reference to sales with 
abnormally high profits, we believe that the SAA warrants such a 
reference. As acknowledged by one of the commenters, the SAA at 839-40 
does refer to sales with abnormally high profits as being outside the 
ordinary course of trade. Although this reference is made in the 
context of constructed value profit, we believe that it applies in 
other contexts, as well. The SAA at 839 itself notes that ``constructed 
value serves as a proxy for a sales price.'' Thus, where normal value 
is based on constructed value, the constructed value is supposed to 
approximate what a price-based normal value would be if there were 
usable sales. Because, according to the SAA, a constructed value that 
included a profit element based on sales with abnormally high prices 
would not constitute an acceptable normal value, it follows that it 
would be improper to use sales with abnormally high profits as a basis 
for a price-based normal value.
    With respect to the suggestion that the Department will be 
overwhelmed with arguments from respondents claiming

[[Page 27300]]

that particular sales have abnormally high profits, as discussed above, 
the burden of establishing that a particular sale is outside the 
ordinary course of trade rests on the party making the claim. Over 
time, we believe that this evidentiary burden will ensure that only 
serious claims are presented to the Department.
    Finally, we do not believe that the proposed definition favors 
respondents. When one considers the proposed definition in light of the 
entire statute and the SAA, it is apparent that the Department may 
exclude sales with both abnormally low (i.e., negative) and abnormally 
high profits from a dumping analysis. The only difference is that the 
Department considers sales with abnormally low profits under the rubric 
of ``sales below cost of production'' and section 773(b) of the Act. 
However, as section 771(15)(A) of the Act makes clear, sales that are 
disregarded under section 773(b)(1) as being below cost are considered 
to be outside the ordinary course of trade.
    Off-quality merchandise: One commenter requested that the 
Department delete the reference in the proposed definition to ``off-
quality merchandise.'' According to this commenter, neither the statute 
nor the SAA mentions ``off-quality merchandise,'' and such merchandise 
may be in the ordinary course of trade in certain industries and 
markets.
    We have not adopted this suggestion. Contrary to the comment, the 
SAA at 839 does refer to ``off-quality merchandise,'' albeit in the 
context of constructed value profit. For the reasons set forth above in 
connection with the issue of ``abnormally high profits,'' we believe 
that this reference is relevant to the general definition of ``ordinary 
course of trade.'' As for the argument that sales of ``off-quality 
merchandise'' may be in the ordinary course of trade in certain 
industries and markets, the inclusion of the reference to ``off-quality 
merchandise'' does not mean that sales of such merchandise are 
automatically outside the ordinary course of trade. As discussed above, 
and as the revised definition now makes clear, the Secretary will 
conclude that particular sales are outside the ordinary course of trade 
only after an evaluation of all of the circumstances.
    Samples and Prototypes: One commenter suggested that the Department 
should consider sales of sample and prototype merchandise to be outside 
the ordinary course of trade, and should exclude such sales from its 
calculations of dumping margins. We have not adopted this suggestion 
for several reasons. First, there needs to be some limit on the number 
of items included in a non-exhaustive list of examples. While we do not 
disagree that there may be instances in which the Department might 
consider sales of samples or prototypes to be outside the ordinary 
course of trade, the commenter acknowledged that such sales already may 
be embraced by the regulatory reference to merchandise ``sold pursuant 
to unusual terms of sale.'' Second, the commenter requested that sales 
of samples or prototypes be excluded from the dumping margin 
calculation altogether. However, as both the Department and the courts 
have made clear on numerous occasions, the statutory exclusion for 
sales outside the ordinary course of trade applies only to sales used 
to determine foreign market value (now normal value), not sales used to 
determine U.S. price (now export price or constructed export price). 
Thus, the courts have sustained the inclusion of all United States 
sales whether in or out of the ordinary course of trade. See, e.g., 
Bowe Passat Reinigungs-Und Waschereitechnik GMBH v. United States, 926 
F. Supp. 1138, 1147-49 (Ct. Int'l Trade 1996), and cases cited therein.
    Price adjustment: We have added to Sec. 351.102(b) a definition of 
the term ``price adjustment.'' This term is intended to describe a 
category of changes to a price, such as discounts, rebates and post-
sale price adjustments, that affect the net outlay of funds by the 
purchaser. As discussed in connection with Sec. 351.401, below, such 
price changes are not ``expenses'' as the Department usually uses that 
term, but rather are changes that the Department must take into account 
in identifying the actual starting price. Numerous commenters requested 
clarification on whether price adjustments would be treated as direct 
or indirect expenses. As discussed more fully below, price adjustments 
are neither direct nor indirect expenses, although they impact price as 
additions or deductions.
    Sale or likely sale: The proposed definition of ``likely sale,'' 
which was based on 19 CFR Secs. 353.2(t) and 355.2(p), defined this 
term as meaning ``a person's irrevocable offer to sell.'' One commenter 
suggested that the Department liberalize this definition to encompass 
something less than an irrevocable offer to sell.
    Although the Department has not adopted this particular suggestion, 
we have taken another look at the ``irrevocable offer'' standard. 
Because most AD/CVD petitions are based on sales, rather than likely 
sales, the Department rarely has applied this standard. However, in one 
case where the use of the irrevocable offer standard was at issue, the 
court criticized the standard. Kerr-McGee Chemical Corp. v. United 
States, 765 F. Supp. 1576 (Ct. Int'l Trade 1991). Therefore, the 
Department has decided to eliminate the definition of ``likely sale'' 
in Sec. 351.102(b). Should the meaning of this term become an issue in 
future cases, we will interpret the term in light of the statute and 
the legislative history.
    Segment of the proceeding: One commenter suggested that paragraph 
(2) of the definition of ``segment of the proceeding'' include a 
reference to scope inquiries, because such inquiries are separately 
reviewable under section 516A of the Act. We have adopted this 
suggestion, and have revised paragraph (2) of the definition 
accordingly.
    Another commenter did not object to the definition itself, but 
stated that the Department should treat each whole review as a separate 
proceeding, and should rely upon the record from each proceeding only 
in connection with that particular proceeding. Because this commenter 
did not propose any revisions to the definition, we have not made any 
changes to the definition based on this comment.
    Suspension of liquidation: One commenter suggested that in order to 
eliminate confusion created by ``suspensions'' ordered by agencies 
other than the Department, such as the Customs Service, the Department 
should add to Sec. 351.102 a definition of ``suspension of 
liquidation.'' The commenter included a proposed definition that, in 
general, defined ``suspension of liquidation'' as a suspension of 
liquidation specifically ordered by the Department under the authority 
of title VII or title X of the Tariff Act, or by the courts in 
litigation involving antidumping or countervailing duties. No commenter 
opposed this suggestion.
    We have adopted the suggestion, and have added to Sec. 351.102(b) a 
definition of ``suspension of liquidation'' along the lines suggested 
by the commenter. However, we have modified the language proposed by 
the commenter in order to make the definition more accurate with 
respect to suspensions of liquidation ordered by courts.

Section 351.104

    Section 351.104 defines what constitutes the official and public 
records of an AD/CVD proceeding, and prohibits the removal of a record 
or any portion thereof unless ordered by the Secretary or required by 
law.
    In connection with Sec. 351.104(a)(1) and its list of examples of 
materials that will be included in the official record,

[[Page 27301]]

one commenter suggested that the Department add to this list ``changes 
to the electronic database that are made by Commerce (or by 
respondents)'' and ``computer programs.'' Although the material 
described by the commenter is, as a matter of practice, included in the 
official record, we have not adopted this suggestion. As the commenter 
acknowledged, paragraph (a)(1) merely contains examples of material 
that will be included in the record, and is not itself an exhaustive 
list. The commenter did not indicate that the absence of a reference in 
the former regulations to computer programs or changes to the 
electronic database gave rise to difficulties in actual cases. In the 
absence of such difficulties, we see no need to revise this regulation.
    One commenter supported Sec. 351.104(a)(2)(ii), which deals with 
the inclusion in the official record of documents returned to the 
submitter. The commenter requested that this provision remain 
unchanged. The Department has not revised this provision.

Section 351.105

    Section 351.105 defines the four categories of information 
applicable to AD/CVD proceedings: public, business proprietary, 
privileged, and classified. After a review of proposed Sec. 351.105 and 
the comments submitted pertaining to that section, we have left 
Sec. 351.105 unchanged, but for some stylistic changes involving the 
substitution of ``that'' for ``which.''
    One commenter suggested that the proposed definition of ``public 
information'' in Sec. 351.105(b) is too narrow, because it excludes 
business information claimed by the submitter to be business 
proprietary unless the submitter has published the information or 
otherwise made it public. According to this commenter, the definition 
should include all non-classified information that a party learns 
through any lawful means outside the context of disclosure under an 
administrative protective order (``APO''). The commenter cited, for 
example, information acquired through market research that may not have 
been published or made generally available to the public at large. In 
addition, this commenter proposed that the definition of ``business 
proprietary information'' contained in Sec. 351.105(c) expressly 
exclude all ``public information'' as the commenter would define 
``public information.''
    For the following reasons, the Department has not adopted this 
suggestion. The Department places a high priority on the safeguarding 
of business proprietary information. The definition of ``public 
information'' in Sec. 351.105(b) is identical to the definition of that 
term in former 19 CFR Secs. 353.4(a) and 355.4(a). Absent some evidence 
that the definition interferes with a party's ability to defend its 
interests in an AD/CVD proceeding, we are reluctant to transform what 
heretofore has been considered as business proprietary information into 
public information. However, the commenter did not offer any evidence 
that the Department's longstanding definition of ``public information'' 
has had this effect. Instead, the commenter merely asserted that it is 
not the Department's role ``to regulate lawfully acquired commercial 
information.''
    The same commenter suggested that the Department should amend 
Sec. 351.105(b) so as to add the following additional category of 
information normally considered as public: ``descriptions of reporting 
methodologies, such as allocation methods.'' We have not adopted this 
suggestion, because here, too, there is no indication that the absence 
of a reference in Sec. 351.105(b) to this type of information has 
interfered with a party's ability to defend its interests in an AD/CVD 
proceeding.
    We should note, however, that the former regulations did not, and 
these regulations will not, preclude a party from arguing in a given 
case that business proprietary treatment should not be accorded to 
particular information. In this regard, Sec. 351.104(b)(3) continues to 
treat as ``public information'' information ``that the Secretary 
determines is not properly designated as business proprietary.'' 
However, we should emphasize here that where a party seeks to challenge 
the business proprietary status of certain information, it should take 
care to ensure that in submitting its challenge to the Secretary, it 
does not inadvertently disclose the information in dispute.
    Finally, we received two comments that essentially suggested that 
the Department delete proposed Sec. 351.105(c)(10), which provides for 
business proprietary treatment of the position of a domestic producer 
or workers regarding a petition. According to one commenter, 
Sec. 351.105(c)(10) would effectively preclude industrial users and 
consumers from commenting on the issue of industry support for a 
petition, because users and consumers would not be eligible to obtain 
this information under APO. In addition, both commenters were skeptical 
regarding the ability of the Department to grant APO access to this 
information in a timely manner so that ``interested parties'' will be 
able to comment on the issue of industry support within the 20-day 
statutory deadline. A third commenter, however, opposed deleting 
paragraph (c)(10), although it agreed that the Department should 
expedite the APO process.
    We have not adopted this suggestion for several reasons. As we 
stated in the AD Proposed Regulations, 61 FR at 7314, several 
commenters indicated that, due to concerns regarding commercial 
retaliation, business proprietary treatment may be necessary in order 
to encourage domestic producers and workers to present their candid 
views regarding a petition. The instant commenters did not challenge 
the validity of these concerns. As for APO disclosure, the Department 
is aware of the need for expedited disclosure with respect to 
information concerning industry support, and is confident that it will 
be able to process APO requests in a timely manner that allows 
interested parties to exercise their right to comment on the existence 
of industry support for a petition.

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. After reviewing 
proposed Sec. 351.106 and the comments pertaining to that section, we 
have left Sec. 351.106 unchanged.
    One commenter objected to the fact that the de minimis standard for 
reviews remained at 0.5 percent, and suggested that this was 
inconsistent with the spirit, if not the letter, of the AD Agreement. 
We have left the de minimis standard for reviews at 0.5 percent, 
because, as stated in the AD Proposed Regulations, 61 FR at 7312, this 
result is required by the statute and is consistent with both the AD 
Agreement and the SCM Agreement.
    As discussed above in connection with Sec. 351.102(b), one 
commenter suggested a definition of ``country-wide subsidy rate'' that 
would have provided for the application of country-wide subsidy rates 
on a state-or province-specific basis. This same commenter, assuming 
the adoption of its prior suggestion, proposed that we add a paragraph 
to Sec. 351.106 that would have applied the de minimis standard to 
country-wide rates on a state-or province-specific basis. The same 
commenter that opposed the prior suggestion also opposed the instant 
suggestion concerning the de minimis standard. Because we have not 
adopted the prior suggestion, we are not adopting the corresponding 
suggestion regarding the de minimis standard; i.e.,

[[Page 27302]]

we will not apply the de minimis standard on a subnational level.
    We have left unchanged proposed Sec. 351.106(c)(2), which applies 
the de minimis standard to the assessment of antidumping duties. 
Applying the de minimis standard to assessments on an importer-specific 
basis resolves the inconsistency between the treatment of cash deposits 
and assessments. If a de minimis amount of estimated duties is not 
worth collecting, then there is no reason to believe that a de minimis 
level of definitively determined duties is worth assessing and 
collecting either. Paragraph (c)(2) also avoids an inconsistency 
between the administration of the AD and CVD laws, something that the 
Department has expressed as one of its goals.
    One commenter contended that the Department should not apply the de 
minimis standard to the assessment of antidumping duties, because such 
a policy does not result in any reduction in the Department's 
administrative burden, is contrary to the SAA, and is not allowed by 
the statute. This commenter cited the statutory requirement that 
antidumping duties be imposed ``in an amount equal to the amount by 
which the normal value exceeds the export price (or the constructed 
export price) for the merchandise'' for the proposition that the 
Department never may decline to assess antidumping duties, regardless 
of how small such duties may be. With regard to the SAA, this commenter 
contended that the SAA expressly limits the application of the de 
minimis standard to the collection of deposits only by stating: 
``Commerce will continue its present practice in reviews of waiving the 
collection of estimated cash deposits if the deposit rate is below 0.5 
percent ad valorem, the existing regulatory standard for de minimis.''
    As noted above, the Department will apply the de minimis standard 
to the assessment of antidumping duties on an importer-specific basis. 
Regarding the commenter's statutory arguments, we believe that the 
statute is silent on the issue. Although the statutory provisions cited 
provide that the Department must assess duties, as the courts have 
recognized, these provisions do not specify any particular assessment 
methodology. See, e.g., FAG Kugelfischer Georg Schafer KGaA v. United 
States, Slip Op. 95-158, 1995 Ct. Int'l. Trade LEXIS 209 (1996), aff'd, 
No. 96-1074 (Fed. Cir. May 20, 1996). Significantly, the statutory 
provisions cited by the commenter do not address how the Department 
should apply the de minimis standards in reviews. Instead, the only 
mention of such standards applying in reviews is contained in the SAA. 
However, the SAA statement cited by the commenter (that the Department 
will continue its practice of waiving cash deposits below 0.5 percent 
in reviews) does not address the assessment issue at all. Read in 
context, the statement refers to the fact that the de minimis standard 
in reviews will continue to be 0.5 percent, as opposed to the new 2 
percent standard for AD investigations. This statement does not address 
the issue of whether the application of the 0.5 percent standard is 
limited to the collection of cash deposits of estimated duties. As the 
Department noted in the AD Proposed Regulations, 61 FR at 7312, the 
only statement addressing that issue in the SAA is the general 
statement that ``de minimis margins are regarded as zero margins.'' The 
commenter offers no policy arguments for adopting an approach that 
would limit the application of the de minimis standard to the deposit 
of estimated duties.
    Another commenter agreed with the Department's proposal to apply 
the de minimis standard to the assessment of antidumping duties. In 
addition, this commenter proposed that the Department clarify that 
where an importer purchases from more than one exporter, the importer 
will receive producer-specific assessment rates, and that no duties 
will be assessed for individual de minimis rates.
    In general, we agree with this comment, although we do not believe 
that revisions to the regulations are necessary. As discussed below, 
under Sec. 351.212(b)(1), the Department, as it has in many previous 
cases, will calculate importer-specific assessment rates for each 
producer or exporter reviewed. Thus, if one importer purchases from 
several producers or exporters, the Department will assign that 
importer an assessment rate for each producer or exporter. The 
Department will apply the de minimis standard to these individual 
assessment rates.
    Proposed paragraph (c)(2) provided that the Secretary will instruct 
the Customs Service to liquidate without regard to antidumping duties 
all entries of subject merchandise for which the Secretary calculates 
an assessment rate that is de minimis (i.e., less than 0.5 percent ad 
valorem. Two commenters noted that the proposed regulations did not 
indicate which entries will be subject to paragraph (c)(2) if it is 
issued in final form. According to the commenters, paragraph (c)(2) 
should apply to all entries that are unliquidated as of the date of 
issuance of the final regulations.
    The Department recognizes the need for guidance on this issue, but 
has not adopted the solution proposed. Instead, the Department will 
apply paragraph (c)(2) to all liquidations done pursuant to final 
results in reviews that the Department initiates after the effective 
date of these regulations. This approach is consistent with the 
applicability date set forth in Sec. 351.701. In addition, this 
approach is necessary in order to avoid the extreme administrative 
burden the Department would face if it applied paragraph (c)(2) 
retroactively, in which case the Department would have to amend the 
numerous liquidation instructions that it has sent to the Customs 
Service over the years. Normally, the Customs Service liquidates 
entries soon after the Department issues liquidation instructions. 
However, the Department has no way to determine whether the Customs 
Service has liquidated all entries subject to liquidation instructions, 
because liquidation may have been delayed for reasons unrelated to the 
existence of an AD order. Therefore, to implement the commenters' 
proposal, the Department would have to amend all of its previously 
issued liquidation instructions.
    One commenter expressed concern that the Department will apply 
paragraph (c)(2) based upon de minimis weighted-average dumping 
margins. With respect to this comment, we note that Department usually 
uses the term ``weighted-average dumping margin'' to refer to an 
exporter-or producer-specific margin that the Department uses for cash 
deposit purposes. As discussed above, the Department normally will 
apply paragraph (c)(2) on the basis of importer-specific assessment 
rates. However, although the Department has been calculating importer-
specific assessment rates for some time, there are some cases that are 
held up in litigation. In these cases, we may not be able to calculate 
importer-specific assessment rates, because the record does not contain 
the necessary information. In such situations, where the Department 
issues assessment instructions at the conclusion of the litigation, we 
will apply the de minimis rule on the basis of the weighted-average 
dumping margin calculated for the exporter or producer.

Section 351.107

    We have added a new Sec. 351.107 that deals with (1) the 
establishment of deposit rates in situations involving a nonproducing 
exporter, (2) the selection of the appropriate deposit rate where entry 
documents do not identify the

[[Page 27303]]

producer of subject merchandise, and (3) the calculation of rates in AD 
proceedings involving nonmarket economy countries.
    Nonproducing exporters: In the AD Proposed Regulations, 61 FR at 
7311, the Department requested additional public comment on the issue 
of whether to promulgate special rules regarding the rates applicable 
to exporters that are not also producers, such as trading companies. We 
noted that one alternative would be to calculate a separate rate for 
each exporter/producer combination.
    One commenter suggested that the Department should apply this 
approach in all instances. Other commenters argued that the Department 
should not codify an across-the-board rule, but instead should 
establish rates for exporter/producer combinations on a case-by-case 
basis. Another commented that it would be inappropriate to determine 
rates solely on the basis of exporter/producer combinations, and that 
normally the Department should base deposits of estimated duties on the 
rate calculated for the producer.
    The Department agrees with the comments suggesting that it is 
appropriate in some instances to establish rates for exporter/producer 
combinations. Therefore, in paragraph (b)(1)(i), we have provided for 
the establishment of such ``combination rates.''
    We believe that combination rates are appropriate, because, in an 
AD proceeding, the Department usually investigates or reviews sales by 
a nonproducing exporter only if that exporter's supplier sold the 
subject merchandise to the exporter without knowledge that the 
merchandise would be exported to the United States. While we agree with 
one commenter that in these instances the producer's pricing is not at 
issue, we are concerned about the proper application of any deposit 
rate determined on the basis of the exporter's pricing. Establishing a 
deposit rate for an exporter and, without regard to the identity of the 
supplier, applying that rate to all future exports by that exporter 
could lead to the application of that rate even if other suppliers sold 
to the exporter with knowledge of exportation to the United States. 
This would enable a producer with a relatively high deposit rate to 
avoid the application of its own rate by selling to the United States 
through an exporter with a low rate. Therefore, in order to ensure the 
proper application of deposit rates, the Department believes that it 
should establish, where appropriate, individual rates for nonproducing 
exporters in combination with the particular supplier or suppliers from 
whom the exporter purchased the subject merchandise.
    On the other hand, the Department believes that there are 
situations where it may be inappropriate and/or impractical to 
establish combination rates. For example, it may not be necessary to 
establish combination rates when investigating or reviewing 
nonproducing exporters that are not trading companies, such as original 
equipment manufacturers. In addition, it may not be practicable to 
establish combination rates when there are a large number of producers, 
such as in certain agricultural cases. The Department will make such 
exceptions to combination rates on a case-by-case basis.
    Another instance in which the Department assigns rates to exporters 
is in AD investigations and reviews of imports from nonmarket economies 
(NMEs). In those cases, if sales to the United States are made through 
an NME trading company, we assign a noncombination rate to the trading 
company regardless of whether the NME producer supplying the trading 
company has knowledge of the destination of the merchandise. One 
exception to this NME practice occurs where we find no dumping and 
exclude an exporter from an AD order. Where exclusions are involved, we 
publish a combination rate to address the same concerns described above 
regarding redirection of exports through an excluded trading company. 
Nothing in Sec. 351.107(b)(1) is intended to change our policy for 
assigning rates in NME proceedings.
    The Department also believes it is not appropriate to establish 
combination rates in an AD investigation or review of a producer; i.e., 
where a producer sells to an exporter with knowledge of exportation to 
the United States. In these situations, the establishment of separate 
rates for a producer in combination with each of the exporters through 
which it sells to the United States could lead to manipulation by the 
producer. Furthermore, the Department recognizes that in many 
industries it is not uncommon for a producer to sell some amount of 
merchandise purchased from other producers. In such situations, the 
Department generally intends to establish a single rate for such a 
respondent based on its status as a producer, although unusual 
circumstances may warrant the application of a combination rate.
    The Department also generally agrees with the comment that, in AD 
cases, if an exporter changes its supplier, the supplier's rate should 
be applied for deposit purposes rather than the ``all-others'' rate. 
Therefore, paragraph (b)(2) provides that for purposes of deposits, the 
Department will apply the producer's rate to entries if the Department 
has not established previously a deposit rate for the particular 
exporter/producer combination or the exporter alone. If the Department 
has not calculated an individual rate for the producer, the Department 
will apply the ``all-others'' rate. Again, nothing in this section is 
intended to change our practice regarding the rates assigned to NME 
exporters. In particular, an ``all-others'' rate may not be calculated 
in an NME proceeding or, if it is, it may not apply to the new shippers 
covered in this section.
    In the case of CVD proceedings, subject merchandise may be 
subsidized by means of subsidies provided to both the producer and the 
exporter. In the Department's view, all subsidies conferred on the 
production of subject merchandise benefit that merchandise, even if it 
is exported to the United States by a reseller rather than the producer 
itself. Therefore, the Department calculates countervailable subsidy 
rates on the basis of any subsidies provided to the producer, as well 
as those provided to the exporter in any investigation or review 
involving exports by a nonproducing exporter. As a result, rates 
established for particular combinations of exporters and producers are 
the most accurate rates. Moreover, as in an AD proceeding, combination 
rates help to ensure the proper application of combination rates when 
other producers sell through the same exporter.
    As in AD proceedings, in CVD proceedings there may be situations in 
which it is not appropriate or practicable to establish combination 
rates. In such situations, the Department will make exceptions to its 
combination rate approach on a case-by-case basis. In addition, for a 
new combination of exporter and producer, the Department believes that 
it should apply the supplier's rate, rather than the ``all-others'' 
rate, for deposit purposes. Therefore, under paragraph (b)(2), in a CVD 
proceeding the Department intends to apply the producer's rate to 
entries for deposit purposes if the Department has not established a 
rate for the particular exporter/producer combination or the exporter 
alone. If the producer's rate is applicable, but the Department has not 
established a rate for that producer, the Department will apply the 
``all-others'' rate.
    In this regard, however, in a CVD proceeding, the Department 
intends to establish a deposit rate for each

[[Page 27304]]

producer that it investigates or reviews, even if during the period of 
investigation or review the producer happened to be selling to the 
United States through a reseller. The purpose of this approach is to 
ensure that if the producer subsequently begins to export to the United 
States directly, the Department will be able to apply a deposit rate 
based on the producer's own level of subsidization, as opposed to the 
``all-others'' rate.
    The proper application of rates to entries for deposit purposes 
generally requires that the producer of the merchandise be identified. 
Accordingly, under paragraph (c), if an entry does not identify the 
producer (or the exporter's supplier if the exporter is not the 
producer), the Department will instruct the Customs Service to use the 
higher of: (1) the highest of any combination rate involving that 
exporter, (2) the highest rate for any producer other than a producer 
for which the Secretary has established a combination rate involving 
the exporter in question, or (3) the ``all-others'' rate. The objective 
of paragraph (c) is to prevent an exporter from obtaining a lower 
deposit rate by means of withholding the identity of its supplier from 
the Customs Service.
    As an example of how paragraph (c) would operate, assume that in an 
AD proceeding the existing rates are: Exporter A/Producer 1--5 percent; 
Exporter B/Producer 2--20 percent; Producer 1--18 percent; Producer 2--
15 percent; and All Others--10 percent. If an entry did not identify 
the producer of subject merchandise exported by Exporter A, the 
Department would instruct the Customs Service to apply Producer 2's 
deposit rate of 15 percent. 15 percent would be the appropriate rate if 
Producer 2 were the supplier, and it also is the highest of the 
possible rates applicable had the producer been identified (those rates 
being 5, 10, and 15 percent in this example). Producer 1's rate of 18 
percent would not be appropriate, because the Department already would 
have established that, when Producer 1 exports through Exporter A, the 
appropriate rate is 5 percent.
    Nonmarket economy cases: The second sentence of the definition of 
``rates'' in proposed Sec. 351.102(b) provided the Department with the 
authority to apply a single AD margin to all producers and exporters 
from a nonmarket economy (``NME'') country. We have moved that sentence 
to paragraph (d) of Sec. 351.107.
    As explained in the AD Proposed Regulations, 61 FR at 7311, the 
Department elected not to codify its current presumption that a single 
rate will be applied in NME cases. We received several comments on this 
issue.
    Four commenters suggested that the Department codify its current 
presumption of a single rate. Three of these commenters viewed the 
presumption as correct, because the fact that a country is an NME 
carries with it an assumption that the government controls all 
exporters. Moreover, these commenters asserted that NME governments, 
due to their control, can funnel sales of the subject merchandise 
through, or transfer production of the subject merchandise to, the 
entity that receives the most favorable dumping margin. These 
commenters further urged the Department to extend the presumption of 
control beyond the central NME government to provincial and municipal 
governments, as well. One commenter that urged the Department to codify 
the presumption of a single rate also argued that the presumption is 
consistent with the statute, because all NME companies are under common 
ownership and, hence, comprise a single exporter. Consequently, in this 
commenter's view, the Department should calculate a single dumping 
margin just as it would calculate a single dumping margin in situations 
where the Department ``collapses'' market economy producers under 
common ownership. This same commenter urged the Department to make 
clear that the NME-wide rate calculated as a consequence of the 
presumption is different from the ``all-others'' rate described in 
section 735(c)(1)(B)(i)(II) of the Act.
    One commenter opposed the presumption. In discussing the People's 
Republic of China (``PRC''), this commenter pointed to the reforms that 
have been instituted in the PRC economy, claiming that the underlying 
premise of the presumption--that the central government controls 
exporters--is erroneous. According to the commenter, the Department's 
experience in administering the presumption confirms this conclusion, 
because in virtually every case since the Department instituted the 
presumption, individual PRC producers have been able to demonstrate 
that they are entitled to their own rates. Consequently, this commenter 
argued, the Department should abandon the presumption of a single NME-
wide rate, and non-investigated exporters in an NME should receive an 
all-others rate. Another commenter asked that even if the Department 
does not codify the presumption, the Department should clarify that it 
will continue to calculate separate rates in appropriate cases.
    Several commenters went on to make specific suggestions for 
amending the so-called ``separate rates test''; i.e., the conditions 
that must be met for rebutting the presumption. One commenter urged the 
Department to incorporate into the separate rates test the affiliated 
party criteria from section 771(33) of the Act and Secs. 351.102(b) and 
351.401(f) of the regulations. In this commenter's view, the affiliated 
party criteria provide appropriate guidance on when parties under 
common ownership should be subject to a single AD rate. A second 
commenter recommended amending the test to include an assessment of 
possible central government influence in the future. Also, in this 
commenter's view, the NME exporter seeking a separate rate should be 
required to present affirmative evidence that the government is not 
involved in the exporter's pricing decision. In other words, this 
commenter claimed, an absence of evidence of control should not be 
sufficient to rebut the presumption. Finally, this commenter suggested 
that, because of the potential for circumvention, the Department should 
calculate individual rates only for manufacturers, and not for export 
trading companies.
    Another commenter pointed to the unfairness of having to prove the 
negative; i.e., the absence of control. This commenter also suggested 
that the Department should focus on events during the period of 
investigation and not speculate about events that might occur in the 
future. Two commenters urged the Department to provide an opportunity 
for firms to receive separate rates in those situations where the 
Department chooses not to investigate all exporters. In their view, 
instead of using the punitive NME-wide rate, the Department should 
assign these non-investigated exporters an average dumping margin 
calculated on the basis of investigated firms receiving separate rates.
    As in the proposed regulations, we have refrained from codifying 
the presumption of a single rate in NME AD cases. Nor have we adopted a 
modified version of the presumption. We appreciate the many thoughtful 
comments that we received on this topic. However, because of the 
changing conditions in those NME countries most frequently subject to 
AD proceedings, we do not believe it is appropriate to promulgate the 
presumption or the separate rates test in these regulations. Instead, 
we intend to continue developing our policy in this area, and the 
comments that were submitted will help us in that process. We would 
like

[[Page 27305]]

to clarify, however, that we do intend to grant separate rates in 
appropriate circumstances, and that our decision not to codify the 
presumption or the separate rates test should not be seen, as one 
commenter suggested, as a decision not to grant separate rates. Also, 
as discussed above in connection with Sec. 351.107(b)(1), we intend to 
continue calculating AD rates for NME export trading companies, and not 
the manufacturers supplying the trading companies.

Subpart B--Antidumping Duty and Countervailing Duty Procedures

    Subpart B deals with AD/CVD procedures, and is based on subpart B 
of part 353 and part 355 of the Department's former regulations.

Section 351.202

    Section 351.202 deals with the contents of, and filing requirements 
for, AD/CVD petitions. We received several comments regarding proposed 
Sec. 351.202.
    Contents of petitions: Proposed Sec. 351.202(b), consistent with 
the statute, provided that a petition must contain specified 
information ``to the extent reasonably available to the petitioner.'' 
One commenter suggested that the Department revise Sec. 351.202(b) so 
as to make clear that the ``reasonably available'' standard is 
flexible, and that, in particular, the Department expressly acknowledge 
in the regulation that cost is a relevant consideration in determining 
what is ``reasonably available.''
    We have not adopted this suggestion. While we do not disagree with 
the proposition that the ``reasonably available'' standard is flexible, 
we believe that the word ``reasonably'' makes this flexibility 
manifest. In addition, while we also do not disagree with the notion 
that cost to a petitioner is a factor in determining what is reasonably 
available, it is only one of many possible factors. To identify in the 
regulation one factor to the exclusion of others might result in undue 
emphasis being placed on the factor of cost. The ``reasonably 
available'' standard has been in the statute for many years, and we 
believe that it provides sufficient guidance to petitioners as to the 
efforts they must undertake in providing information to the Department.
    The same commenter objected to the requirement in proposed 
Sec. 351.202(b)(3) that a petitioner provide production data for each 
domestic producer identified by the petitioner. This commenter argued 
that Article 5.2 of the AD Agreement and Article 11.2 of the SCM 
Agreement merely require that a petitioner provide aggregate production 
data for all known domestic producers. A second commenter supported 
proposed Sec. 351.202(b)(3) as drafted, arguing that the SAA at 861 
clearly requires producer-specific production data.
    We do not agree with the first commenter's interpretation of 
articles 5.2 and 11.2. However, even if that interpretation were 
correct, it is the U.S. statute that controls. The SAA clearly requires 
that a petitioner provide producer-specific production data, subject, 
of course, to the proviso that such information is reasonably available 
to the petitioner. This information is necessary in order to enable the 
Department to determine whether an adequate portion of domestic 
producers support a petition, an inquiry which is based on production 
volumes of domestic producers. Therefore, we have left 
Sec. 351.202(b)(3) unchanged.
    Two commenters suggested that the Department coordinate with the 
Commission with respect to regulations dealing with the contents of 
petitions, and that the Department incorporate into Sec. 351.202(b) the 
specific requirements contained in the Commission's corresponding 
regulation. In addition, these commenters suggested that, in light of 
the Commission's proposed Sec. 207.11(b)(2)(iv), the Department should 
revise its own proposed Sec. 351.202(b)(8) so as to require volume and 
value information regarding the subject merchandise for the most recent 
three-year period, as opposed to a two-year period.
    We have adopted these suggestions in part. The Commission completed 
its rulemaking activity and issued final rules on July 22, 1996. See 61 
FR 3818. These final rules contain a revised 19 CFR Sec. 207.11 that 
deals with the contents of AD/CVD petitions. We have incorporated 
elements of the Commission's regulations into Sec. 351.202(b) where the 
information identified in Sec. 207.11 is of the same general type as 
that sought by the Department. With respect to the identity of 
importers, we have revised proposed Sec. 351.202(b)(9) so as to require 
telephone numbers for each importer identified, to the extent such 
information is reasonably available to the petitioner. On the other 
hand, we have not incorporated elements of Sec. 207.11 where the 
information identified in that regulation is not of the same general 
type as that sought by the Department. For example, we have not 
included the requirement of Sec. 207.11(b)(2)(iv) that a petitioner 
identify each product for which the petitioner requests the Commission 
to seek pricing information in its questionnaires. Finally, we have 
added a sentence to paragraph (a) that advises petitioners to refer to 
the Commission's regulations concerning petition contents.
    With respect to the suggestion that we require three, rather than 
two, years of volume and value information, as required by proposed 
Sec. 207.11(b)(2)(iv), we note that the Commission deleted this 
provision in its final rule. Therefore, we are not adopting this 
suggestion for purposes of Sec. 351.202(b).
    Amendments to petitions: One commenter objected to the substitution 
of ``may'' for ``will'' in proposed Sec. 351.202(e) (``The Secretary 
may allow timely amendment of the petition''). The commenter argued 
that the substitution is improper, because it confers on the Department 
more discretion than is allowed by section 732(b)(1) of the Act. We 
have retained the language of the proposed rule. In our view, the 
statute, by permitting the Secretary to establish on a case-by-case 
basis the timing and conditions for any amendments to a petition, 
confers considerable discretion. We continue to believe that the word 
``may'' more accurately reflects this discretionary authority than does 
the word ``will.''
    Pre-initiation communications: Commenting on proposed 
Sec. 351.202(i), one commenter suggested that because the statutory 
limitation on pre-initiation communications is limited to comments that 
are unsolicited by the Department, the Department should revise 
Sec. 351.202(i) so as to clarify that the Department retains the 
discretion to ``solicit'' comments on its own initiative. According to 
this commenter, the Department's interpretation of the SAA in the AD 
Proposed Regulations is incorrect. See 61 FR at 7313. The commenter 
argued that while the SAA limits the pre-initiation right of parties to 
comment to the issue of industry support, Congress deliberately used 
the word ``unsolicited'' in sections 702(b)(4)(B) and 732(b)(3)(B) of 
the Act in order to provide the Department with the discretion to 
solicit comments on any issue where necessary. Two other commenters 
submitted similar comments.
    Three commenters, however, opposed the suggestion described in the 
preceding paragraph. In addition, these commenters proposed that the 
Department revise the proposed regulations so as to expressly state 
that the Department will not solicit information from sources other 
than domestic interested parties.
    We have not adopted either of these competing suggestions. As noted 
above,

[[Page 27306]]

in drafting these regulations, the Department has sought to avoid 
repeating the statute to the extent possible. Consistent with this 
objective, in proposed Sec. 351.202(i), the Department sought to do no 
more than clarify that the filing of a notice of appearance would not 
constitute a ``communication'' within the meaning of the statute. The 
Department referred in paragraph (i) to sections 702(b)(4)(B) and 
732(b)(3)(B) merely to provide a context for this clarification. As for 
the Department's discussion of the SAA mentioned by the first 
commenter, this discussion was in response to suggestions that the 
Department should solicit comments regarding a petition, an activity 
clearly not contemplated by the statute or the SAA.
    Each group of commenters is asking the Department to place a 
different gloss on the statute. At this time, we do not believe that 
either gloss is necessary or appropriate. However, in view of the fact 
that both groups of commenters apparently misinterpreted the 
Department's intent in drafting proposed Sec. 351.202(i), we have 
revised that paragraph to clarify that it deals only with the treatment 
of notices of appearance.
    We should note that the Department has no intention of soliciting 
comments concerning the adequacy and accuracy of a petition. In this 
regard, the Department intends to follow the general rule articulated 
by the Federal Circuit in United States v. Roses, Inc., 706 F.2d 1563 
(1983), that, in order to determine whether a petition is adequate 
under the law, the Department should look only within the four corners 
of the petition. This general principle is now incorporated in sections 
702(b)(4)(B) and 732(b)(3)(B) of the Act.
    The three exceptions to this rule are those specified in the Act 
and the SAA: for comments concerning industry support for the petition; 
for inquiries concerning the status of the Department's consideration 
of the petition; and for government-to-government consultations in CVD 
investigations. With respect to industry support, the statutory 
exception is necessary in part because the issue of industry support 
cannot be revisited after initiation. The SAA at 194 makes clear that 
the Department is to construe this exception narrowly. The Department 
may accept and answer inquiries concerning the status of the 
Department's consideration of a petition, because such inquiries do not 
constitute comments on the accuracy and adequacy of the petition 
itself. In the case of CVD investigations, section 702(b)(4)(B) 
expressly directs the Department to provide the government of the 
exporting country with an opportunity for consultations on the 
petition. This requirement implements Section 13.1 of the SCM 
Agreement. The Department will determine what weight to give to any 
information received during the course of such consultations on a case-
by-case basis.
    Other comments: One commenter argued that it was improper for a 
Department official to counsel a petitioner in preparing a petition and 
then, after the petition is formally filed, participate in an analysis 
of the adequacy of the petition. According to this commenter, such 
activity gives rise to an appearance of impropriety and violates the 
Department's own rules on ethical conduct. The commenter proposed a 
revision to Sec. 351.202 which would have (1) required the Department 
to disclose publicly the names of all Department personnel who assisted 
in the preparation of a petition; and (2) precluded any such official 
from participating in the relevant AD/CVD proceeding once the petition 
was filed.
    We have not adopted this comment, and we disagree strongly with its 
underlying premise. We do not believe that Department personnel lose 
their objectivity or impartiality regarding the merits of a petition 
when they have provided advice to a petitioner in the preparation of a 
petition. In addition, we do not believe that there is an appearance of 
impropriety or a violation of the Department's rules of ethical conduct 
when such personnel participate in an AD/CVD proceeding triggered by 
the filing of a petition with respect to which they may have offered 
pre-filing advice.
    The same commenter also suggested that the Department revise 
proposed Sec. 351.202(i)(2), which provides that, in the case of a CVD 
petition, the Department will invite the government of the exporting 
country involved for consultations under Article 13.1 of the SCM 
Agreement. Consistent with other comments made by this commenter based 
on its analysis of the statutory term ``country,'' the commenter 
suggested that the Department modify paragraph (i)(2) to provide that 
the Department also will invite for consultations the government of any 
political subdivision of a named country.
    We have not adopted this suggestion. Although there certainly are 
situations in which the statute treats political subdivisions as 
``countries,'' this is not one of those situations. Section 
702(b)(4)(A)(ii) of the Act refers to consultations with a ``Subsidies 
Agreement country.'' In our view, a state or provincial government does 
not meet the definition of ``Subsidies Agreement country'' in section 
702(b) of the Act.
    Moreover, under Article 13.1, the obligation of the United States 
is to consult with ``Members'' of the WTO, a term that excludes 
subnational governments, such as states and provinces. While the 
central government of a WTO Member may choose to be accompanied at 
consultations by representatives of subnational levels of government, 
the Department will not embroil itself in the internal politics of 
another country by inviting such representatives to participate in 
Article 13.1 consultations.
    Finally, one commenter proposed that the following sentence be 
added to proposed Sec. 351.202(c): ``Other filing requirements are set 
forth in Sec. 351.303.'' The purpose of this addition would be to put 
petitioners on notice as to the existence and location of distinct 
filing requirements. The Department agrees with this suggestion, and we 
have revised paragraph (c) accordingly.
    Other changes: In light of the recent reorganization of Import 
Administration, we have revised Sec. 351.202(h)(2) to provide that 
persons seeking information concerning petitions should contact Import 
Administration's Director for Policy and Analysis.

Section 351.203

    Section 351.203 deals with determinations regarding the sufficiency 
of an AD or CVD petition, and implements sections 702(c) and 732(c) of 
the Act. We received several comments regarding Sec. 351.203.
    Adequacy of allegations: Three commenters made suggestions relating 
to proposed Sec. 351.203(b)(1), which provides that ``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.'' While these 
commenters agreed that proposed Sec. 351.203(b)(1) was consistent with 
the statute, they were concerned that the Department's commentary in 
the AD Proposed Regulations and/or the Department's practice was not. 
In the commentary, we described our prior practice in reviewing a 
petition and stated that this practice was consistent with the type of 
review contemplated by the new statute. In particular, we noted that it 
was the Department's practice to seek additional information when a 
particular allegation lacked sufficient support or appeared 
aberrational, even though the allegation was supported by some 
documentation. 61 FR at 7313.

[[Page 27307]]

    One of the three commenters, however, stated that the practice 
described amounted to the weighing of evidence, and that this practice 
is inconsistent with the legislative history of the Trade Agreements 
Act of 1979, a legislative history that the SAA endorsed. This 
commenter proposed that the 1979 legislative history be incorporated 
into Sec. 351.203(b)(1).
    The second of the three commenters also complained that the 
Department's commentary suggested the weighing of evidence, and 
disagreed that the Department's proposal was consistent with past 
practice. Asserting that the statute and legislative history do not 
envision an adversarial pre-initiation proceeding, this commenter 
proposed that the Department clarify that (1) it will not allow 
respondents to bring public information to the Department's attention 
for purposes of assessing the sufficiency of a petition; and (2) that 
the new regulations are not intended to increase the burden on 
petitioners for initiating investigations.
    The third of the three commenters agreed with proposed 
Sec. 351.203(b)(1) and the accompanying commentary, but alleged that 
over time, the Department has been subjecting petitioners to 
substantially increased demands for additional factual support. 
Therefore, while not suggesting any changes to Sec. 351.203(b)(1) or 
the commentary, this commenter suggested that the Department review its 
practice to ensure that that practice is consistent with the regulation 
and the commentary.
    We agree that the pre-initiation process should not become an 
adversarial process between the petitioner and potential respondents. 
On the other hand, however, the Department has a statutory obligation 
to examine the accuracy and adequacy of the evidence provided in the 
petition, an exercise which necessarily entails making some judgments 
regarding the quantity and quality of the information contained in a 
petition. Whether or not such an examination constitutes the ``weighing 
of evidence'' is, in our view, largely a question of semantics. 
However, we believe that the practice described in the commentary 
accompanying proposed Sec. 351.203(b)(1) does not result in an 
adversarial process and that this practice is consistent with the 
legislative history of the 1979 Act. That legislative history states, 
inter alia, that a petition must be ``reasonably supported by the facts 
alleged.'' H.R. Rep. No. 317, 96th Cong., 1st Sess. 51 (1979) (emphasis 
added). In our view, this means that the mere provision of any 
documentation is not necessarily sufficient, and the Department, where 
appropriate, should be able to seek additional information where 
support for a particular allegation is weak or information appears 
aberrational.
    Therefore, we have not changed proposed Sec. 351.203(b)(1) in light 
of these comments. However, we wish to reiterate what we said in the 
commentary accompanying proposed Sec. 351.203(b)(1); namely, that we do 
``not believe that the new statutory standard constitutes a significant 
departure from past Department practice.'' 61 FR at 7313.
    Sources readily available: Commenting on proposed 
Sec. 351.203(b)(1), one commenter suggested that the regulations make 
clear that ``sources readily available'' to the Department include any 
information that is relevant to its evaluation of a petition and that 
is submitted by an interested person further to the Department's 
request. We have not adopted this suggestion, because we prefer to 
develop our interpretation of this new statutory term on a case-by-case 
basis.
    The same commenter urged the Department to refrain from allowing a 
petitioner to comment on any pre-initiation submissions that a 
respondent interested party makes in response to a Department request. 
Presumably, this commenter was referring to the following statement in 
the preamble to the AD Proposed Regulations: ``The Department will give 
the petitioner an opportunity to comment on any such information 
acquired by the Department.'' 61 FR at 7313. We have not adopted this 
suggestion either, because we continue to believe that it is 
appropriate to provide a petitioner with an opportunity to comment on 
information collected during the pre-initiation process.
    Also in connection with proposed Sec. 351.203(b)(1), another 
commenter proposed that after the phrase ``sources readily available to 
the Secretary,'' the Department should add the following clause: 
``including information provided to the Department by foreign 
governments during the consultations required under 19 U.S.C. 
Sec. 1671a(b)(4)(A)(ii). * * *'' This commenter was referring to the 
pre-initiation consultations provided for in Article 13.1 of the SCM 
Agreement and referred to in section 702(b)(4)(A)(ii) of the Act. 
According to the commenter, the ``right to consult is meaningless if 
the Department were not to consider information provided in the 
consultations in making its decision whether to initiate an 
investigation and, if so, on what programs.'' Another commenter, 
however, opposed this suggestion, arguing that neither the statute nor 
the Department's practice concerning CVD petitions allows the 
Department to transform Article 13.1 consultations into pre-initiation 
litigation.
    While we have not adopted the suggestion, we do not disagree with 
the thrust of the first commenter's position. Under Article 13.1 of the 
SCM Agreement, foreign governments have a right to consultations prior 
to the initiation of an investigation. The purpose of these 
consultations is to clarify the matters referred to in a petition. The 
right to consultations is specifically provided for in 
Sec. 702(b)(4)(A)(ii) of the Act. We note that under Sec. 702(b)(4)(B), 
the Department is prohibited from accepting any unsolicited oral or 
written communication from potential respondents, except as provided 
for under the aforementioned provision of the Act requiring that 
foreign governments be given an opportunity for consultations. 
Therefore, we believe that the Department may consider relevant 
information provided by a foreign government prior to the initiation of 
an investigation. The use of such information and the weight given to 
it, either prior to the initiation decision or during an investigation, 
will be determined by the Department on a case-by-case basis.
    Industry support: Commenting on proposed Sec. 351.203(e)(1), one 
commenter suggested that when measuring domestic production as an index 
of industry support for a petition, the Department (1) never should 
measure production over a period of less than twelve months; and (2) 
should retain the flexibility to examine a period greater than twelve 
months in appropriate circumstances. A second commenter endorsed 
proposed Sec. 351.203(e)(1), arguing that the use of the word 
``normally'' in that provision provided the Department with the 
necessary flexibility to use periods greater or lesser than twelve 
months when appropriate.
    We have left Sec. 351.203(e)(1) unchanged. Because the statutory 
standard for determining industry support is new, we are reluctant to 
adopt a regulation that would preclude, in all cases, the use of a 
period shorter than twelve months. As observed by the second commenter, 
there may well be industries for which use of a shorter period is 
appropriate. While we expect that in most cases the Department will use 
a twelve-month period, use of the word ``normally'' provides us with 
sufficient flexibility to use longer or shorter periods when 
appropriate.

[[Page 27308]]

    One commenter suggested that the Department revise proposed 
Sec. 351.203(e)(3) to provide that: (1) the Department may base the 
position of workers on a statistically valid sampling of the views of 
individual workers; and (2) the views of workers and management be 
recorded in writing and certified in accordance with Sec. 351.303(g). A 
second commenter objected to these suggestions, arguing that (1) the 
first commenter's notion of sampling effectively would rewrite the 
statute; and (2) a separate certification requirement is unnecessary, 
because Sec. 351.303(g) already requires certification of submissions 
containing factual information.
    We have not adopted the first commenter's suggestions. With respect 
to sampling of individual workers, this suggestion would require a 
level of regulatory detail greater than what we consider to be 
appropriate at this time. The statute does provide for the use of 
statistically valid sampling methods to determine industry support, but 
only when there are a large number of producers in the relevant 
industry. In the AD Proposed Regulations, we deliberately refrained 
from elaborating on what is, for the Department, a new and untried 
method for determining industry support. For purposes of these final 
regulations, we continue to believe that we should develop this method 
on a case-by-case basis. With respect to the first commenter's 
suggestion regarding filing requirements for industry positions, we 
agree with the second commenter that the changes proposed are redundant 
and unnecessary.
    Another commenter sought clarification with respect to proposed 
Sec. 351.203(e)(3), a provision that states that the Secretary will 
accord equal weight to the positions of management and workers 
regarding a petition. The commenter stated that the 25 percent 
threshold for determining industry support should not be subject to 
Sec. 351.203(e)(3), apparently based on the commenter's belief that 
this provision somehow undermines the 25 percent threshold. A second 
commenter offered an interpretation of the first commenter's comment, 
and suggested, based on its interpretation, that the commenter's 
``complaint should be dismissed.''
    The first commenter did not seek a change to the regulation, and we 
do not believe that a change is necessary. However, the Department 
wishes to confirm that in situations where the views of the management 
and workers of a firm negate each other, the production of the firm in 
question will be included as part of the total production of the 
domestic like product for purposes of applying the 25 percent threshold 
in sections 702(c)(4)(A)(i) and 732(c)(4)(A)(i) of the Act.
    The same commenter also sought clarification that all interested 
parties would be given access to non-confidential information related 
to the positions of domestic producers and workers. With respect to 
this comment, the Department can confirm that public information (e.g., 
non-business proprietary information) concerning the positions of 
producers and workers will be included in the public record of an AD/
CVD proceeding. Under Sec. 351.104(b), the public record will be 
available to the public, including interested parties, for inspection 
and copying in Import Administration's Central Records Unit.
    Another commenter made some suggestions regarding proposed 
Sec. 351.203(e)(5), which deals with determinations of industry support 
in cases where the petitioner alleges the existence of a regional 
industry. This commenter proposed that in regional industry cases, the 
Department should (1) determine the position of all members of the 
national industry regarding the petition, initiate based upon support 
within the alleged region, but terminate the investigation for lack of 
interest if there is insufficient support from producers within the 
region or nation, as determined by the Commission in its preliminary 
determination; and (2) consult extensively with the Commission prior to 
initiation regarding the adequacy of the regional industry allegation 
and, if the Commission's advice is that the alleged region is 
questionable, advise the petitioner to withdraw the petition and refile 
it as a national case or with a more properly defined region. According 
to the commenter, such an approach is necessary (1) to address the 
``anomaly'' in the statute that arises when the Commission rejects a 
regional industry alleged in a petition; and (2) to ensure that 
allegations of regional industry in a petition are not used to 
circumvent the industry support requirements.
    A second commenter opposed these suggestions. First, this commenter 
noted, the statute addresses this very situation, because the statute 
expressly states that (1) the Department shall determine industry 
support based on production in the region alleged in the petition, and 
(2) the Department shall not reconsider a determination of industry 
support once it is made. Second, there is no ``anomaly'' limited to 
regional industry cases, because in any case, including a case in which 
the petitioner alleges a national industry, the Commission may define 
the relevant product in such a way that the scope of the relevant 
industry analyzed for injury purposes differs from the scope of the 
industry analyzed for purposes of determining industry support. Third, 
there is no basis for the Department to revisit its industry support 
determination based on the Commission's preliminary determination, 
because in its final determination the Commission may change the 
definition of the industry at issue yet again, or even revert back to 
the definition originally alleged in the petition. Finally, the second 
commenter suggested that the first commenter's concerns about 
circumvention were overblown, stating that the first commenter did not 
understand the difficulties involved in bringing a regional industry 
case.
    In light of these comments, and because the SAA is clear on this 
point, we have deleted paragraph (e)(5).
    Other comments: One commenter submitted a comment concerning 
proposed Sec. 351.203(c)(2), which requires that, after initiation of 
an investigation, the Secretary provide a public version of the 
petition to all known exporters who sell for export to the United 
States. Section 351.203(c)(2) makes an exception for situations where 
the number of exporters is ``particularly large.'' The commenter 
suggested that the Department should invoke the exception only in 
situations where the number of exporters is ``exceptionally large.'' We 
have not adopted this suggestion, because the phrase ``particularly 
large'' tracks the language of the SAA and the relevant provisions of 
the AD Agreement and the SCM Agreement.
    The same commenter also suggested that Sec. 351.203(c)(2) provide 
that, upon request, any exporter, producer, or importer of subject 
merchandise be provided, free of charge, with a public version of the 
petition. We have not adopted this suggestion, because Sec. 351.104(b) 
adequately deals with matters relating to access to the public record, 
including the public version of a petition.

Section 351.204

    Section 351.204 deals with issues relating to the time period and 
persons to be examined in an investigation, voluntary respondents, and 
exclusions. In the section title, we have substituted ``Time periods'' 
for ``Transactions'' to reflect more accurately the contents of 
Sec. 351.204.
    Period of investigation in AD investigations: In proposed

[[Page 27309]]

Sec. 351.204(b)(1), the Department revised the period of investigation 
(``POI'') for antidumping investigations. In the past, the Department 
normally used a six-month POI that ended with the month in which the 
petition was filed. 19 CFR Sec. 353.42(b)(1) (1995). In 
Sec. 351.204(b)(1), the Department expanded the POI from six months to 
four fiscal quarters (twelve months), with the exception of nonmarket 
economy cases. In addition, the Department provided that the POI would 
consist of the four most recently completed fiscal quarters as of the 
month preceding, instead of including, the month in which the petition 
was filed or in which the Secretary self-initiated an investigation. 
Finally, the Department preserved its discretion to use a different POI 
in appropriate circumstances.
    We received several comments concerning this change in the standard 
AD POI. One commenter, while approving the expansion of the POI to 
twelve months, objected to reliance upon fiscal quarters completed as 
of the month preceding the month in which a petition was filed. 
According to this commenter, domestic industries are badly buffeted by 
dumped imports at least up to the date of the filing of a petition. If 
the Department relied on completed fiscal quarters, however, it would 
ignore at least two months worth of dumping activity, activity that was 
automatically covered by the Department's former POI. In addition, this 
commenter asserted, the use of months, rather than fiscal quarters, 
``has worked well generally in the past and has not demonstrably been 
an impediment to verification.'' Therefore, this commenter proposed 
that the standard AD POI be the twelve-month period ending in the month 
of filing or self-initiation, and that respondents should have the 
burden of proving that a different POI is appropriate.
    A second commenter, on the other hand, generally supported the use 
of fiscal quarters, but believed that the Department should rely on 
completed quarters as of the end of the month of filing or self-
initiation. In addition, this commenter objected to the expansion of 
the POI from six months to twelve months, arguing that the Department 
had not explained the reasons for this expansion and that it appeared 
to be inconsistent with the Department's stated goal of easing 
reporting requirements and permitting more efficient verification.
    With respect to the expansion of the POI to twelve months, we 
believe that this expansion is required by Article 2.2.1, note 4 of the 
AD Agreement. Note 4 states: ``The extended period of time should 
normally be one year but shall in no case be less than six months.'' 
Although this statement is made in the context of analyzing sales below 
the cost of production, implicit in the statement is the assumption 
that the POI in an AD investigation normally will be one year. 
Therefore, we have not adopted the suggestion of the second commenter 
that we revert to a normal POI of six months.
    With respect to the use of completed fiscal quarters rather than 
months, while we do not dispute the first commenter's assertion that 
domestic industries may be buffeted by dumped imports in the months 
immediately preceding the filing of a petition, these imports would not 
be subject to antidumping duties, regardless of whether they were 
covered by the POI. Moreover, the timing of a petition filing often can 
address such concerns. In addition, we continue to believe that 
defining the POI in terms of completed fiscal quarters, rather than 
calendar months running from the date of filing, will generate 
considerable savings in time and money for both the Department and the 
parties involved in AD proceedings. Our experience is that a 
considerable amount of time is spent in reconciling AD submissions 
(that until now have been based on calendar months) to a firm's 
accounting records (that typically are based on fiscal quarters). 
However, we should emphasize that Sec. 204(b)(1) refers to the POI that 
the Secretary ``normally'' will use. Therefore, the Department retains 
the discretion to depart from its standard POI where warranted by the 
circumstances of a case.
    Finally, we are not adopting the suggestion that we base our POI on 
completed fiscal quarters as of the end of the month of filing or self-
initiation. In general, we believe that it is more appropriate to 
investigate only sales made prior to the filing of a petition to 
alleviate concerns about the effect of the petition on pricing 
practices.
    Period of investigation in CVD investigations: One commenter 
suggested that we retain the modifier ``normally'' in the second 
sentence of proposed Sec. 351.204(b)(2). According to this commenter, 
the Department should retain the flexibility to adopt as the POI the 
fiscal year of the foreign government or the main responding company.
    We have retained the word ``normally'' in the second sentence. 
However, we have changed the second sentence of Sec. 351.204(b)(2). 
Originally, this sentence would have required the Secretary to set the 
POI as the most recently completed calendar year, if the fiscal years 
of the government and the exporters or producers differed. This 
language did not correctly reflect our past practice, a practice that 
we do not wish to change. The new language simply deletes the reference 
to the government's fiscal year. Thus, the Department normally will set 
the POI according to the fiscal year of the individual exporters or 
producers. Only if the fiscal years of the exporters or producers 
differ, will the POI be the most recently completed calendar year. In 
the case of investigations conducted on an aggregate basis, the 
Department's normal POI will continue to be based on the most recently 
completed fiscal year for the government in question.
    Acceptance of voluntary respondents: Two commenters submitted 
virtually identical comments objecting to the requirement in proposed 
Sec. 351.204(d)(2) that a voluntary respondent submit a questionnaire 
response before the Department decides whether to examine the voluntary 
respondent individually. Citing the Department's AD investigation on 
Pasta from Italy, these commenters claimed that an exporter will not be 
willing to expend the time and financial resources required to prepare 
a questionnaire response without some prior assurance by the Department 
that it will conduct an individual examination of the firm. Therefore, 
they concluded, this requirement discourages voluntary responses and, 
thus, violates Article 6.10.2 of the AD Agreement.
    To remedy this alleged violation of international law, the 
commenters proposed that the Department require only that any exporter 
not selected as a mandatory respondent submit a letter if it is 
interested in submitting a voluntary response. Based on these letters, 
the Department would decide which, if any, voluntary respondents it 
would examine. Only after being selected would voluntary respondents be 
required to submit questionnaire responses.
    We have not adopted this suggestion, because the approach that the 
commenters objected to is made necessary by the requirements of 
sections 777A(c)(2)(B) and 782(a) of the Act. Where the Department does 
not examine all known producers and exporters, it often selects for 
examination all producers or exporters ``that can be reasonably 
examined'' in accordance with the requirements of section 777A(c)(2)(B) 
of the Act. The selected producers and exporters in this group normally 
represent the largest number of respondents the Department believes it 
can examine at that time. The Department normally will decide the 
number of selected respondents very early in the proceeding; i.e., 
before it

[[Page 27310]]

issues questionnaires to the selected respondents. Therefore, it 
frequently is the case that the Department cannot make a determination 
as to whether additional voluntary respondents can be reasonably 
examined until after the deadline for questionnaire responses has 
passed (e.g., one or more selected respondents have not responded). If 
the additional voluntary respondents did not begin to prepare their 
questionnaire responses until after the Department received 
questionnaire responses from the selected respondents, the Department 
would not be able to complete the investigation or review within the 
statutory deadlines. Therefore, additional voluntary respondents must 
submit the complete questionnaire response by the deadlines in 
accordance with section 782(a) of the Act. In addition, we do not 
believe that section 782(a) ``discourages'' voluntary responses within 
the meaning of Article 6.10.2. Instead, it simply recognizes the 
constraints on the Department's resources that must be taken into 
account in determining whether we can accept a voluntary response. In 
order to help potential voluntary respondents decide, prior to 
acceptance as a respondent, whether to submit a questionnaire response, 
we intend to accept voluntary responses based on the order in which 
written requests to be accepted as voluntary respondents are submitted. 
In those instances where we can make earlier determinations to accept 
voluntary responses, we will do so.
    One commenter submitted a comment suggesting that Sec. 351.204 be 
amended to incorporate requests by voluntary respondents to be included 
in the pool of companies investigated in cases conducted on an 
``aggregate'' basis. We have not adopted this suggestion, because under 
the statute, only CVD investigations are to be conducted on an 
``aggregate basis,'' and it is clear from the comment that the 
commenter was addressing AD investigations.
    Voluntary respondents and the all-others rate: Proposed 
Sec. 351.204(d)(3) provided that in calculating an all-others rate, the 
Secretary will exclude weighted-average dumping margins or 
countervailable subsidy rates calculated for voluntary respondents. In 
the preamble to the AD Proposed Regulations, the Department explained 
that the purpose of this provision was to prevent manipulation and to 
maintain the integrity of the all-others rate. One commenter argued 
that this provision is inconsistent with the statute and should be 
deleted.
    We do not agree with this comment, and have retained the rule as 
drafted. The statute does not define the term ``investigated'' and does 
not directly address the question of whether voluntary respondents 
should be considered to be part of the Department's investigation. 
Because the statute does not resolve the issue, we look to the AD 
Agreement for guidance as to the best interpretation of the Act, in 
keeping with the requirement that, to the extent possible, a statute be 
interpreted in a manner consistent with the international obligations 
of the United States.
    Article 9.4 of the AD Agreement provides that the duties applied to 
``exporters or producers not included in the examination'' (i.e., 
``all-others'') may not exceed the weighted-average margin for the 
``selected exporters or producers.'' This implies that those exporters 
or producers not ``selected'' are not considered to be included in the 
``examination.'' Therefore, the better interpretation of section 
735(c)(5) is that producers who are not ``selected'' by the Department 
(i.e., voluntary respondents) are not considered to have been 
``examined'' (i.e., investigated), so that their margins should not 
contribute to the ``all-others'' rate. In effect, the Department 
conducts parallel proceedings for voluntary respondents.
    As we noted in the preamble to the AD Proposed Regulations, 
exclusion of voluntary respondents from the determination of the all-
others rate serves the obvious purpose of preventing distortion or 
outright manipulation of the all-others rate. The producers or 
exporters most likely to submit voluntary responses are those with 
reason to believe that they will obtain a lower margin by volunteering 
than they would obtain by being subject to the all-others rate. 
Inclusion of rates determined for voluntary respondents thus would be 
expected to distort the weighted-average for the respondents selected 
by the Department on a neutral basis.
    Exclusions: In the AD Proposed Regulations, 61 FR at 7315, the 
Department requested additional public comment on the issue of whether 
there should be special exclusion rules for firms, such as trading 
companies, that export, but do not produce, subject merchandise. We 
noted that one alternative would be to limit the exclusion of a 
nonproducing exporter to the subject merchandise produced by those 
producers that supplied the exporter during the period of 
investigation. Several commenters supported this approach, citing the 
potential for other producers to avoid the imposition of duties by 
selling through an excluded exporter. Other commenters argued that if 
an exporter is excluded, the exclusion should apply to all exports by 
that exporter, regardless of the producer.
    The Department agrees with the first group of commenters that 
normally the exclusion of a nonproducing exporter should be limited. 
Therefore, we have added a new paragraph (e)(3) to provide that the 
exclusion of a nonproducing exporter normally will be limited to 
subject merchandise produced or supplied by those companies that 
supplied the exporter during the period of investigation.
    In an AD investigation, the Secretary may grant an exclusion to a 
nonproducing exporter if the Secretary investigates the exporter's 
sales and determines that the dumping margins on those sales are not 
greater than de minimis. However, to prevent other producers from 
selling through an excluded exporter in order to avoid the imposition 
of duties, the Secretary normally will apply the exclusion only to the 
exporter's exports of subject merchandise purchased from those 
producer(s) found by the Secretary to lack knowledge of the exportation 
of the merchandise to the United States. This limitation is 
appropriate, because the lack of knowledge by these producers provided 
the basis for investigating and establishing a rate for the exporter.
    In a CVD investigation, the basis for the exclusion of a 
nonproducing exporter is that neither the exporter nor the producers or 
suppliers of subject merchandise sold by the exporter received more 
than de minimis net countervailable subsidies. Therefore, it is 
appropriate to limit the exclusion to merchandise purchased from the 
same suppliers and producers.
    With respect to requests for exclusion in a CVD investigation 
conducted on an aggregate basis, we have renumbered paragraph (e)(3) as 
paragraph (e)(4), and we have revised paragraph (e)(4)(iv) to clarify 
that in the case of a non-producing exporter, the foreign government 
must certify that neither the exporter nor the exporter's supplier 
received more than de minimis countervailable subsidies during the 
review period.
    One commenter proposed that (1) the regulations make clear that the 
Department has the authority to ``bring back'' under an order an 
excluded company if the Department subsequently finds in a review that 
the company is dumping, and (2) the regulations retain the requirements 
of Secs. 353.14 and 355.14 of the Department's prior regulations. 
According to the commenter, the Department required a company with a

[[Page 27311]]

zero or de minimis dumping margin or CVD rate to certify that the 
company would not dump or receive countervailable subsidies in the 
future. The commenter contended that this certification authorized the 
Department to review excluded firms to confirm that they were acting in 
a manner consistent with the certification. In addition, this commenter 
claimed that because AD/CVD orders apply to countries, rather than to 
individual companies, the Department has the authority to review 
excluded companies.
    We have not adopted these suggestions. With respect to the notion 
of ``bringing back'' excluded companies, as a matter of administrative 
practice, the Department never has reviewed sales of excluded 
companies, with the exception of situations in which nonexcluded 
companies attempt to funnel their ``non-excluded'' merchandise through 
an excluded company. There is no indication in either the statute or 
the SAA that Congress intended the Department to make such a radical 
departure from its prior practice concerning exclusions. Moreover, we 
believe that the ``inclusion'' of an excluded company would be 
inconsistent with Article 5.8 of the AD Agreement and Article 11.9 of 
the SCM Agreement (both of which require termination where the amount 
of dumping or subsidization is de minimis).
    As for former Secs. 353.14 and 355.14, with the exception of CVD 
investigations conducted on an aggregate basis, these provisions are no 
longer necessary in light of the amendments to the statute made by the 
URAA, and, in any event, never functioned in the manner suggested by 
the commenter. These provisions, notwithstanding their titles, 
functioned as a mechanism for considering requests by voluntary 
respondents to be investigated. As stated by the Department when it 
adopted Sec. 351.14:

    If the Department includes a producer or reseller in its 
investigation and determines that the producer or reseller had no 
dumping margin during the period of investigation, the Department 
would automatically exclude that producer or reseller from the 
antidumping duty order, even if the producer or reseller did not 
request exclusion under the procedures described in [Sec. 353.14]. 
The purpose of this section merely is to provide an opportunity for 
producers and resellers that the Department might not otherwise 
include in its investigation to request that the Department 
specifically include and investigate them.

Final Rule (Antidumping Duties), 54 FR 12742, 12748 (1989). The 
Department made a virtually identical statement with respect to 
Sec. 355.14. Final Rule (Countervailing Duties), 53 FR 53206, 52316 
(1988).
    Given their original purpose, Secs. 353.14 and 355.14 have become 
superfluous in light of section 782(a) of the Act and Sec. 351.204(d) 
(which establish new procedures for dealing with voluntary respondents) 
and Sec. 351.204(e)(3) (which deals with exclusion requests in CVD 
investigations conducted on an aggregate basis). Under these 
provisions, decisions on exclusions will be based on a firm's actual 
behavior, as opposed to assertions regarding its possible future 
behavior.
    Other comments: One commenter suggested that Sec. 351.204 be 
modified to state explicitly that the Department retains the right to 
seek and obtain information from importers in the United States of 
subject merchandise. We have not adopted this suggestion. While we do 
not disagree with the proposition that the Department may seek 
information from importers, we also do not believe that there is any 
doubt concerning the Department's authority to seek such information. 
Therefore, we do not feel that the suggested modification is necessary.

Section 351.205

    Section 351.205 deals with preliminary AD and CVD determinations. 
Two commenters noted that, in connection with proposed Sec. 351.205(c), 
the Department deleted (1) the requirement that a preliminary 
determination include the factual and legal conclusions for the 
Department's determination, and (2) the requirement that the Department 
notify the parties to the proceeding. They suggested that paragraph (c) 
be revised so as to include these requirements.
    While we do not disagree with the substance of the comments, we do 
not believe that a revision to paragraph (c) is appropriate. Section 
777(i) of the Act requires the Department to include its factual and 
legal conclusions in a preliminary determination, and sections 703(f) 
and 733(f) of the Act require the Department to notify the petitioner 
and other parties to an investigation. Therefore, given our overall 
approach of avoiding repetitions of the statute, we have not made the 
revisions suggested.

Section 351.206

    Section 351.206 deals with critical circumstances findings. In 
connection with Sec. 351.206, one commenter sought clarification that 
provisional measures would not be imposed on merchandise imported prior 
to the date of initiation of an AD or CVD investigation. We can confirm 
that provisional measures will not be imposed on merchandise entered 
prior to the date of initiation. Section 351.206(d), which deals with 
retroactive suspension of liquidation, refers to sections 703(e)(2) and 
733(e)(2) of the Act. These sections provide that suspension of 
liquidation may not apply to merchandise entered prior to the date on 
which notice of the determination to initiate is published in the 
Federal Register. See also SAA at 878.

Section 351.207

    Section 351.207 deals with the termination of investigations. We 
received several comments regarding Sec. 351.207 from one commenter.
    First, the commenter objected to the proviso in Sec. 351.207(b)(1) 
that the Secretary may terminate an investigation if ``the Secretary 
concludes that termination is in the public interest.'' The commenter 
argued that because the relevant provisions of the statute do not 
require a public interest finding, the regulations should not enlarge 
upon the statutory criteria.
    We have not adopted this suggestion, because the legislative 
history of the Trade Agreements Act of 1979 indicates that Congress 
intended that the Secretary make a public interest finding before 
terminating a self-initiated investigation or an investigation in which 
a petition is withdrawn. See, e.g., Trade Agreements Act of 1979 
Statements of Administrative Action, H.R. Doc. No. 153, Pt. II, 96th 
Cong., 1st Sess. 400, 418 (1979); and S. Rep. No. 249, 96th Cong., 1st 
Sess. 54, 70-71 (1979). We believe that this legislative history 
remains relevant in interpreting the post-URAA version of the Act. 
Moreover, there is no indication in the legislative history of the URAA 
that Congress intended that the Department abandon the requirement of a 
public interest finding.
    Second, in connection with Sec. 351.207(c), the commenter suggested 
that the Department clarify that its authority to terminate an 
investigation due to lack of interest is unaffected by those statutory 
provisions prohibiting the post-initiation reconsideration of industry 
support for a petition. We have not adopted this suggestion, because, 
as the Department stated in the AD Proposed Regulations, 61 FR at 7315, 
the SAA is clear on this point.
    Finally, in connection with Sec. 351.207(b)(2), the commenter 
suggested that in light of the prohibition against voluntary export 
restraints found in the WTO Agreement on Safeguards, the Department 
should exercise sparingly its discretion to terminate an investigation 
based on a

[[Page 27312]]

foreign government's agreement to limit the volume of imports of 
subject merchandise into the United States. The commenter did not 
suggest any modifications to Sec. 351.207(b)(2), and we have left that 
provision unchanged.

Section 351.208

    Section 351.208 deals with suspension agreements and suspended 
investigations. Most of the comments we received regarding Sec. 351.208 
dealt with our proposed deadlines for initialing and signing suspension 
agreements.
    Deadlines: In proposed Sec. 351.208(f)(1)(i), we advanced the 
deadline for submitting a proposed suspension agreement to 15 days 
after a preliminary determination in an AD investigation and 5 days 
after a preliminary determination in a CVD investigation. As explained 
in the AD Proposed Regulations, the purpose of this change was to 
reduce burdens on all parties and Department staff. 61 FR at 7316. 
Public reaction to this change in deadlines was mixed, cutting across 
respondent/domestic industry lines.
    On the domestic industry side, one commenter strongly supported the 
change, while another commenter thought the AD deadline too short. On 
the respondent side, one commenter supported the change, but three 
commenters considered the revised deadline to be too short.
    After careful consideration of these comments, we have left the 
deadlines as set forth in proposed Sec. 351.208(f)(1)(i). Several of 
the commenters seeking a longer deadline argued that exporters are not 
in a position to consider whether or not they desire to propose a 
suspension agreement until the preliminary determination has been 
issued. We can understand why respondent interested parties might wish 
to see the results of a preliminary determination before formally 
submitting a proposed suspension agreement. However, in our view, a 
respondent interested party that is entertaining a suspension agreement 
as an option may begin its deliberations as soon as the Department 
initiates an investigation instead of waiting until the Department 
issues a preliminary determination. If a respondent interested party 
begins its deliberations early, we believe that the deadlines set forth 
in Sec. 351.208(f)(1)(i) provide sufficient time in which to digest the 
results of a preliminary determination.
    We received other comments regarding deadlines, in addition to 
those described above. One commenter suggested that the Department give 
itself authority to extend the deadlines where necessary. We agree with 
this suggestion, but note that it already is addressed by 
Sec. 351.302(b), which provides the Secretary with authority to extend, 
for good cause, any time limit established by part 351.
    Another commenter suggested that in order to provide the Department 
with more flexibility, the deadlines should run from the date of 
publication of a preliminary determination instead of the date of 
issuance. We have not adopted this suggestion. In order to accomplish 
our objective of reducing burdens, we deliberately chose the date of 
issuance, because one week can elapse between the date of issuance and 
the date of publication in the Federal Register. However, we believe 
that Sec. 351.302(b), discussed in the preceding paragraph, addresses 
the commenter's concerns, because it permits the Secretary to extend a 
deadline for good cause.
    Another commenter suggested that if the deadline for submitting 
proposed suspension agreements in CVD investigations remains at 5 days 
from the preliminary determination, the timeframe should be modified to 
5 business days, excluding applicable foreign holidays. We have adopted 
this suggestion in part by changing the deadline from 5 days to 7 days. 
However, we have not adopted the suggestion concerning the exclusion of 
foreign holidays. If, in a particular case, the occurrence of a foreign 
holiday should make this deadline unworkable, this is something that 
the Secretary could consider under the extension authority of 
Sec. 351.302(b).
    Suspension agreement procedures: We received several comments 
concerning the procedures to be followed in entering into a suspension 
agreement. One commenter, arguing that current procedures deprive 
petitioners of meaningful input, suggested that the Department amend 
Sec. 351.208(f)(1) to: (1) require the foreign exporters or foreign 
government to serve a copy of the proposed suspension agreement on the 
petitioner at the same time that it is submitted to the Department; (2) 
require the Department thereafter to consult with all parties and to 
request written comments from all parties regarding the terms of the 
agreement and whether the agreement is in the public interest; and (3) 
require the Department to consider domestic industry opposition to a 
suspension agreement as a strong indicator that the agreement is not in 
the public interest.
    Before addressing the specific suggestions, we should note at the 
outset that, in our view, the Department's existing procedures have not 
denied petitioners meaningful input regarding decisions to enter into 
suspension agreements. Department precedents offer numerous examples of 
revisions to proposed suspension agreements that the Department has 
made in response to petitioners' comments. While the Department may not 
always agree with all of a petitioner's comments, this does not mean 
that the Department has not carefully considered those comments.
    As for the specific suggestions, we have not adopted them for the 
following reasons. With respect to the suggestion that the party 
proposing a suspension agreement serve a copy on the petitioner, we 
note that sections 704(e) and 734(e) of the Act contemplate that the 
Department will notify the petitioner of a proposed suspension 
agreement and provide the petitioner with a copy of the proposed 
agreement at the time of notification. In our experience, this process 
has worked well in the past and there is no need to change it at this 
time. With respect to the suggestion that the Department consult with, 
and request written comments from, all parties, sections 704(e)(1) and 
734(e)(1) require the Department to consult only with the petitioner, a 
requirement reflected in Sec. 351.208(f)(2)(iii). Other parties have a 
right to comment on a proposed suspension agreement, however, and we do 
not believe it is necessary or appropriate to impose an additional 
consultation requirement on Department staff. With respect to written 
comments, sections 704(e)(3) and 734(e)(3) permit all interested 
parties to submit comments and information, a right that is already 
reflected in Sec. 351.208(f)(3). Finally, with respect to the 
suggestion concerning the significance of domestic industry opposition, 
this is something to which the Department would accord considerable 
weight when assessing the public interest. However, the Department must 
assess the public interest based on all the facts, and we do not 
believe it appropriate to issue a regulation that singles out one 
factor to the exclusion of others.
    Another commenter suggested that before entering into a suspension 
agreement, the Department should consult potentially affected consuming 
industries and potentially affected producers and workers in the 
domestic industry, including producers and workers not party to the 
investigation. As discussed above, we do not believe it is necessary or 
appropriate to expand the consultation requirements beyond those set 
forth in the statute. However, we have revised paragraph (f)(3) so as 
to

[[Page 27313]]

expressly permit industrial users and consumers to submit written 
argument and factual information concerning a proposed suspension 
agreement.
    Regional industry cases: One commenter stated that the Department 
should clarify Sec. 351.208, in accordance with the new statutory 
language, to make it clear that (1) it is not easier for respondents to 
obtain a suspension agreement in a regional industry investigation, and 
(2) the Department has no more obligation to accept a suspension 
agreement in a regional industry investigation than in any other 
investigation. We agree that a suspension agreement in a regional 
industry investigation is subject to the same requirements as a 
suspension agreement in a national industry investigation (including 
the public interest requirement), and that the Department need not 
accept an agreement in a regional industry investigation if those 
requirements are not met. However, because the SAA at 859 makes this 
clear, we do not think that additional clarification is necessary.
    Revision to paragraph (f)(1): Although not the subject of public 
comments, we have made certain stylistic revisions to paragraph (f)(1) 
in order to make this provision accurate and more readable.

Section 351.209

    Section 351.209 deals with the violation of suspension agreements. 
Of the comments we received regarding this section, most related to 
proposed Sec. 351.209(b)(2), which deals with the resumption of 
suspended investigations that had not been completed under sections 
704(g) or 734(g) of the Act. Proposed Sec. 351.209(b)(2) provided that 
the Secretary may ``update previously submitted information where the 
Secretary deems it appropriate to do so.''
    Although one commenter supported the use of updated information, 
three commenters opposed the use of updated information. Each of the 
latter commenters argued that the use of updated information 
constitutes poor policy, because it effectively rewards parties that 
violate or take advantage of a suspension agreement. In addition, two 
of the commenters referred to sections 704(j) and 734(j) of the Act, 
which provide that in making a final determination the Secretary 
``shall consider all of the subject merchandise, without regard to the 
effect of any [suspension] agreement. . . .'' According to one of the 
two commenters, these two statutory provisions preclude the use of 
updated information. According to the second of the two commenters, 
these provisions preclude the use of updated information except in the 
unusual case where the Department is able to account for the effect of 
the terminated suspension agreement.
    While we do not believe that sections 704(j) and 734(j) necessarily 
preclude the use of updated information, we have concluded that, in 
light of the Department's limited experience with resumed 
investigations, it would be premature at this time to resolve this 
issue in the regulations. Therefore, we have revised paragraph (b)(2) 
by deleting the phrase dealing with updated information.
    One commenter also questioned whether Sec. 351.209(b) was intended 
to broaden the circumstances under which it can be determined that a 
suspension agreement has been violated. In this regard, our intent was 
neither to broaden nor to narrow these circumstances.

Section 351.210

    We received two comments concerning Sec. 351.210, which deals with 
final determinations in investigations. As it did with respect to 
proposed Sec. 351.205(c), one commenter objected to the deletion of (1) 
the requirement that the Department include in a final determination 
its factual and legal conclusions; and (2) the requirement that the 
Department notify parties of a final determination. As we stated above 
in connection with Sec. 351.205(c), because the Act clearly imposes 
these requirements on the Department, these requirements need not be 
reiterated in the regulations.
    Another commenter suggested that the Department codify its practice 
of treating a request for a postponement of a final determination as a 
request for the extension of provisional measures. We agree with this 
suggestion. However, instead of assuming that a request for 
postponement includes an implied request for an extension of 
provisional measures, we prefer to rely on the Department's 
discretionary authority to deny requests for postponements of final 
determinations. More specifically, the absence of a request to extend 
provisional measures would constitute a compelling reason, within the 
meaning of Sec. 351.210(e)(1), for denying a request to postpone a 
final determination. Therefore, we have revised Sec. 351.210(e) so as 
to provide that in the case of a request for postponement made by 
exporters, the Secretary will not grant the request unless it is 
accompanied by a request for an extension of provisional measures to 
not more than 6 months.

Section 351.211

    Section 351.211 deals with the issuance of AD and CVD orders. We 
received several suggestions concerning proposed Sec. 351.211(c), which 
established special procedures concerning the assessment of duties in 
proceedings in which the Commission identified a regional industry. 
Based on our own review of paragraph (c) and these suggestions, we have 
deleted paragraph (c) and substituted in its place a new 
Sec. 351.212(f). A discussion of the suggestions and this new provision 
appears below under ``Section 351.212.''

Section 351.212

    Section 351.212 deals with matters related to the assessment of 
antidumping and countervailing duties. We received several comments 
relating to automatic assessment of duties and the calculation of 
assessment rates.
    Automatic assessment: Under the former regulations, if the 
Department did not receive a request for the review of particular 
entries of subject merchandise, the Department would instruct the 
Customs Service to liquidate those entries and assess duties at the 
cash deposit rate applied to those entries at the time of entry. In 
proposed Sec. 351.212(c), the Department proposed to assess duties on 
entries for which there was no review request ``at rates equal to the 
rates determined in the most recently completed segment of the 
proceeding. . . .'' The Department believed that by relying on more 
current rates as the basis for the assessment of duties, the number of 
requests for reviews would decline.
    Several commenters opposed this change, some describing their 
opposition as ``strong.'' They argued that the proposed change would 
create an undue element of uncertainty, because at the time when a 
party would have to decide whether to request a review, it would not 
know the rate that would be applied to its entries if it did not 
request a review. This would force parties to request reviews solely to 
protect their interests, thereby defeating the purpose of the proposal. 
They also argued that the proposal would result in more work for the 
Customs Service, a point the Department recognized in 1989. Finally, 
even those who did not oppose the change argued that proposed 
Sec. 351.212(c) needed additional refinements in order to provide some 
minimum degree of certainty.
    In light of the comments received, the Department has decided to 
continue its current practice with respect to automatic assessment; 
i.e., if an entry is

[[Page 27314]]

not subject to a request for a review, the Department will instruct the 
Customs Service to liquidate that entry and assess duties at the rate 
in effect at the time of entry. We have made the appropriate revisions 
to paragraph (c).
    Antidumping duty assessment rates: Proposed Sec. 351.212(b)(1) 
dealt with the method that the Department will use to assess 
antidumping duties upon completion of a review. In proposed paragraph 
(b)(1), the Department provided that it normally will calculate an 
``assessment rate'' for each importer by dividing the absolute dumping 
margin found on merchandise reviewed by the entered value of that 
merchandise. As such, paragraph (b)(1) merely codified an assessment 
method that the Department has come to use more and more frequently in 
recent years.
    Historically, the Department (and, before it, the Department of the 
Treasury) used the so-called ``master list'' (entry-by-entry) 
assessment method. Under the master list method, the Department would 
list the appropriate amount of duties to assess for each entry of 
subject merchandise separately in its instructions to the Customs 
Service. However, in recent years, the master list method has fallen 
into disuse for two principal reasons. First, in most cases, 
respondents have not been able to link specific entries to specific 
sales, particularly in CEP situations in which there is a delay between 
the importation of merchandise and its resale to an unaffiliated 
customers. Absent an ability to link entries to sales, the Department 
cannot apply the master list method. Second, even when respondents are 
able to link entries to sales, there are practical difficulties in 
creating and using a master list if the number of entries covered by a 
review is large. Preparing a master list that covers hundreds or 
thousands of entries is a time-consuming process, and one that is prone 
to errors by Department and/or Customs Service staff. Therefore, as the 
Department explained in the AD Proposed Regulations, 61 FR at 7317, the 
Department would consider using the master list method of assessment 
only in situations where there are few entries during a review period 
and the Department can tie those entries to particular sales.
    Several commenters suggested that the Department clarify that it 
will apply the master list method if the importer can demonstrate that 
the assessment rate approach would distort the amount of duty assessed 
as compared to the amount assessed under the master list method. In 
addition, one of these commenters urged the Department to clarify that, 
regardless of the assessment method used, the Department will not 
consider merchandise entered prior to the suspension of liquidation to 
be ``subject merchandise'' under section 771(25) of the Act. Finally, 
one commenter supported proposed paragraph (b)(1), and urged the 
Department to apply the assessment rate method to all outstanding 
unliquidated entries, regardless of whether the Department conducted 
the applicable review under the pre-or post-URAA version of the Act.
    The Department has adopted proposed paragraph (b)(1) without 
change. As noted above, and as recognized by most of the commenters, to 
a large extent, paragraph (b)(1) simply codifies the Department's 
current practice.
    With respect to the suggestions that the Department continue to 
apply the master list method on a case-by-case basis, in our view, the 
fact that a respondent is able to link its sales to entries, in itself, 
constitutes an insufficient basis for using the master list method. As 
discussed above, there are practical problems inherent in the use of 
the master list method wholly apart from the linkage problem.
    Thus, based on the results of each review, the Department generally 
will assess duties on entries made during the review period and will 
use assessment rates to effect those assessments. However, on a case-
by-case basis, the Department may consider whether the ability to link 
sales with entries should cause the Department to base a review on 
sales of merchandise entered during the period of review, rather than 
on sales that occurred during the period of review. These two 
approaches differ, because, in the case of CEP sales, the delay between 
importation and resale to an unaffiliated customer means that 
merchandise entered during the review period often is different from 
the merchandise sold during that period. Because of the inability to 
tie entries to sales, the Department normally must base its review on 
sales made during the period of review. Where a respondent can tie its 
entries to its sales, we potentially can trace each entry of subject 
merchandise made during a review period to the particular sale or sales 
of that same merchandise to unaffiliated customers, and we conduct the 
review on that basis. However, the determination of whether to a review 
sales of merchandise entered during the period of review hinges on such 
case-specific factors as whether certain sales of subject merchandise 
may be missed because, for example, the preceding review covered sales 
made during that review period or sales may not have occurred in time 
to be captured by the review. Additionally, the Department must 
consider whether a respondent has been able to link sales and entries 
previously for prior review periods and whether it appears likely that 
the respondent will continue to be able to link sales and entries in 
future reviews. The Department must consider these factors because of 
the distortions that could arise by switching from one method to 
another in different review periods. Also, in cases in which the 
Department is sampling sales under section 777A of the Act, other 
complicating factors mitigate against using entries during the POR as 
the basis for the review.
    Finally, the fact that the amount of duties assessed may differ 
depending on the method used is not necessarily grounds to conclude 
that the assessment rate method is distortive, because neither the Act 
nor the AD Agreement specifies whether sales or entries are to be 
reviewed, nor do they specify how the Department must calculate the 
amount of duties to be assessed. See, Torrington Co. v. United States, 
44 F.3d 1572, 1578 (Fed. Cir. 1995). Moreover, as the Court of 
International Trade has recognized in upholding the Department's 
assessment rate method, a review of sales, rather than entries, 
``appears not to be biased in favor of, or against, respondents.'' FAG 
Kugelfischer Georg Schafer KgaA v. United States, 1995 Ct. Int'l. Trade 
LEXIS 209, *10 (1995), aff'd, 1996 U.S. App. LEXIS 11544 (Fed. Cir 
1996).
    With respect to the issue of whether merchandise entered prior to 
suspension of liquidation is ``subject merchandise,'' the Department 
addressed this issue in Stainless Steel Wire Rod from France, 61 FR 
47874, 47875 (Sept. 11, 1996), in which the Department stated:

    Sales of merchandise that can be demonstrably linked with 
entries prior to the suspension of liquidation are not subject 
merchandise and therefore are not subject to review by the 
Department. Merchandise that entered the United States prior to the 
suspension of liquidation (and in the absence of an affirmative 
critical circumstances finding) is not subject merchandise within 
the meaning of section 771(25) of the Act.

    Finally, with respect to the effective date of paragraph (b)(1), in 
many cases the Department currently is applying the assessment rate 
method. However, the Department cannot apply this method to all 
unliquidated entries. Because liquidation of entries may have been 
delayed by the Customs Service for reasons unrelated to the collection 
of

[[Page 27315]]

antidumping duties, applying this method to all unliquidated entries 
would require the amendment all of our prior liquidation instructions. 
Not only would this place an enormous burden on the Department and the 
Customs Service, it also would cause uncertainty for the importing 
community.
    For these reasons, the Department will apply paragraph (b)(1) only 
to assessment instructions issued on the basis of final results in 
reviews initiated after the effective date of these regulations. As 
noted previously, however, because this regulation merely codifies a 
past practice, the Department will apply the assessment rate method in 
those cases that are not technically subject to the regulation. 
However, the Department will do so as a matter of practice, and not as 
a regulatory requirement. The purpose of having an effective date is to 
ensure that the Department is not required to amend old assessment 
instructions based on reviews in which the Department did not collect 
the necessary information.
    Regional industry cases: As noted above, we received suggestions 
from one commenter regarding proposed Sec. 351.211(c), which 
established special procedures for proceedings in which the Commission 
identified a regional industry. Under paragraph (c), which was designed 
to implement sections 706(c) and 736(d) of the Act, the Secretary could 
except from the assessment of duties merchandise of an exporter or 
producer that did not supply the region during the POI.
    While the commenter generally supported the procedures set forth in 
Sec. 351.211(c), it suggested several improvements. First, it suggested 
that the Department clarify that a petitioner has a right to respond to 
certifications submitted by an exporter or producer. In its post-
hearing comments, this commenter further refined this suggestion by 
proposing that the Department require certifications from foreign 
exporters and producers to be submitted early in the investigation, 
rather than at its end.
    Second, for purposes of certifying and establishing whether an 
exporter or producer exported subject merchandise for sale in the 
region concerned during the POI, the commenter suggested that the 
relevant POI be the ITC's POI. According to the commenter, the 
Department's normal one-year POI is too short, and the Commission's 
normal three-year POI is preferable.
    Third, the commenter suggested that U.S. importers should be 
required to certify to the Customs Service, upon entry into the United 
States of merchandise from an exporter or producer whose merchandise 
has been excepted from assessment, whether that merchandise will be 
sold in the region concerned. If an importer certified that merchandise 
would be sold in the region, the importer would be required to notify 
the Department directly so that the Department could direct that 
merchandise of the exporter or producer in question would be subject to 
the assessment of duties.
    Finally, in its post-hearing comments, the commenter suggested that 
the certifications of exporters and producers should include the period 
after the POI. In this regard, it noted that paragraph (c), as drafted, 
required that the certifications of U.S. importers cover the period 
after the POI.
    We believe these suggestions have considerable merit, and with, 
certain exceptions, we have incorporated them into these final 
regulations. However, after reviewing the commenter's suggestions and 
proposed Sec. 351.211(c), we came to the conclusion that instead of 
creating an entirely new procedure, it would be more administrable for 
the Department to consider requests for an exception from the 
assessment of duties in the context of an existing procedural 
mechanism. Among other things, this would ensure that domestic 
interested parties have ample opportunity to comment on requests for an 
exception, something which was one of the primary concerns of the 
commenter. Entries of subject merchandise from an exporter or producer 
that did not supply the region concerned during the original POI would 
be subject to cash deposit requirements. However, because final duties 
would not be levied if, in a review, the exporter or producer 
established its eligibility for an exception from assessment, this 
procedure is consistent with Article 4.2 of the AD Agreement and 
Article 16.3 of the SCM Agreement.
    Therefore, we have added a new paragraph (f) to Sec. 351.212 to 
deal with requests for an exception from the assessment of duties in 
regional industry cases. The procedures for obtaining an exception 
would work as follows. First, paragraph (f)(1) sets forth the basic 
standard for obtaining an exception, and incorporates some of the 
suggestions of the commenter.
    Paragraph (f)(2) provides that requests for an exception from 
assessment will be considered in the context of an administrative 
review or a new shipper review. Paragraph (f)(2)(i) provides that an 
exporter or producer seeking an exception from assessment must request 
an administrative review or a new shipper review under Sec. 351.213 or 
Sec. 351.214, respectively. The request for review must be accompanied 
by a request that the Secretary determine whether subject merchandise 
of the exporter or producer satisfies the requirements of paragraph 
(f)(1) and should be excepted from the assessment of duties. The 
exporter or producer may request that the Secretary limit the review to 
a determination as to whether an exception should be granted. In 
addition, a request for review and exception from assessment must be 
accompanied by the certifications described in paragraphs (f)(2)(i) (A) 
and (B).
    If the requirements of paragraph (f)(2)(i) and Sec. 351.213 or 
Sec. 351.214, as the case may be, are satisfied, the Secretary will 
initiate an administrative review or a new shipper review. The 
Secretary will conduct the review in accordance with Sec. 351.221. 
However, under paragraph (f)(2)(ii), the Secretary may limit the review 
to a determination as to whether an exception from assessment should be 
granted if requested to do so by the exporter or producer under 
paragraph (f)(2)(i). Notwithstanding the submission of such a request, 
the Secretary could decline to conduct a limited review if, for 
example, a domestic interested party had requested an administrative 
review of the particular exporter or producer.
    Under paragraph (f)(3), if the Secretary determines that the 
exporter or producer satisfies the requirements for an exception from 
assessment, the Secretary will instruct the Customs Service to 
liquidate entries without regard to antidumping or countervailing 
duties. These instructions would apply only to entries of subject 
merchandise of the exporter or producer concerned that were covered by 
the review. Future entries of subject merchandise would remain subject 
to cash deposit requirements for estimated duties, although the 
exporter or producer could seek an exception from assessment for future 
entries in a subsequent review.
    Paragraph (f)(4) describes the actions that the Secretary will take 
if the Secretary does not grant an exception from assessment. Under 
paragraph (f)(4)(i), if the review was not limited to the question of 
an exception from assessment, the Secretary will instruct the Customs 
Service to assess duties in accordance with Sec. 351.212(b); i.e., to 
assess duties in accordance with the results of the review. Under 
paragraph (f)(4)(ii), however, if the review was limited to the 
question of an exception from assessment, the Secretary will apply the 
automatic assessment provisions of Sec. 351.212(c).
    Returning to the commenter's suggestions, because we now have opted

[[Page 27316]]

to deal with requests for exception from assessment in the context of 
reviews, we have not adopted the suggestion concerning the early 
submission of certifications in an investigation. By dealing with 
requests for an exception in the context of a review, domestic 
interested parties should have ample opportunity to scrutinize, and 
comment on, the certifications submitted by an exporter or producer.
    In addition, we have not adopted the suggestion that we use the 
Commission's POI. Neither section 703(c) nor section 706(d) expressly 
state whether the relevant POI is the Department's or the ITC's. 
However, we think that section 751(a)(2)(B) of the Act provides 
guidance as to what Congress intended. Section 751(a)(2)(B), which 
deals with new shipper reviews, refers to an

exporter or producer [that] did not export the 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. * * *

    The Department interprets this section as referring to the 
Department's period of investigation, because the section is directed 
to the Department. If Congress had intended that the Department use the 
Commission's POI for purposes of determining whether an exporter was a 
new shipper under section 751(a)(2)(B), it would have said so 
explicitly. Given the obvious interrelationship between section 
751(a)(2)(B) and sections 706(c) and 736(d), the more reasonable 
interpretation is that ``period of investigation,'' as used in the 
latter two sections, means the Department's POI.
    Provisional measures deposit cap: Although we have not revised 
proposed paragraph (d) in these final regulations, the Department is 
using this opportunity to clarify that the provisional measures deposit 
cap contained in paragraph (d) will apply to entries subject to an AD 
order secured by bonds as well as cash deposits, as stated in that 
paragraph.
    On July 29, 1991, the Court of International Trade (the CIT) 
invalidated the Department's AD regulation on the provisional measures 
deposit cap (19 CFR Sec. 353.23) in a case on televisions from Taiwan. 
Zenith Electronics v. United States, 770 F. Supp. 648. The CIT followed 
this precedent on July 28, 1992, in a challenge to a review of 
televisions from Korea. Daewoo Electronics v. United States, 794 F. 
Supp. 389 (Daewoo I). On September 30, 1993, the Court of Appeals for 
the Federal Circuit reversed the CIT's decision in the Korean 
television case, and upheld the regulation. Daewoo Electronics v. 
United States, 6 Fed. 3d 1511 (Daewoo II). As a result of the Federal 
Circuit's decision, the CIT subsequently vacated its July 29, 1991, 
order in Taiwan televisions. The Department never amended its 
regulation, and the original regulation (now replicated in paragraph 
(d)) remains valid. For this and other reasons discussed below, 
paragraph (d) and its predecessor provision should be applied to all 
entries as though the CIT never invalidated it.
    Section 733(d)(2) of the Act provides that an importer of 
merchandise subject to an AD investigation must post bonds, cash 
deposits, or other security for entries of the subject merchandise 
between the Department's affirmative preliminary determination of sales 
at less than fair value and the Commission's final injury 
determination.
    Assuming an AD order is imposed, a manufacturer or importer may 
request an administrative review under section 751(a) of the Act to 
determine the actual amount of antidumping duties due on the sales 
during this period. Section 737(a)(1) of the Act provides that, if the 
amount of a cash deposit collected as security for an estimated 
antidumping duty is different from the amount of the antidumping duty 
determined in the first section 751 administrative review, then the 
difference shall be disregarded, to the extent that the cash deposit 
collected is lower than the duty determined to be due under a section 
751 administrative review. This is called the provisional measures 
deposit cap, and applies to entries between publication of the 
Department's preliminary determination and the Commission's final 
determination of injury.
    The provisional measures deposit cap for countervailing duties 
(section 707 of the Act), on the other hand, explicitly provides that 
the cap applies whether the entry is secured by a cash deposit or by a 
bond or other security. That is, the Act at first glance appears to 
apply the cap to entries secured both by cash deposits and by bonds in 
CVD cases, but only by entries secured cash deposits in AD cases.
    Since 1980, the Department, by regulation, took the position that 
the difference between the AD and CVD provisions in the statute was an 
oversight, and the agency thus applied the provisional cap to entries 
secured both by bonds and by cash deposits in both AD and CVD cases. 19 
C.F.R. Sec. 353.50 in pre-1989 regulations; 19 CFR Sec. 353.23 in the 
post-1989 regulations.
    On July 29, 1991, in a case involving televisions from Taiwan, the 
CIT rejected the Department's interpretation that the statutory 
differences between the AD and CVD provisions were an oversight, based 
on its analysis of the statute and the Tokyo Round AD Code. It ruled 
that, in AD cases, the provisional measures deposit cap applied only to 
entries secured by cash deposits. Zenith.
    The Department decided it would not appeal the decision when it 
became final, and published notice of its acquiescence in the Federal 
Register. 57 FR 45769 (1992). It also announced that, from the date of 
the decision, it would apply the cap only to entries secured by cash 
deposits in AD cases. However, the Department never amended its 
regulations to be consistent with this position.
    In 1992, the CIT followed its Taiwan television decision on the cap 
in a case involving televisions from Korea. (Daewoo I) Respondents 
appealed the decision on this issue to the Federal Circuit.
    Although not directly before it, the Federal Circuit reviewed the 
reasoning in the Zenith decision while deciding Daewoo II. The Federal 
Circuit disagreed with the Zenith reasoning. It found that the statute 
does not prohibit the application of the cap to bonds, that the 
Department's interpretation was reasonable, and it overruled the CIT's 
decision. On September 30, 1994, the Federal Circuit held that the 
Department's regulation was valid, and that the cap can apply where 
duties are secured by bonds as well as cash deposits. In footnote 17 of 
its decision, the Federal Circuit noted with respect to the 
Department's Federal Register notice:

    After the Court of International Trade issued its opinion in 
Zenith II [in 1991], Commerce indicated that it would follow that 
holding, but prospectively only. The court here rejected that 
limitation [to cash deposits]. In view of our resolution of this 
issue, the changed regulation may have prospective application only 
[from October 5, 1992 forward].

    Thus, the Federal Circuit, erroneously treating our public notice 
as an amendment to the Department's regulations, held that the 
``amended regulation'' could only be applied prospectively from the 
date it was adopted, October 5, 1992. It was not valid during the time 
between the CIT decision in Zenith and the date of the Federal Register 
notice. The Department's Federal Register notice, however, did not 
amend its original regulation; it only stated that it did not intend to 
appeal the Zenith decision and

[[Page 27317]]

would change its practice. Therefore, the original regulation remained 
valid from the date the CIT overturned it to the present.
    In addition, on October 21, 1994, when the Zenith decision became 
final, the CIT vacated its original 1991 decision in Korean televisions 
with regards to the cap. Zenith, Slip Op. 94-170.

Section 351.213

    Section 351.213 deals with administrative reviews under section 
751(a)(1) of the Act. We received a few comments concerning 
Sec. 351.213.
    Publication of preliminary dumping margins: One commenter suggested 
that the Department refrain from including individual, company-specific 
preliminary dumping margins in its published notices of preliminary 
results of review. We have not adopted this suggestion, because, in our 
view, section 777(i)(2)(A)(iii)(II) of the Act requires that individual 
margins be included in the published notice of preliminary results.
    Deferral of administrative reviews: To reduce burdens on parties 
and the Department, in proposed Sec. 351.213(c) the Department 
established a procedure by which the Secretary could defer the 
initiation of an administrative review for one year if (i) the request 
for review was accompanied by a request that the Secretary defer the 
review; and (ii) no relevant party to the proceeding objected. One 
commenter strongly supported this proposal, but two commenters opposed 
it. According to the two opponents, deferral of reviews lacks a 
statutory basis, is inconsistent with legislative intent, and may not 
result in a reduction of burdens. In addition, the opposing commenters 
argued that the requirement that no party object to deferral is an 
inadequate procedural safeguard. They claim that the Department may 
apply pressure on petitioners to acquiesce in requests for deferrals, 
citing instances in which petitioners have requested postponements of 
final determinations as an accommodation to the Department.
    After considering the comments, we have left Sec. 351.213(c) 
unchanged, except for (1) minor revisions to paragraph (c)(1)(ii) aimed 
at improving the clarity of that provision; and (2) an addition to 
paragraph (c)(3) that extends the deadline in Sec. 351.301(b)(2) for 
submitting factual information. As stated by the commenter supporting 
the change, we believe that the deferral process will save ``time and 
money, for both the Department and the parties.'' In addition, we do 
not think that it is inconsistent with the statute or legislative 
intent to defer a review for one year where all parties consent. As for 
the claim that the ``no objection'' requirement is an inadequate 
safeguard, while it is true that the Department, at times, may take the 
initiative in suggesting that parties request postponements or 
extensions, the Department does not ``pressure'' parties into 
submitting such requests. In the case of a request for a deferral, if a 
deferral is not in the interests of a particular party, that party will 
be free to object without risk of any adverse consequences.
    Rescissions of administrative reviews: Commenting on proposed 
Sec. 351.213(d)(1) and its 90-day limit on withdrawals of a request for 
a review, one commenter suggested that the provision be modified so as 
to allow the Department to rescind an administrative review after the 
90-day period has expired if (1) the party that initially requested the 
review withdraws its request, and (2) no other party objects to the 
rescission within a reasonable period of time. According to the 
commenter, such a rule would avoid the burden and expense of completing 
reviews that none of the parties want.
    We agree that the 90-day limitation may be too rigid. However, we 
believe that the Department must have the final say concerning 
rescissions of reviews requested after 90 days in order to prevent 
abuse of the procedures for requesting and withdrawing a review. For 
example, we are concerned with the situation in which a party requests 
a review, the Department devotes considerable time and resources to the 
review, and then the party withdraws its requests once it ascertains 
that the results of the review are not likely to be in its favor. To 
discourage this behavior, the Department must have the ability to deny 
withdrawals of requests for review, even in situations where no party 
objects.
    Therefore, in Sec. 351.213(d)(1), we have retained the 90-day 
requirement. In addition we have added a new sentence, taken from 19 
CFR Secs. 353.22(a)(5) and 355.22(a)(3), that essentially provides that 
if a request for rescission is made after the expiration of the 90-day 
deadline, the decision to rescind a review will be at the Secretary's 
discretion.
    Extension of review period: One commenter suggested that if the 
Department has the authority to defer the initiation of an 
administrative review, it follows that it has the authority to begin an 
administrative review early, or to extend the period of a particular 
review beyond one year. This commenter stated that in certain 
industries where prices change rapidly, it is important to have duty 
deposit rates that are as current as possible. The commenter suggested 
a revision to proposed Sec. 351.213(e)(1) that would permit the 
Secretary to extend the period of an administrative review, for good 
cause shown, up to the date on which questionnaire responses are due.
    We believe that the regulation, as drafted, is sufficiently 
flexible to address these concerns in extraordinary circumstances. 
Section 351.213(e)(1)(i) states that the period of review ``normally'' 
will be linked to the anniversary month of the order. The use of 
``normally'' indicates that the Secretary has the discretion to use 
some other period in appropriate circumstances, but the Department will 
exercise this discretion only in very unusual circumstances.
    Duty absorption: Proposed paragraph (j) established administrative 
review procedures for analyzing antidumping duty absorption. We have 
made several changes to paragraph (j) in response to the comments 
received.
    Timing of the absorption inquiry: Three commenters argued that 
proposed paragraph (j)(1) was unlawful to the extent that it allowed 
for absorption inquiries during reviews other than those occurring in 
the second and fourth years following the publication of an AD order. 
In response, two other commenters argued that section 751(a)(4) of the 
Act does not preclude parties from requesting, or the Department from 
conducting, a duty absorption inquiry during administrative reviews 
other than the second and fourth. One of these two commenters further 
argued that the retention of the authority to conduct absorption 
inquiries in any review would prevent automatic filings of requests by 
petitioners in the second and fourth reviews.
    A sixth commenter asserted that for orders entered in 1993, section 
751(a)(4) provides for duty absorption determinations in reviews 
commenced in 1995 and 1997. Therefore, in the view of this commenter, 
proposed paragraph (j)(1) is inconsistent with the statute to the 
extent that it provides for absorption inquiries in reviews commencing 
in 1996 and 1998.
    We have not revised paragraph (j)(1) in light of these comments. 
Paragraph (j)(1), in accordance with section 751(a)(4), provides for 
the conduct, upon request, of absorption inquiries in reviews initiated 
two and four years after the publication of an AD order. As noted by 
the commenters, paragraph (j)(1) also provides for such inquiries in

[[Page 27318]]

reviews initiated in the second and fourth years following the 
continuation of an AD order as the result of a sunset review under 
section 751(c) of the Act. The reason for this schedule is that (1) 
duty absorption findings are intended for use in the five-year sunset 
reviews conducted by the Department and the Commission (see SAA at 
885), and (2) there will be subsequent sunset reviews of AD orders that 
remain in place following the completion of an initial sunset review 
(see section 751(a)(c)(1)(C) of the Act). Moreover, section 751(a)(4) 
does not preclude the Department from conducting absorption inquiries 
in reviews initiated in the second and fourth years after continuation.
    With respect to the comment concerning AD orders published in 1993, 
under section 751(c)(6)(C) of the Act, these orders constitute 
``transition orders'' because they were in effect on January 1, 1995, 
the date on which the WTO Agreement became effective with respect to 
the United States. Under section 751(c)(6)(D) of the Act, the 
Department is to treat transition orders, such as the 1993 orders in 
question, as being issued on January 1, 1995. Therefore, paragraph 
(j)(2) properly permits absorption inquiries for transition orders to 
be requested in any administrative review initiated in 1996 or 1998, 
because these are the second and fourth years after the date on which 
transition orders are deemed to be issued.
    Who can request an absorption inquiry: We have modified paragraph 
(j)(1) to clarify that only domestic interested parties may request a 
duty absorption inquiry. This is consistent with the Department's view 
that one exporter or producer may not request an administrative review 
of another exporter or producer.
    Deadline and content of request: Two commenters supported as 
reasonable the Department's proposal to impose a deadline of 30 days 
after initiation on requests for absorption inquiries. One of these 
commenters also suggested that the Department require requests for 
absorption inquiries to be made on a respondent-specific basis.
    Two other commenters argued that the Department should eliminate 
the 30-day deadline. One of these two commenters argued that the 30-day 
requirement was not reasonable in cases in which the necessary evidence 
of absorption is already before the Department. The other commenter 
stated that, because a respondent's questionnaire response would not be 
available to a domestic interested party within the first 30 days of an 
administrative review, the Department should extend the request period 
until after the date on which questionnaire responses are filed.
    A fifth commenter suggested that requests for duty absorption 
inquiries should contain legitimate and substantial evidence of duty 
absorption. In response, two other commenters argued that the 
Department should not impose any special burden on a party requesting 
an absorption inquiry, and that any such burden would be contrary to 
section 751(a)(4).
    With respect to these comments, we agree with the commenters who 
stated that the 30-day deadline is reasonable. No change in the 
deadline is necessary, because any domestic interested party requesting 
an absorption inquiry will not have to supply any information to the 
Department other than the name(s) of the respondent(s) to be examined 
for duty absorption.
    We also agree with the suggestion that absorption inquiry requests 
be respondent-specific, and we have made appropriate revisions to 
paragraph (j)(1). In the Department's view, a requirement that the 
request identify the respondents to be examined is not unreasonable, 
and such a requirement will spare the Department the burden of 
conducting an absorption inquiry of respondents in which the domestic 
industry is not interested.
    Finally, we have not adopted the suggestion that requests for duty 
absorption inquiries must be accompanied by evidence of duty 
absorption. In our view, any such requirement would be contrary to 
section 751(a)(4).
    Substantive criteria: One commenter argued that the Department 
should set forth in the regulations substantive criteria regarding duty 
absorption. This commenter further proposed that as part of these 
criteria, the Department should give an exporter or producer credit for 
negative dumping margins.
    A second commenter agreed with the need for substantive criteria, 
and argued that the Department should find duty absorption whenever an 
affiliated entity pays either estimated or final antidumping duties. 
This commenter also asserted that the regulations should state 
expressly that a finding of absorption does not result in the treatment 
of the absorbed duties as a cost in the Department's calculations of 
dumping margins.
    A third commenter, also supporting the promulgation of substantive 
criteria, suggested that the Department must develop a ``bright-line'' 
test to review and examine intracompany transfers of capital. This 
commenter also asserted that the Department should make clear that the 
duty absorption provision applies only to final, assessed antidumping 
duties, not to estimated antidumping duty deposits.
    We have not adopted the suggestions that we promulgate substantive 
duty absorption criteria. The Department will need experience with 
absorption inquiries before it is able to promulgate such criteria. 
However, we have added a new paragraph (j)(3) that clarifies that the 
Department will limit the absorption inquiry to information pertaining 
to antidumping duties determined in the administrative review in which 
the absorption inquiry is requested. In our view, this limitation flows 
directly from the objective of section 751(a)(4), which is to identify 
producers or exporters that have affiliated importers and that continue 
to dump while the affiliated importer pays the antidumping duties. See, 
S. Rep. No. 412, 103d Cong., 2d Sess. 44 (1994). Limiting the inquiry 
in this manner precludes any approach to duty absorption that attempts 
to measure the degree to which the duties determined in a prior review 
period were passed on to unaffiliated purchasers, and precludes basing 
absorption on estimated antidumping duty deposits.
    Exception from assessment of duties in regional industry cases: In 
light of the revised procedure for obtaining an exception from the 
assessment of duties in regional industry cases, discussed above in 
connection with Sec. 351.212, we have added a new paragraph (l) that 
cross-references Sec. 351.212(f).
    Administrative reviews of CVD orders conducted on an aggregate 
basis: With respect to requests for zero rates in administrative review 
of CVD orders that are conducted on an aggregate basis, we revised 
paragraph (k)(1)(iv) to clarify that in the case of a non-producing 
exporter, the foreign government must certify that neither the exporter 
nor the exporter's supplier received more than de minimis subsidies 
during the review period.

Section 351.214

    Proposed Sec. 351.214 established procedures for conducting new 
shipper reviews, a new type of review provided for in section 
751(a)(2)(B) of the Act. We received several comments concerning new 
shipper reviews, some of which related to Sec. 351.214 and some of 
which related to other sections. For ease of discussion, we will 
address here those comments concerning other sections.
    Initiation of a new shipper review: Three commenters suggested that 
the regulations clarify that the Department may initiate a new shipper 
review based

[[Page 27319]]

on an irrevocable offer for sale. They argue that if an irrevocable 
offer is considered sufficient for purposes of initiating an 
investigation, it should be considered sufficient for purposes of 
initiating a new shipper review. In addition, they argued that the 
statute does not preclude this approach, and they cited to one instance 
in which the Department allegedly initiated a new shipper review based 
on an irrevocable offer. Another commenter, however, argued in response 
that the statute precludes the initiation of a new shipper review in 
the absence of a sale or entry during the relevant review period, 
although the commenter did not cite the particular provision of the 
statute containing this preclusion. Yet another commenter suggested 
that the Department clarify that a person can request a new shipper 
review as long as there is a bona fide sale of subject merchandise to 
the United States, even if that merchandise has not yet been shipped to 
or entered the United States.
    We agree that the Department should clarify the basis on which an 
exporter or producer may request a new shipper review. Therefore, in 
paragraph (b), we have added a new paragraph (b)(1) and have renumbered 
the remainder of paragraph (b) accordingly. Under paragraph (b)(1), an 
exporter or producer may request a new shipper review if it has 
exported subject merchandise to the United States or if it has sold 
subject merchandise for export to the United States. Thus, an exporter 
or producer may request a new shipper review prior to the entry of 
subject merchandise.
    We have not adopted the suggestion that an irrevocable offer for 
sale would suffice for purposes of initiating a new shipper review. 
First, as discussed above in connection with Sec. 351.102(b) and the 
definition of ``likely sale,'' we have deleted the irrevocable offer 
standard from the regulations. More generally, however, we do not 
believe it appropriate to base a new shipper review on anything short 
of a sale. The initiation of new shipper reviews and the issuance of 
questionnaires requires an expenditure of administrative resources by 
the Department that is not inconsiderable when cumulated across all AD/
CVD proceedings. In our view, the Department should not expend these 
resources unless there is a reasonable likelihood that there ultimately 
will be a transaction for the Department to review; namely, as 
discussed below, an entry and sale to an unaffiliated purchaser. In the 
case of an offer, because the offer may or may not result in a sale, we 
do not believe that there is a sufficient likelihood of an eventual 
entry and sale to warrant the expenditure of resources on the 
initiation of a new shipper review.
    The same commenter requested that the regulations clarify that one 
shipment or sale is sufficient for a new shipper to be entitled to a 
review, assuming that the other requirements of Sec. 351.214(b) are 
satisfied. While we do not disagree with the proposition that a new 
shipper review may be initiated based on a single transaction, we 
believe that the regulation, as proposed, makes this clear. As 
discussed below, we have revised Sec. 351.214(f)(2) to provide that the 
Secretary may rescind a new shipper review if there ``has not been an 
entry and sale.'' In our view, the use of the singular indicates that a 
single transaction is sufficient for purposes of initiating and 
completing a new shipper review.
    Citing the possibility of meritless claims for new shipper reviews, 
one commenter, referring to proposed paragraph (b) (now paragraph 
(b)(2)), suggested that the Department require additional documentation 
from an exporter claiming to be a new shipper. Specifically, this 
commenter stated that the Department should require: (1) Documentation 
concerning the exporter's offers to sell merchandise in the United 
States; (2) documentation identifying the exporter's sales activities 
in the United States; (3) an identification of the complete 
circumstances surrounding the exporter's sales to the United States, as 
well as any home market or third country sales; (4) in the case of a 
non-producing exporter, an explanation of the exporter's relationship 
with its producer/supplier; (5) an identification of the exporter's 
relationship to the first unrelated U.S. purchaser; and (6) a 
certification from the purchaser that it did not purchase the subject 
merchandise from the exporter during the POI of the original 
investigation. Another commenter opposed this suggestion.
    While the Department has no interest in dealing with meritless 
claims for new shipper reviews, by the same token, we do not want to 
discourage meritorious claims. The information requirements that this 
commenter would impose might discourage legitimate new shippers from 
requesting new shipper reviews. Moreover, some of the information 
sought (e.g., the complete circumstances surrounding an exporter's home 
market or third country sales) appears to be of little relevance in 
determining whether an exporter is a new shipper to the United States. 
Therefore, we have not adopted this suggestion.
    Another commenter questioned the implication, in the case of a CVD 
proceeding, that the foreign government will be required to provide a 
full response to a Department questionnaire. Presumably, the commenter 
was referring to proposed Sec. 351.214(b)(5) and the requirement that a 
person requesting a new shipper review certify that it ``has informed 
the government of the exporting country that the government will be 
required to provide a full response to the Department's 
questionnaire.'' According to the commenter, if the foreign government 
cooperated during the original CVD investigation and provided a full 
response to the Department's questionnaire, another questionnaire 
response would not be necessary.
    We have not revised Sec. 351.214(b)(5) in light of this comment, 
because it overlooks the fact that the period of review in a new 
shipper review will be different from the POI of the original CVD 
investigation. Therefore, just as in the case of an administrative 
review, the Department will require information from the foreign 
government concerning any countervailable subsidies conferred during 
the period of review. In addition, as stated in the AD Proposed 
Regulations, the purpose of this particular certification requirement 
is ``to minimize situations in which [the Department] will be forced to 
rely upon the facts available.'' 61 FR at 7318.
    Completion of a new shipper review: One commenter suggested that 
the Department clarify that a sale to an unaffiliated person along with 
an entry during the review period should be a prerequisite for 
completing a new shipper review. This commenter interpreted the 
references in proposed Sec. 351.214(f)(2) to ``entries, exports, or 
sales'' as indicating that the Department might complete a new shipper 
review even in the absence of an entry and sale to an unaffiliated 
person during the review period.
    In drafting proposed Sec. 351.214, our intent was that the 
Department would complete a new shipper review only if there were an 
entry during the review period and a sale to an unaffiliated person. 
However, we appreciate that proposed Sec. 351.214(f)(2), as drafted, 
does not accurately reflect this intent. Therefore, we have revised 
Sec. 351.214(f)(2) to clarify this particular point.
    Another commenter suggested that the Department modify proposed 
Sec. 351.214(f)(2) to allow a review to continue if there were no 
entries during the review period but an entry occurred within 30 days 
after initiation. We have not adopted this suggestion. The

[[Page 27320]]

Department does not disagree with the notion that the Secretary should 
have the discretion to expand the review period in appropriate cases. 
However, given our lack of experience with this new procedure, we are 
reluctant to select 30 days as the relevant cut-off point for all 
cases. There may be cases in which the cut-off point should be greater 
or lesser than 30 days. In our view, Sec. 351.214(f)(2)(ii) 
appropriately provides the Department with a more flexible approach for 
dealing with the types of problems envisioned by the commenter.
    Conduct of new shipper reviews: One commenter also suggested that 
the regulations should provide that, in each new shipper review, the 
Department will send a questionnaire to the U.S. customer seeking 
information concerning the bona fide nature of the new shipper 
transaction. According to the commenter, such an approach would 
safeguard against new shippers conspiring with an unaffiliated U.S. 
customer to engage in a single transaction at a high price that would 
generate a dumping margin and deposit and assessment rates of zero. 
Again, another commenter opposed this suggestion.
    We have not adopted this suggestion, because we believe that the 
statutory and regulatory schemes provide adequate safeguards against 
such manipulation, should it actually occur. It bears emphasis that in 
the scenario described by the commenter, a new shipper obtaining a 
dumping margin of zero would not be excluded from the order. Instead, 
its merchandise would remain subject to the AD order, and if the new 
shipper later began to sell at dumped prices, antidumping duties could 
be assessed with interest for any underpayment of estimated duties.
    The same commenter made a suggestion regarding proposed 
Secs. 351.221(b)(3) and 351.307(b)(iv), which together provide that the 
Department will conduct a verification in a new shipper review if the 
Secretary determines that good cause for verification exists. The 
commenter suggested that the regulations clarify that it will be the 
Department's normal practice to conduction a verification in a new 
shipper review.
    We have not adopted this suggestion. While new shipper reviews 
constitute a new procedure, new shippers themselves are not a new 
phenomenon. Under the former statutory and regulatory scheme, the 
Department reviewed new shippers and assigned them their own rates in 
the context of reviews under section 751(a)(1) of the Act (now defined 
in Sec. 351.102(b) as ``administrative reviews''). Under this scheme, 
the Department would not automatically conduct a verification in any 
review that involved a new shipper. We do not believe that the creation 
of a separate review mechanism for new shippers, in and of itself, 
warrants a departure from this practice. In addition, making 
verification the norm in all new shipper reviews would impose a 
considerable administrative burden on the Department. For these 
reasons, therefore, we have not adopted the suggestion.
    A different commenter suggested that the regulations provide that 
the new shipper review period always will encompass all shipments of 
the subject merchandise made by the new shipper during the period 
preceding initiation of the review. This commenter cited the situation 
in which, in an AD proceeding, a new shipper waits until the end of the 
year following its first shipment to request a review. Because, 
according to the commenter, the period of review in an AD new shipper 
review may be the six-month period immediately preceding the 
anniversary or semiannual anniversary month, the review would not 
capture shipments, including the first shipment, made in the first six 
months. In addition, the commenter argued that in a CVD proceeding, 
because, under proposed Sec. 351.214(g)(2), the normal new shipper 
review period would be the most recently completed calendar year, a 
shipment made before initiation but outside the calendar year would not 
be captured in the review period.
    We have not adopted this suggestion, because we do not believe it 
is necessary. In the case of AD proceedings, while Sec. 351.214(c) 
permits a new shipper to wait one year before requesting a review, it 
does not require a new shipper to do so. A new shipper can ensure that 
its first shipment is covered by submitting a request for a review at 
the earliest possible date. Moreover, in the case of new shipper 
reviews initiated after the anniversary month of an order, the period 
of review normally will be twelve, not six, months.
    In the case of CVD proceedings, while it is possible that a review 
period based on the most recently completed calendar year may not 
capture a new shipper's first shipment because that shipment occurs 
after the calendar year in question, we believe that 
Sec. 351.213(e)(2), which is cross-referenced in Sec. 351.214(g)(2), 
and Sec. 351.214(f)(2)(ii) provide the Department with sufficient 
flexibility to resolve any problems that may arise by modifying the 
standard review period.
    This commenter also claimed that proposed paragraph (g) creates an 
anomaly by providing for different review periods for AD and CVD 
proceedings. The commenter suggested that the Department revise 
paragraph (g) so that the review periods for both AD and CVD new 
shipper reviews coincide.
    The Department does not see any ``anomaly,'' because the POI and 
POR for AD and CVD investigations and reviews normally are different. 
See Secs. 351.204(b) and 351.213(e). Moreover, the commenter did not 
offer any explanation as to why they should be identical. Therefore, we 
have not adopted this suggestion.
    Deadlines for completing new shipper reviews: Another commenter, 
apparently referring to proposed Sec. 351.214(d), contended that the 
timing of initiation of new shipper reviews was not consistent with the 
intent that new shippers be accorded expedited reviews. This commenter 
urged the Department to treat new shipper reviews more expeditiously, 
and alleged that the AD Agreement provides for such reviews at any time 
after an order is issued.
    We have not adopted this suggestion, because, in our view, 
Sec. 351.214(d) is consistent with section 751(a)(2)(B)(ii) of the Act, 
which, in turn, is consistent with Article 9.5 of the AD Agreement. 
Article 9.5 does not prescribe exactly when an authority must commence 
a new shipper review, but simply requires that such a review be 
``initiated * * * on an accelerated basis, compared to normal duty 
assessment and review proceedings in the importing Member.'' This is 
precisely what section 751(a)(2)(B)(ii) and Sec. 351.214(d) accomplish, 
because they provide for initiation on an accelerated basis as compared 
to an administrative review.
    A different commenter suggested that to ensure that the Department 
completes new shipper reviews within the statutory deadlines, the 
regulations should provide that a new shipper would no longer have to 
post a bond or make a cash deposit for subject merchandise if a new 
shipper review extends beyond 270 days. According to the commenter, 
such a provision is necessary because a new shipper allegedly has no 
effective judicial remedy if a review extends beyond the 270-day 
period. We have not adopted this suggestion, because we do not believe 
that the Department has the authority (and the commenter does not cite 
to any authority) to do what the commenter suggests.
    Bonding requirements: One commenter, presumably referring to 
proposed Sec. 351.214(e), suggested that instead of permitting the 
posting of

[[Page 27321]]

bonds (in lieu of cash deposits) only when the Secretary initiates a 
new shipper review, the Department should permit the posting of bonds 
to be suspended immediately upon acceptance of a request for a new 
shipper review. We have not adopted this suggestion, because section 
751(a)(2)(B)(iii) of the Act provides that the Secretary may direct the 
Customs Service to allow the posting of a bond ``at the time a review * 
* * is initiated. * * *''
    Another commenter suggested that upon the initiation of a new 
shipper review, the new shipper should have the option of replacing its 
estimated duty deposits with a bond or other security. Specifically, 
this commenter suggested that in the case of merchandise entered prior 
to the initiation of the new shipper review, the Department should 
direct the Customs Service to refund all estimated duty deposits with 
interest, provided that the new shipper replaces those deposits with a 
bond or other security. We have not adopted this suggestion, because it 
is required by neither the statute nor the AD Agreement, and its 
implementation would result in a considerable administrative burden for 
the Department and the Customs Service.
    Citing to proposed Sec. 351.214(e) and the importer's option to 
post a bond in lieu of a cash deposit, one commenter suggested that the 
regulations provide for the payment of interest on liquidation, even 
where the importer has opted to post bond in lieu of cash deposits. We 
have not adopted this suggestion, because it would be inconsistent with 
the Department's general approach that interest may not be imposed 
where an importer has posted a bond or other security in lieu of a cash 
deposit. The Federal Circuit sustained this approach in The Timken Co. 
v. United States, 37 F.3d 1470 (1994), and the commenter did not offer 
any justification for applying a different approach in the context of 
new shipper reviews.
    Duty assessments: One commenter suggested that the Department 
revise Sec. 351.214 so as to ensure that the rate determined in a new 
shipper review will apply to any entries that occurred before the new 
shipper review period. The commenter proposed changes to paragraphs (b) 
and (g).
    We have not adopted this suggestion, because we do not believe that 
it is necessary. Although Sec. 351.214 gives a new shipper the option 
of waiting for up to one year before requesting a new shipper review, 
it does not require a new shipper to do so. A new shipper can ensure 
that its initial shipments are covered by the rates determined in a new 
shipper review by promptly requesting a new shipper review at a 
sufficiently early date.
    Multiple reviews: One commenter objected to proposed 
Sec. 351.214(j), which deals with situations where there are multiple 
reviews (or requests for review) of merchandise from a particular 
exporter or producer. According to the commenter, a new shipper should 
be guaranteed a new shipper review when multiple reviews covering the 
same merchandise are requested. The commenter cited Article 9.5 of the 
AD Agreement and the requirement that new shippers must have an 
opportunity for a review ``on an accelerated basis, compared to normal 
duty assessment and review proceedings in the importing Member.'' The 
commenter argued that the objective of Article 9.5 would be thwarted if 
the Department chose to terminate or not initiate a new shipper review 
in favor of a more protracted administrative review. The commenter 
proposed revised language that would have guaranteed a new shipper 
review if the request for review was made within six months of the 
first shipment. If the request was made later than six months and the 
merchandise already was the subject of a different type of review, the 
Secretary could decline to initiate a new shipper review.
    With respect to this suggestion, we are mindful of the requirements 
of Article 9.5. In drafting a solution to the problem of multiple 
reviews, our intent was to provide the Secretary with sufficient 
flexibility so that the Secretary could opt to use the review mechanism 
that, in light of the facts, would be most likely to provide a new 
shipper with its own rate at the earliest possible date. Therefore, we 
believe that our objective was not inconsistent with that of the 
commenter.
    On the other hand, as noted previously, new shipper reviews are a 
new procedure with which we have little experience. In our view, the 
proposal suggested by the commenter may be too rigid to accommodate all 
of the possible permutations that may arise in actual cases. Therefore, 
we have not adopted the suggestion, and have left Sec. 351.214(j) 
somewhat open-ended in terms of the Secretary's discretion. We should 
emphasize again, however, that our intent is that the Secretary will 
exercise this discretion in a manner that provides a new shipper with 
its own individual rate at the earliest possible date.
    Expedited reviews in CVD proceedings for noninvestigated exporters: 
In proposed paragraph (k), the Department established procedures for 
expedited reviews in CVD proceedings of exporters that the Department 
did not individually examine in the original CVD investigation. Upon 
further review, we have made several revisions to paragraph (k).
    First, we have consolidated proposed paragraphs (k)(1) and (k)(2) 
into a single paragraph (k)(1). Paragraph (k)(1) continues to require 
that a request for review be submitted within 30 days of the date of 
publication in the Federal Register of the countervailing duty order. 
In addition, instead of providing for the initiation of paragraph (k) 
reviews in the semi-annual anniversary month or the anniversary month, 
in a revised paragraph (k)(2) we have provided that the Secretary will 
initiate a review in the month following the month in which a request 
for review is due.
    Second, we have made certain changes to paragraph (k)(3) to better 
reflect the distinctions between a paragraph (k) review and a new 
shipper review. Under paragraph (k)(3)(i), the period of review will be 
the period of investigation used by the Secretary in the investigation 
that gave rise to the CVD order. This change will enable the Department 
to use government data from the original investigation, thereby 
enabling the Department to truly expedite the review. The objective is 
to provide a noninvestigated exporter with its own cash deposit rate 
prior to the arrival of the first anniversary month of the order, at 
which point the exporter may request an administrative review. In this 
regard, in paragraph (k)(3)(iii) we have clarified that the final 
results of a paragraph (k) review will not be the basis for the 
assessment of countervailing duties, except, of course, under the 
automatic assessment provisions of Sec. 351.212(c).
    Finally, because the Department will be reviewing the original 
period of investigation, we have provided in paragraph (k)(3)(iv) for 
the exclusion from a CVD order of a firm for which the Secretary 
determines an individual countervailable subsidy rate of zero or de 
minimis. However, the Secretary will not exclude an exporter unless the 
information on which the exclusion is based has been verified.
    One commenter made two comments concerning proposed 
Sec. 351.214(k). First, the commenter questioned the basis for not 
extending the opportunity to post bonds to reviews conducted under 
Sec. 351.214(k). Second, the commenter questioned the implication that 
the foreign government will be required to provide a full response to 
the Department's questionnaire.

[[Page 27322]]

    With respect to the first comment, we have not extended the 
opportunity to post a bond to these types of reviews because this 
option is not required by either the statute or the SCM Agreement. With 
respect to the second comment, for the reasons discussed in the 
preceding paragraph, we do not agree with the comment. However, the 
comment has identified a lack of precision in proposed (k)(1) regarding 
the information to be provided by an exporter requesting a review of 
this type. Therefore, we have added a new paragraph (k)(1)(iii) to 
clarify that an exporter must certify that it has informed the 
government of the exporting country that it will be required to provide 
a full questionnaire response.
    One commenter argued that paragraph (k) should be extended to 
permit expedited reviews of exporters that were not investigated in an 
antidumping investigation. With respect to this comment, as stated in 
the AD Proposed Regulations, paragraph (k) implements Article 19.3 of 
the SCM Agreement. 61 FR at 7318. Article 19.3 requires expedited 
reviews for exporters that were not ``actually investigated'' in a CVD 
investigation. Because the AD Agreement does not contain a similar 
requirement, we have continued to limit paragraph (k) to CVD 
proceedings.
    Exception from assessment of duties in regional industry cases: In 
light of the revised procedure for obtaining an exception from the 
assessment of duties in regional industry cases, discussed above in 
connection with Sec. 351.212, we have added a new paragraph (l) that 
cross-references Sec. 351.212(f).

Section 351.216

    Section 351.216 deals with changed circumstances reviews under 
section 751(b) of the Act. In connection with Sec. 351.216, one 
commenter suggested that the Department should adopt objective criteria 
for determining changed circumstances that would take into account the 
best interests of the current American industry rather than merely the 
interests of the petitioner. The commenter then described a series of 
scenarios for which, the commenter claimed, the regulations do not 
provide express answers. The commenter appeared to be focusing on so-
called ``no-interest revocations.'' According to the commenter, the 
regulations, as drafted, provide a petitioner with a veto.
    We have not revised the regulations in light of this comment, 
because we believe that the proposed regulations adequately take into 
account the interests of domestic producers other than the petitioner. 
First, Sec. 351.216(b) provides that any interested party may request a 
changed circumstances review. Therefore, U.S. producers other than the 
petitioner may request such a review. Second, insofar as no-interest 
revocations are concerned, Sec. 351.222(g)(1)(i) states that the lack 
of interest must be expressed by ``[p]roducers 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.* * *'' Thus, a petitioner does not acquire a 
``veto'' due to its status as petitioner.
    Another commenter suggested that Sec. 351.216 be revised so as to 
provide for a determination as to whether the domestic industry 
supports the continuation of an order. We have not adopted this 
suggestion, because it is inconsistent with legislative intent to 
preclude reconsideration of support for a petition after the initiation 
of an investigation. See sections 702(c)(4)(E) and 732(c)(4)(E) of the 
Act; SAA at 863.
    Several commenters argued that the Department's existing regulatory 
procedures inadequately deal with situations of short supply. These 
commenters proposed a number of substantive and procedural changes in 
the areas of revocation, changed circumstances reviews, and temporary 
relief. Other commenters opposed the creation of a regulatory short 
supply provision. The commenters expressed concern that such a 
provision would undermine the AD/CVD law by creating a huge loophole, 
raising the cost of AD/CVD procedures, and interfering with the 
economic impact of an order. These commenters argued that a short 
supply provision would allow unfair low prices to continue and thereby 
thwart U.S. companies from renewing production in those products. The 
commenters also argued that no statutory authority exists in U.S. law 
to create a short supply provision.
    With respect to revocation, several commenters suggested that the 
Department codify in the regulations its authority to revoke an order 
(or terminate a suspended investigation) in part with respect to 
particular products included within the scope of an order or suspended 
investigation. Another commenter proposed that demonstration of a lack 
of domestic availability would create a rebuttable presumption that the 
continued inclusion of the product within an order does not serve the 
purpose for which AD/CVD relief is granted, and, unless the petitioning 
industry rebutted the presumption, the Department would revoke the 
order with respect to the particular product. The commenter proposed 
also that the regulations set forth specific standards and procedures 
that would allow parties to demonstrate that a product covered by an 
order is not available domestically.
    With respect to changed circumstances reviews, several commenters 
proposed that the regulations be amended to provide that lack of 
domestic availability of a product constitutes a ``changed 
circumstance'' sufficient to warrant a changed circumstance review. 
Other commenters proposed that the regulations provide that the mere 
allegation of lack of domestic availability is sufficient to trigger a 
changed circumstances review. Commenters also proposed that lack of 
domestic availability or, alternatively, an allegation of lack of 
domestic availability, should constitute ``good cause'' under section 
751(b)(4) of the Act to initiate a changed circumstances review less 
than two years after the issuance of an order or the suspension of an 
investigation.
    Several commenters specifically objected to the proposal that lack 
of domestic availability alone would trigger the initiation of a 
changed circumstances review. These commenters argued that a lack of 
interest or consent by the petitioning industry should be the only 
factor relevant to the decision to initiate a changed circumstances 
review of products alleged to be unavailable domestically. Other 
commenters argued that an express lack of interest in continuing the 
order is required to show ``good cause.'' They argued that, especially 
in the first two years after issuance of an order, industries that had 
been injured by dumped imports would be unable to begin or renew 
production if they continued to confront dumped goods.
    Additionally, with respect to changed circumstances reviews, 
several commenters proposed specific regulatory deadlines governing the 
initiation and completion of changed circumstances reviews in cases 
based on lack of domestic availability. Another commenter also 
suggested that the Department adopt internal deadlines now and consider 
regulatory deadlines at a later date. Certain commenters also suggested 
that the Department revise its regulations to allow industrial users or 
consumers to file requests for changed circumstances reviews with 
respect to particular products covered by an order or suspended 
investigation.
    With respect to temporary relief, several commenters proposed that 
the Department establish procedures that

[[Page 27323]]

provide for temporary relief in appropriate cases. In a similar vein, 
one commenter suggested that in the case of a suspension agreement 
based on quantitative restraints, the regulations should require the 
inclusion of a provision in the agreement that would permit the 
Department to suspend temporarily quantitative restrictions on the 
import of particular products that are not available domestically.
    As is clear from these comments, the issues raised under the rubric 
of ``domestic availability'' represent the positions of parties with 
conflicting interests. The Department believes, however, that it is 
possible to provide relief to industries from unfair trade practices 
while also ensuring that products in which the affected industry has no 
interest are properly removed from, or not included in the scope of an 
order. As discussed in more detail below, through administrative 
practice, the Department has developed procedures that, in our view, 
adequately address the interests of both domestic producers and 
domestic users. In these regulations, we have modified some of these 
procedures in light of the comments received. In addition, we have 
created two new procedures specifically to address parties' concerns. 
Both the new and modified procedures are designed to ensure that 
products in which the affected industry has no interest are removed 
from, or not included in the scope of an order, without undermining the 
Department's ability to effectively enforce the AD/CVD law.
    Two important new procedures we will implement are intended to 
avoid, in the first instance, situations where products in which the 
domestic industry has no interest are included in the scope of an 
order. These new procedures will, at the outset of a proceeding, focus 
on the proposed scope of an investigation. The Department believes that 
early attention to product coverage issues will alleviate the need to 
revisit these issues in the future.
    First, we will include in our checklist of items raised to 
petitioners during pre-filing consultations, whether the proposed scope 
of a proceeding is an accurate reflection of the product for which the 
domestic industry is seeking relief. The Department's experience, in 
some cases, has been that proposed product coverage may be 
unintentionally over inclusive. This situation typically arises in 
cases where the proposed scope of an investigation is worded broadly or 
covers numerous HTS classification subheadings including subject and 
nonsubject merchandise. Raising these types of coverage issues during 
the pre-filing consultation period will give petitioners the 
opportunity to focus the scope on those products causing injury to the 
domestic industry. The resulting refined scope will contain a more 
accurate reflection of intended product coverage. In addition, the 
Department believes that beginning an investigation with more carefully 
defined scope language and tariff classifications will reduce the need 
to address product coverage issues later during the course of the 
proceeding.
    Even after reconsideration of product coverage based on pre-filing 
consultations, petitioners may not be aware that the scope is over 
inclusive until U.S. purchasers have an opportunity to review the scope 
language and tariff classifications. As a result, as a second new 
procedure, we also will set aside a specific period early in an 
investigation for issues regarding product coverage to be raised. This 
new specific comment period will provide parties with ample opportunity 
to address product coverage issues. Petitioners will then have the 
opportunity to reconsider product coverage and the Department can amend 
the scope of the investigation if warranted. Given the timing of any 
amendments, the ITC may be able to take the refined scope into account 
in defining the domestic like product for injury purposes. In addition, 
early amendment will partially alleviate the reporting burden on 
respondents and avoid suspension of liquidation and posting of bonds or 
cash deposits on products of no interest to petitioners.
    No regulations are needed to implement these two new procedures. We 
believe that affirmatively addressing product coverage, both pre-filing 
and early in an investigation, is the single most effective means to 
address the parties' concerns. This approach results in less ambiguity 
over coverage and avoids problems inherent in later clarifications and 
modifications to an order. In addition, resolution of product coverage 
issues early in a proceeding reduces costs for all parties by 
diminishing the necessity for later changed circumstances reviews or 
scope inquiries.
    With respect to revocation, we believe that, as a matter of 
administrative practice, the Department's authority to issue such 
partial revocations or terminations already is well-established. For 
example, in New Steel Rail, Except Light Rail, from Canada, 61 FR 11607 
(March 21, 1996), the Department issued a partial revocation with 
respect to certain 100 lb. rail. Similarly, in Certain Cut-to-Length 
Carbon Steel Plate from Canada, 61 FR 7471 (Feb. 28, 1996), the 
Department issued a partial revocation with respect to certain cobalt 
60-free steel. To make clear the Department's commitment to the use of 
this established authority, we have codified this practice in section 
351.222 (g). The Department, however, has not adopted the commenters' 
suggestions with respect to temporary relief because we believe that 
prompt and permanent revocation (or termination), where warranted by 
the facts, has been an adequate mechanism and is one which provides 
greater predictability for all parties. We will continue to consider 
the efficacy of our approach as this issue arises in individual cases.
    We have not adopted the proposal that demonstration of lack of 
domestic availability creates a rebuttable presumption that, unless 
rebutted by the petitioning industry, would lead to automatic 
revocation of the order with respect to a particular product. Shifting 
the burden of proof would constitute a dramatic change from the 
Department's current practice.
    We also have not adopted the proposal that lack of domestic 
availability, or an allegation thereof, constitutes a ``changed 
circumstance'' sufficient to warrant a changed circumstances review. 
Nor have we adopted the proposal that lack of, or the alleged lack of 
domestic availability automatically constitutes ``good cause'' to 
initiate an expedited changed circumstances review. The Department has 
an established practice of partially revoking an order after a changed 
circumstances review in certain situations where an interested party 
has alleged that a product should not be subject to an order and the 
petitioner or the domestic industry expresses a lack of interest in 
continuing the order with respect to the particular product. 
Furthermore, the Department has, in appropriate circumstances, 
initiated a changed circumstances review less than two years after the 
issuance of an order where the petitioners agreed there was ``good 
cause'' to conduct a review with respect to a particular product. See 
Flat Panel Displays from Japan, 57 FR 58791 (1992). We believe that 
Department practice, therefore, can adequately meet the needs of both 
the domestic industry and the domestic users of the particular product.
    With respect to the suggestion that the Department adopt specific 
regulatory deadlines for changed circumstances reviews in cases where 
an interested party has alleged that a particular product should not be 
subject to an order, we agree that a deadline for

[[Page 27324]]

initiation is appropriate, and we have revised Sec. 351.216(b) to 
provide for a 45-day deadline for initiation decisions. In addition, we 
recognize that the Department can complete changed circumstances 
reviews more quickly in cases in which there is agreement on the 
issues. Therefore, we have revised Sec. 351.216(e) to require the 
Secretary, in such cases, to issue final results of review within 45 
days after initiation. As revised, these regulations would permit the 
Secretary to issue final results within, roughly, 90 days of the 
receipt of a request for review. However, because changed circumstances 
reviews, by their nature, are fact-specific and often involve unique 
issues, we continue to believe that in situations where there is no 
agreement on the issues, a deadline of 270 days is appropriate for the 
completion of a changed circumstances review.
    Finally, the Department has not adopted the suggestion that 
industrial users or consumers be allowed to file requests for changed 
circumstances reviews because we believe that it would conflict with 
the statutory scheme contemplated by Congress. Section 751(b)(1) of the 
Act refers only to requests for a changed circumstances review from an 
``interested party.'' In addition, the Act and the SAA make a clear 
distinction between ``interested parties'' and other participants in an 
AD/CVD proceeding. On the other hand, section 751(b)(1) of the Act 
permits the Department to self-initiate a changed circumstances review 
when it ``receives information * * * which shows changed circumstances 
sufficient to warrant a review. * * * '' Nothing in these regulations 
alters the Department's authority under that provision. Despite 
statements that section 751(b) of the Act puts industrial users at a 
disadvantage with regard to supply concerns, the Department's 
experience has been that the requirements of the section have not 
prevented requests for changed circumstance reviews.

Section 351.218

    Section 351.218 deals with sunset reviews under section 751(c) of 
the Act. We received a few comments concerning different aspects of 
Sec. 351.218.
    Initiation of sunset reviews: One commenter noted that proposed 
Sec. 351.218(c) fails to account for sunset reviews other than the 
first sunset review. We agree that this oversight should be corrected, 
and we have revised paragraph (c) accordingly. In addition, we also 
have added a reference in paragraph (c) to the statutory provisions 
governing the initiation of sunset reviews of transition orders.
    Another commenter suggested that the Department amend paragraph (c) 
to ensure that the intent of initiating a sunset review prior to the 
start of the last year of an order is made clearer. We have not revised 
paragraph (c) in light of this comment, because, in our view, the 
regulation already is clear that the Secretary, in certain 
circumstances, may issue an early initiation of a sunset review.
    Sunset review procedures: One commenter argued that there should be 
no routine issuance of questionnaires in sunset reviews, and noted that 
the proposed regulations were ambiguous on this point. The commenter 
observed that proposed Sec. 351.221(b)(2), which applies to reviews 
generally, calls for the issuance of questionnaires in every case. On 
the other hand, proposed Sec. 351.221(c)(5)(i), which deals with sunset 
reviews in particular, provides that the notice of initiation of a 
sunset review will contain a request for information described in 
section 751(c)(2) of the Act. According to the commenter, these 
information requests may obviate the need for the Department to issue 
questionnaires.
    Although we have yet to conduct an actual sunset review, we agree 
with the commenter that it may not be necessary to issue questionnaires 
in every sunset review. Accordingly, we have revised Sec. 351.221(c)(5) 
by adding a new paragraph (iii) which permits the Secretary to refrain 
from issuing the questionnaires called for by Sec. 351.221(b)(2). Of 
course, the Secretary would retain the discretion to issue 
questionnaires in sunset reviews in appropriate situations.
    The same commenter also argued that because it is not anticipated 
that parties will have to submit much additional factual information in 
a sunset review, there should be no need for the Department to conduct 
verifications in sunset reviews. However, the commenter noted, proposed 
Sec. 351.307(b)(1)(iii) requires a verification if the Department 
determines to revoke an order as the result of a sunset review. The 
commenter argued that verification should occur only for good cause, 
and that Sec. 351.307(b)(1)(iii) should be revised to refer only to 
revocations under section 751(d)(1) of the Act, and not to revocations 
under section 751(d)(2) resulting from a sunset review.
    We have not adopted this suggestion, because section 782(i)(2) of 
the Act provides that the Department will verify all information relied 
upon in making ``a revocation under section 751(d) of the Act'' 
(emphasis added). Thus, section 782(i)(2) does not distinguish between 
revocations under section 751(d)(1) and revocations under section 
751(d)(2).
    Finally, this commenter suggested that the Department amend 
proposed Sec. 351.218(e)(2) to set forth specifically the time limits 
for transition orders. We have not adopted this suggestion. Because the 
schedule in section 751(c)(6) of the Act for conducting sunset reviews 
of transition orders refers to the completion of activity by both the 
Department and the Commission, we believe it more appropriate to simply 
include in paragraph (e)(2) a reference to the relevant provisions of 
the statute.
    Substantive guidelines: Three commenters suggested that 
Sec. 351.218 should include standards and guidelines for determining 
the likelihood of dumping in a sunset review. (One of these commenters 
actually submitted its comment in connection with Sec. 351.222(i)). One 
commenter simply noted the absence of standards and guidelines. 
However, the other commenter, proceeding from the premise that there is 
an internationally agreed preference for the revocation of old orders, 
made specific suggestions concerning the contents of standards and 
guidelines. At a minimum, this commenter suggested, the regulations 
should incorporate the relevant discussion from the SAA. A third 
commenter essentially suggested that the regulations should put the 
burden of proof on the domestic industry, and that the Department 
should consider arguments from petitioners valid only if the 
preponderance of the evidence supports their claim.
    We have not adopted these suggestions. Due to our lack of 
experience with sunset reviews, we do not believe it appropriate at 
this time to elaborate in regulations on the substantive standards to 
be applied in determining whether dumping would be likely to continue 
or resume if an order were revoked. As for the suggestion that we 
incorporate into the regulations relevant language from the SAA, as 
noted previously, we generally have refrained from repeating in these 
regulations the language of the statute or the SAA.
    We should note, however, that we do not agree with the statement by 
the one commenter that there is an internationally agreed preference 
for the revocation of old orders. The commenter does not elaborate on 
the precise source of this preference, and we do not find one in either 
the AD Agreement or the SCM Agreement. All that these agreements 
require is that

[[Page 27325]]

national authorities periodically review an order or suspended 
investigations to determine whether the maintenance of the order or 
suspended investigation is necessary to remedy injurious dumping or 
countervailable subsidization. In addition, we find no basis in either 
the statute or the agreements for placing the burden of proof on the 
domestic industry.

Section 351.221

    Section 351.221 deals with review procedures. In paragraph 
(c)(7)(i) of this section, we moved the word ``will'' from that 
paragraph to the beginning of paragraph (c)(7).
    We received one comment concerning Sec. 351.221(b), in which the 
commenter stated that the regulation should provide that the results of 
a review include the Department's factual and legal bases for the 
determination. As noted previously in connection with a related 
comment, we have not included this requirement in the regulations 
because it already is clearly provided for in section 777(i) of the 
Act.
    One commenter suggested that proposed Sec. 351.221(c)(4) should be 
revised so as to provide for the issuance of preliminary results of 
review in the case of Article 8 Violation and Article 4/Article 7 
reviews under section 751(g) of the Act and Sec. 351.217. According to 
the commenter, while the Department should conduct these special 
reviews on an expedited basis, this objective can be preserved without 
eliminating an ``essential step'' in the review process.
    We have not adopted this suggestion. In the case of an Article 8 
Violation review, the review will be premised on a WTO ruling that the 
foreign government in question has violated its international 
obligations concerning the notification and use of so-called ``green 
light'' subsidies. In our view, in this situation, it is important to 
act as quickly as possible in order to provide the relevant domestic 
industry the relief to which it is entitled.
    In the case of Article 4/Article 7 reviews, we also believe that 
swift action is essential to ensure that the United States promptly 
implements its international obligations in situations where the United 
States has prevailed in a dispute under Article 4 or Article 7 of the 
SCM Agreement. Moreover, we believe that Article 4/Article 7 reviews 
will be sufficiently straightforward so as to obviate the need for the 
issuance of preliminary results.

Section 351.222

    Section 351.222 deals with the revocation of orders and the 
termination of suspended investigations. We received several comments 
relating to certain aspects of Sec. 351.222.
    Intervening periods: In proposed Sec. 351.222 (b) and (c), the 
Department retained the requirement of the former regulations that an 
order or suspended investigation may be revoked or terminated based on 
the absence of dumping for three consecutive years or the absence of 
countervailable subsidization for three (or in some cases five) 
consecutive years. However, in proposed Sec. 351.222(d), the Department 
established a new procedure under which a review of an ``intervening 
year'' would not be necessary if (1) the Department conducted a review 
of the first and third (or fifth) years and found no dumping or 
countervailable subsidization for those time periods; and (2) the 
Secretary is satisfied that during the unreviewed intervening years 
there were exports to the United States in commercial quantities of 
subject merchandise. As the Department explained, the purpose of 
paragraph (d) was to reduce the Department's workload by removing the 
incentive for companies to request reviews that they otherwise might 
not request.
    Several commenters supported paragraph (d), while others opposed 
it. All of the commenters opposing paragraph (d) argued that it would 
not reduce the Department's workload, because if the first 
administrative review of an order or suspended investigation resulted 
in a rate of zero, the domestic industry likely would request a review 
in the second period to ensure that there was no dumping or 
subsidization during intervening years. In addition, one opposing 
commenter argued that paragraph (d) would allow a respondent to engage 
in significant dumping and still secure revocation. Another commenter 
suggested that a domestic interested party might not be in a position 
to know whether a particular producer is selling in commercial 
quantities. Yet another commenter argued that in cases where the 
Department relied on sampling and applied sample rates to non-sampled 
companies, there would be no basis for assuming that the non-sampled 
companies were not dumping in the beginning and ending years, or in the 
intervening years.
    Having considered these comments carefully, we have retained 
paragraph (d). While it may be true that in many instances a domestic 
industry will request a review of an intervening year to ensure that 
dumping margins or countervailable subsidy rates did, in fact, remain 
at zero, we believe that there also will be cases where the domestic 
industry, based on its own knowledge of what is going on in the 
marketplace, will refrain from requesting a review because it is 
satisfied that dumping or countervailable subsidization has ceased. In 
terms of the Department's workload, this constitutes an improvement 
over the existing situation, in which a respondent must request a 
review for each year in order to obtain a revocation or termination.
    As for the argument that a respondent might engage in significant 
dumping during an intervening year, one of the opponents of paragraph 
(d) admits that a domestic interested party could request a review if 
it believed that this was taking place. Similarly, while a domestic 
interested party may not know the precise volumes sold by a particular 
company, we believe, based on our experience, that domestic interested 
parties generally are sufficiently aware of marketplace developments so 
as to know whether a company is selling in commercial quantities. 
Finally, with respect to the comment concerning sampling, any sample 
used by the Department must be statistically valid. Therefore, we do 
not believe that it is illogical to extrapolate the results of sampling 
in the beginning and ending years to intervening years.
    One commenter suggested that if paragraph (d) is retained, the 
Department should revise various paragraphs in Sec. 351.222(e) so as to 
require, in addition to the certifications already required, that a 
request for revocation be accompanied by information concerning the 
volume and value of exports of subject merchandise during the initial 
period of investigation and each of the last three (or five) 
consecutive years. We have not adopted this suggestion, because we do 
not believe that this information needs to be provided at the same time 
as the request for revocation is submitted. However, the Department 
intends to request this type of information in the course of its review 
of the ending year in the three-or five-year period. Such information 
would be necessary to fulfill the requirement of Sec. 351.222(d)(1) 
that 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.''
    Turning to supporters of paragraph (d), one supporter suggested 
certain amendments. First, the commenter suggested that the Department 
eliminate the requirement of commercial shipments during intervening 
years. According to the commenter, the presence of shipments during the

[[Page 27326]]

intervening years is irrelevant because the U.S. industry would not 
have been the victim of dumped or subsidized imports, and the available 
evidence from the first and last reviews would indicate that AD or CVD 
rates were not a factor in the absence of imports and that dumping or 
subsidization had ceased.
    We have not adopted this suggestion, because we do not accept the 
premise that the absence of shipments in the intervening years is 
irrelevant. The underlying assumption behind a revocation based on the 
absence of dumping or countervailable subsidization is that a 
respondent, by engaging in fair trade for a specified period of time, 
has demonstrated that it will not resume its unfair trade practice 
following the revocation of an order. If the respondent is not selling 
in commercial quantities characteristic of that company or industry for 
the duration of the specified period, this assumption becomes weaker.
    Moreover, we believe that it is reasonable to presume that if 
subject merchandise, shipped in commercial quantities, is being dumped 
or subsidized, domestic interested parties will react by requesting an 
administrative review to ensure that duties are assessed and that cash 
deposit rates are revised upward from zero. If domestic interested 
parties do not request a review, presumably it is because they 
acknowledge that the subject merchandise continues to be fairly traded. 
However, neither presumption can be made when merchandise is not being 
shipped in commercial quantities.
    This same commenter also suggested that paragraph (d) be revised so 
as to permit more than one intervening unreviewed year in an AD 
proceeding or more than three unreviewed years in a CVD proceeding. 
According to the commenter, there may be reasons why a respondent might 
not request revocation at the earliest possible opportunity, such as 
cash flow difficulties that would preclude the respondent from 
incurring the expense of a review, or the respondent simply might miss 
the deadline for requesting a review. The Department agrees with this 
suggestion and has revised paragraphs (d)(2), (e)(1)(iii), 
(e)(2)(ii)(C), and (e)(2)(iii)(C) accordingly.
    Revocation based on absence of review requests: In the AD Proposed 
Regulations, the Department eliminated its prior ``sunset revocation'' 
procedures based on the absence of requests for administrative reviews. 
These procedures previously were set forth in 19 CFR Secs. 353.25(d)(4) 
and 355.25(d)(4). One commenter asked that the Department reconsider 
its elimination of these types of revocations.
    The Department has reconsidered this matter, but continues to 
believe that these types of revocations should be eliminated. The 
procedures called for by Secs. 353.25(d)(4) and 355.25(d)(4) result in 
a considerable administrative burden on Department staff, a burden that 
is unnecessary in light of the new sunset review procedure contained in 
section 751(c) of the Act and Sec. 351.218 of these regulations.
    Nonproducing exporters: As in the case of exclusions, in the AD 
Proposed Regulations, 61 FR at 7319, the Department requested 
additional public comment on the issue of whether there should be 
special revocation rules for firms, such as trading companies, that 
export, but do not produce, subject merchandise. We noted that one 
alternative would be to limit any revocation of a nonproducing exporter 
to the subject merchandise produced by those producers that supplied 
the exporter prior to revocation. The comments we received on this 
issue mirrored those concerning special exclusion rules for 
nonproducing exporters. For the same reasons discussed above with 
respect to exclusions, the Department believes it is appropriate to 
normally limit the revocation of a nonproducing exporter to that 
exporter's exports of subject merchandise produced by those producers 
that supplied the exporter during the years that formed the basis for 
the revocation. Therefore, we have added paragraphs (b)(3) and (c)(4) 
to provide that the partial revocation of an order with respect to a 
nonproducing exporter will be limited to that exporter's exports of 
subject merchandise produced or supplied by those companies that 
supplied the exporter during the time period that formed the basis for 
the revocation.
    Other changes: In paragraph (g)(3)(vii), we corrected a 
typographical error. Also, we revised the structure of paragraph (j) to 
conform to Federal Register drafting guidelines.

Section 351.224

    Section 351.224 deals with the disclosure of calculations and 
procedures for the correction of ministerial errors.
    Section 351.224(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. One 
commenter proposed that the regulations provide for release of 
disclosure materials on the same day that the Department releases its 
determination or results, and that comments on clerical errors be due 
10 days thereafter. Another commenter proposed that the regulations 
permit disclosure of draft preliminary determinations and draft final 
determinations and results of review, and provide for filing of 
comments identifying ministerial errors, prior to their public 
announcement. A third commenter proposed that the regulations permit 
disclosure and correction of ministerial errors before publication of 
the Department's determination or results of review because an 
interested party may file an appeal immediately upon publication of the 
final, effectively removing jurisdiction from the Department and hence 
requiring litigation and court approval for correction of ministerial 
errors.
    We have not adopted these proposals. In response to concerns about 
needless litigation arising out of lengthy review of ministerial error 
allegations, the Department has streamlined the disclosure and 
ministerial error correction process by providing a 30-day time frame 
for response to ministerial error allegations. While nothing prevents 
the Department from, for example, releasing disclosure materials on the 
day of public announcement, it is unlikely given the amount of work 
necessary to prepare the Federal Register notice, draft decision 
memoranda, finalize the computer programs, assemble the disclosure 
materials, etc., that the Department would be able to shorten the 
timing of disclosure even further.
    Section 351.224(c) provides for filing of comments regarding 
ministerial errors. Paragraph (c)(1) indicates that the Department will 
not consider comments concerning ministerial errors made in the 
preliminary results of review. One commenter proposed that the 
regulations clarify that while the Department will not amend 
preliminary results to correct ministerial errors, it will consider 
comments concerning ministerial errors made in preliminary results in 
parties' case briefs. The commenter is concerned that the language in 
the proposed regulation suggests that the Department is prohibited from 
considering comments concerning ministerial errors until after the 
final results have been issued. The Department agrees that the language 
in the proposed regulation could be misconstrued. It was not our 
intention to suggest that the Department would not consider comments 
concerning ministerial errors made in preliminary results of review 
during the course of

[[Page 27327]]

the review. Rather, we meant only to indicate that the Department will 
not issue amended preliminary results to correct ministerial errors. 
Therefore, we have adopted the commenter's proposal and have amended 
the regulation to clarify that we will consider comments concerning 
ministerial errors made in a preliminary results of a review in a 
party's case brief. The alleged errors, therefore, will be addressed in 
the final results of review.
    Two commenters proposed that the proposed regulations be amended to 
provide for correction of ministerial errors in preliminary results 
calculations because of ``significant commercial harm'' caused by 
publication of erroneous preliminary dumping margins in administrative 
reviews. We have not adopted this proposal. As the Department explained 
in the preamble to the proposed regulations, 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 consequences. See 
61 FR at 7321. 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. The Department is unable to 
comment on the commenters' concern that not correcting ministerial 
errors in preliminary results of review results in ``significant 
commercial harm'' because the commenters offered no examples or further 
explanation as to what they meant.
    Section 351.224(c)(3) establishes the time limits for filing 
replies to comments. One commenter proposed that the regulations permit 
the filing of responses to allegations of ministerial errors in the 
context of preliminary determinations because the proposed timetable 
provides sufficient time for the Department to analyze such responses 
in addition to the original submissions. We have not adopted this 
proposal. Paragraph (c)(3) provides that replies to comments must be 
filed not later than five days after the date on which such comments 
are filed. There is an exception for replies to comments in connection 
with a significant ministerial error in a preliminary determination. As 
the Department explained in the preamble to the proposed regulations, 
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. See 61 FR at 7321. 
Given the short time between public announcement of a preliminary 
determination and departure for verification, the Department disagrees 
with the commenter's suggestion that the proposed timetable provides 
sufficient time for the Department to analyze replies to comments in a 
preliminary determination. Any reply that a party wishes to make 
should, therefore, be included in that party's case brief so that the 
Department may address the reply in its final determination.
    Section 351.224(e) provides for 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. One commenter proposed that the proposed regulations be 
modified to provide for announcement of the Department's decision on 
ministerial error allegations no later than 25 days after publication 
of the final in the Federal Register. Another commenter expressed 
strong support for the 30-day time frame set forth in the proposed 
regulations. The Department has not made any changes to the provision. 
A period of 30 days after the date of public announcement (the 
Department's regulation) or 25 days after publication in the Federal 
Register (the commenter's proposal) is roughly the same because there 
are typically three to seven days between the date of public 
announcement of a Department decision and the date of publication of 
that decision in the Federal Register. We have chosen to tie the 
deadline for issuance of a correction notice to the date of public 
announcement because the other deadlines in the ministerial regulation 
are also tied to the date of public announcement.
    Sections 351.224(g) and (f) define ministerial error and 
significant ministerial error, respectively. One commenter proposes 
that the regulations clarify that ministerial errors do not include 
``substantive'' errors, i.e., errors which call a data submission into 
question in terms of basic accuracy or credibility. The commenter also 
proposed that the regulations state explicitly that parties are not 
allowed to submit new evidence beyond the time frame for submitting 
information to show or deny the existence of an error.
    The Department has not adopted these proposals. The provisions of 
Sec. 351.224--covering disclosure of the Department's calculations and 
procedures for correction of ministerial errors--only apply to 
ministerial errors, as defined in paragraphs (f) and (g), and, hence, 
only to errors made by the Department. Errors made by respondents in 
their submissions to the Department, such as transposing digits as a 
result of a data input error or other computer errors resulting in the 
omission of data cited as examples by the commenter, are not governed 
by the provisions of Sec. 351.224. Prior to the deadline for submission 
of factual information, the Department's practice normally is to accept 
a respondent's correction of an error in its own data because the 
Department has time to review, analyze, and where applicable, verify 
the corrected data. Where a respondent alleges an error in its own data 
only after the deadline for submission of factual information, 
frequently after the preliminary determination or results of review, 
the Department's longstanding practice has been to correct the 
respondent's own clerical errors only if the Department can assess from 
information already on the record that an error has been made, that the 
error is obvious from the record, and that the correction is accurate. 
See, e.g., Industrial Belts and Components and Parts Thereof, Whether 
Cured or Uncured, From Italy, 57 FR 8295, 8297 (1992). In light of the 
Federal Circuit's decision in NTN Bearing Corp. v. United States, Slip 
Op. 94-1186 (1996), however, the Department is in the process of 
reevaluating its policy for correcting clerical errors of respondents. 
We believe that it is appropriate to develop such a policy through 
practice. See Certain Fresh Cut Flowers From Colombia, 61 FR 42833, 
42833-34 (August 19, 1996) (proposing a number of conditions under 
which we would accept corrections of a respondent's own clerical 
error). As a result, we do not believe that a regulation on this issue 
would be appropriate at this time.

Section 351.225

    Section 351.225 details the procedural and substantive rules for 
scope rulings, including rulings involving the anticircumvention 
provisions of section 781 of the Act. We have noted below the few 
changes made from the AD Proposed Regulations.
    Suspension of liquidation: In connection with proposed paragraph 
(l), a number of commenters urged that, contrary to previous practice 
and the proposed regulation, the Department should suspend liquidation 
of possibly affected entries at the time of the formal initiation of a 
scope inquiry, and that this suspension should continue unless and 
until the Department makes a final negative ruling. These commenters 
argued that proposed paragraph (l) is

[[Page 27328]]

contrary to the purpose of the statute, which is designed to provide 
relief from imports of merchandise that, in the context of a scope 
inquiry, the Department already has determined to have been dumped. 
They noted that because scope rulings only clarify, and do not expand, 
the scope of an order, the Department must view any merchandise that it 
determines to be within the scope of an order as always having been 
within the scope. Therefore, they asserted, the Department should 
suspend liquidation when it initiates a formal scope inquiry (if 
liquidation is not already suspended), and this suspension should apply 
to all unliquidated entries. Finally, these commenters argued that the 
Department should terminate suspension of liquidation only upon the 
issuance of a negative final determination.
    Another commenter suggested that to help address the problem of 
imports escaping the assessment of duties, the Department should impose 
a deadline on the formal initiation of scope inquiries following the 
receipt of a request for a scope ruling or an anticircumvention 
inquiry. In addition, one commenter asked the Department to specify 
that the suspension of liquidation and the imposition of a cash deposit 
requirement will apply prospectively from the date of an affirmative 
scope ruling. Other commenters supported the suspension of liquidation 
provisions in proposed paragraph (l).
    The Department believes that, for the most part, the suspension of 
liquidation rules in paragraph (l) are appropriate and has not changed 
them. Suspension of liquidation is an action with a potentially 
significant impact on the business of U.S. importers and foreign 
exporters and producers. The Department should not exercise this 
governmental authority before it has first given all parties a 
meaningful opportunity to present relevant information and defend their 
interests, and before the Department gives a reasoned explanation for 
its action. Formal initiation of a scope inquiry by the Department 
represents nothing more than a finding by the Department that it cannot 
resolve the issue on the basis of the plain language of the scope 
description or the clear history of the original investigation. It 
would be extremely unfair to importers and exporters to subject entries 
not already suspended to suspension of liquidation and possible duty 
assessment with no prior notice and based on nothing more than a 
domestic interested party's allegation. Because, when liquidation has 
not been suspended, Customs, at least, and perhaps the Department as 
well, have viewed the merchandise as not being within the scope of an 
order, importers are justified in relying upon that view, at least 
until the Department rules otherwise. Therefore, the Department will 
not order the suspension of liquidation until it makes either a 
preliminary or final affirmative scope ruling, whichever occurs first.
    Nonetheless, the Department is cognizant of the concerns expressed 
on this issue by representatives of domestic interested parties. In 
particular, the Department is concerned that significant delays in 
initiating scope inquiries can be harmful. Accordingly, we have amended 
paragraph (c), in accordance with a suggestion made by one commenter, 
to impose a time limit of 45 days, from the date of receipt of a 
request for a scope ruling, on the determination whether to initiate a 
formal scope inquiry under Sec. 351.225. This deadline will apply to 
all scope requests, including requests relating to circumvention. 
Although the Department will continue to resolve scope questions, where 
it can, on the basis of the plain language of the scope description and 
the clear history of the original investigation without initiating a 
formal inquiry, the Department will do so in 45 days or less.
    In further recognition of the concerns expressed by domestic 
interested parties, the Department also has revised paragraph (l) to 
make a suspension of liquidation, when ordered in conjunction with a 
preliminary or final affirmative ruling, effective as to entries of all 
affected merchandise that are made on or after the date of initiation 
of the scope inquiry and that remain unliquidated as of the date of 
publication of the affirmative ruling.
    Anticircumvention/Major input rule: Several commenters noted a 
discrepancy between proposed paragraphs (g) and (h) relating to the 
application of the ``major input'' rule under section 773(f)(3) of the 
Act. Under proposed paragraph (g), which deals with products completed 
or assembled in the United States, the application of the major input 
rule was discretionary when valuing parts or components acquired from 
an affiliated person. Under proposed paragraph (h), the application of 
the major input rule was mandatory in dealing with products completed 
or assembled in other foreign countries. One commenter suggested that 
use of the major input rule be mandatory in all cases. Another 
suggested that it be discretionary in all cases.
    The SAA at 894 states that affiliation ``* * * can result in 
application of the major input rule * * *'' (emphasis added). 
Therefore, the Department has revised paragraph (h) to make application 
of the rule discretionary for purposes of both U.S. and third country 
assembly. We also have corrected a typographical error in the last 
sentence of paragraph (g).
    Several commenters suggested that, in applying paragraphs (g) and 
(h), the Department should not apply the major input rule in 
determining the value of parts and components originating in the 
country subject to the order. They argued that the statute requires a 
determination of whether such parts and components constitute a 
significant percentage of the final value of the finished product. 
Because the major input rule provides for the use of cost of production 
to value such parts or components, use of the rule, they asserted, 
necessarily would omit a profit element, thereby understating the value 
of the parts or components.
    The Department has not made the change suggested by these 
commenters. First, the SAA, as noted above, clearly contemplates the 
use of the major input rule in appropriate circumstances. Second, the 
statute clearly states that in dealing with inputs from affiliated 
persons, the Department may use the higher of transfer price, market 
value, or cost of production to ``determine the value of the major 
input. * * *'' Thus, cost of production may be used as the basis of the 
``value'' of such an input. Finally, as noted above, the application of 
the major input rule is discretionary. Should the Department encounter 
a case in which the application of this rule would, in our judgment, be 
inappropriate, we will explore other methods of valuing such parts or 
components.
    Anticircumvention/Other issues: Several commenters suggested that 
the Department should provide more definitive guidance on what 
constitutes circumvention. One commenter suggested a ``safe harbor'' of 
35 percent value added in determining whether the value added in a 
process of assembly or completion in the United States or a third 
country is ``significant.'' Another commenter suggested the adoption of 
value-added ranges for what the Department will consider 
``significant'' in examining assembly or completion or assembly in the 
United States or a third country. Another suggested that the Department 
adopt a standard of considering production in the United States or a 
third country as ``significant'' and simple assembly as not 
``significant''. Still another commenter proposed that the Department 
develop a framework for analyzing scope issues

[[Page 27329]]

and a comprehensive set of factors within that framework.
    The Department has not adopted these suggestions because we believe 
that the wide variety of products and processes encountered in AD/CVD 
proceedings makes the adoption of any more specific standards 
inadvisable at this time. To establish a ``safe harbor'' or specific 
guidelines might result in the incorrect classification of substantial 
production operations as ``insignificant'' and ``screwdriver'' 
operations as ``significant.'' As we gain more experience, we will 
consider promulgating more detailed rules.
    One commenter suggested that for purposes of determining whether 
completion or assembly processes in the United States or a third 
country are minor or insignificant, the Department should require all 
relevant factors in sections 781(a)(2) and 781(b)(2) to be present and 
demonstrably insignificant before finding that circumvention exists. 
The Department has not adopted this suggestion, because we believe it 
to be at odds with the statute, which requires only that all the listed 
factors be taken into account. Adoption of this suggestion would, we 
believe, restrict the application of the anticircumvention provisions 
in a manner contrary to the intent of the law.
    Another commenter suggested that the regulations (1) provide that 
all anticircumvention inquiries will encompass at least the four most 
recent fiscal quarters of any respondent subject to the inquiry, and 
(2) make verification mandatory in all anticircumvention inquiries. The 
Department has not adopted these suggestions because we believe that 
the exact periods appropriately covered in an anticircumvention inquiry 
may vary widely and are best left to a case-by-case judgment. Also, 
verification can and will be conducted whenever the Department believes 
it appropriate, but it is unnecessary to mandate it in every case.
    One commenter argued that because the emphasis in anticircumvention 
inquiries concerning completion or assembly in the United States or a 
third country is now on whether that process is minor or insignificant, 
any parts or components sourced from third countries should not be 
included in making that judgment. We have not adopted this suggestion. 
The commenter is correct about the change in emphasis in 
anticircumvention inquiries. However, the Department also must 
determine whether the value of the parts or components from the subject 
country is a significant portion of the total value of the merchandise. 
Any parts or components sourced from a third country necessarily form 
part of the total value of any such merchandise.
    Another commenter suggested that the regulations make clear that 
the requirement that merchandise circumventing an order be of the same 
``class or kind'' as the merchandise subject to the order be broadly 
construed to include within the same class or kind of merchandise a 
component and a finished product. According to the commenter, such a 
construction is necessary to effectuate Congress' intent and is fully 
consistent with the terms of the statute, the Department's past 
practice and judicial precedent.
    The Department has not adopted this suggestion. As we stated in the 
AD Proposed Regulations, 61 FR at 7322, ``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.
    One commenter suggested that the Department include in the 
regulations the factors for applying section 781(c) of the Act, the 
``minor alterations in the merchandise'' provisions, that are 
enumerated in the Senate Report on the URAA. The Department believes 
that the adoption of this suggestion would be inappropriate. While the 
Department may apply them in practice, formal adoption of them might be 
so restrictive as to make it more difficult to reach sound decisions on 
such questions, given the widely varying fact patterns encountered in 
such inquiries.
    Scope procedures: One commenter suggested that the final 
regulations clarify that the Department has the authority to self-
initiate anticircumvention and other types of scope inquiries. 
According to the commenter, the proposed regulation did not state 
expressly that the Department could self-initiate a scope inquiry.
    The Department has not adopted this suggestion, because we believe 
that the regulation as proposed is clear that the Department has the 
authority to self-initiate an anticircumvention inquiry, as well as any 
other type of scope inquiry. The proposed regulation makes clear that 
the term ``scope ruling'' includes rulings relating to 
anticircumvention, and Sec. 351.225(b) clearly provides for self-
initiated scope inquiries.
    Another commenter requested that the four-month time limit for 
resolving formally initiated scope inquiries run from the date of 
receipt of a request for a ruling, not the date of initiation of an 
inquiry. The Department believes that such a change would so compress 
the time available for making scope decisions as to hamper our ability 
to make decisions that are both timely and proper. Accordingly, we have 
not adopted this suggestion. However, as noted above, we have adopted a 
45-day time limit on the initiation of scope inquiries to ensure that 
there are no undue delays in the resolution of scope issues.
    One commenter suggested, in the context of comments regarding scope 
issues, that the Department establish presumptions concerning the 
domestic unavailability of a product at issue. According to the 
commenter, these presumptions would be based upon allegations by 
petitioners and the products produced by them. With respect to this 
comment, the Department has addressed it in the section of this notice 
dealing with comments relating to lack of domestic availability.
    Another commenter suggested that the Department specify in the 
regulations that scope rulings are clarifications, not modifications, 
of the scope of an order. We have not adopted this suggestion, because 
we believe that this principle is so well-established that a regulation 
is not necessary.
    One commenter suggested that the regulations be revised to require 
the Department, after issuing an affirmative scope ruling, to (1) 
canvas known importers to detect covered imports, and (2) then advise 
Customs to proceed to suspend liquidation on entries of such 
merchandise. The same commenter requested a regulation that would 
require immediate electronic transmission from the Department to the 
Customs Service of all final scope rulings.
    The Department believes that a canvassing process would be an 
enormous burden, and one that is neither contemplated in the statute or 
its legislative history nor necessary for effective enforcement of the 
law. Accordingly, we have not adopted this suggestion. To the extent 
that electronic transmittals of scope rulings to the Customs Service is 
meritorious, it is unnecessary and inappropriate to provide for this in 
the regulations.
    Two commenters asked the Department to revise the regulations to 
clarify that in the case of an industrial user that has participated in 
any segment of a proceeding, the Department will include the industrial 
user on the scope service list and will notify the industrial user of a 
ruling under Sec. 351.225(d). With respect to this suggestion, it was 
our intent in the proposed regulations that all persons, whether 
interested parties, industrial users, or a representative consumer 
group, would be included on the scope service list and would be 
notified of

[[Page 27330]]

scope rulings. Therefore, we are modifying the language in paragraphs 
(d) and (n) of Sec. 351.225 to clarify this intent.
    One commenter suggested that the Department require service on all 
parties included on the scope service list only in the case of an 
application for a scope ruling. This commenter suggested that other 
documents should be served only on those parties that entered an 
appearance in the scope inquiry. According to the commenter, proposed 
Sec. 351.225(n) and Sec. 351.303(f) both require service of all 
documents on all parties included on the scope service list.
    The Department does not believe that a revision of Sec. 351.225(n) 
is necessary. In our view, paragraph (n) makes clear that the term 
``scope service list'' differs from the term ``service list,'' and that 
only applications for scope rulings need to be served on all parties 
included on the scope service list. As for service of all other 
submitted documents, the requirements of Sec. 351.303(f) apply, which 
require only service on parties included on the normal ``service list'; 
i.e., those parties that have entered an appearance and, in the case of 
business proprietary information, have obtained an APO for the 
particular scope inquiry. As noted above, we have modified 
Sec. 351.225(d) so that all parties included on the scope service list 
will be notified of scope rulings.
    The same commenter made a suggestion concerning paragraph (l)(4), 
which provides for the inclusion of a product within a pending review 
if, within 90 days after initiation of the review, the Secretary issues 
a final scope ruling that the product is included within the scope. The 
commenter suggested that we should extend the 90-day period if the 
Secretary extends the time for a preliminary determination in the 
review.
    The Department has not adopted this suggestion because the decision 
to extend the time for a preliminary review determination often comes 
only a short time before the expiration of the normal time limit and 
well after the expiration of 90 days. Therefore, we could not implement 
the proposal in a manner that would allow the Department to request and 
receive the needed additional information in a timely manner.
    Another commenter made a suggestion regarding proposed 
Sec. 351.225(l)(4). Paragraph (l)(4) provides, among other things, that 
if the Secretary determines after 90 days of the initiation of a review 
that a product is included within the scope of an order or suspended 
investigation, the Secretary may decline to seek sales information 
concerning the product for purposes of the review. The commenter 
suggested that although it may not be practicable, for purposes of an 
ongoing review, to collect information on sales found to be within the 
scope of an order, the Department should collect this information for 
use in a subsequent review.
    The Department has not adopted this suggestion, because we do not 
believe it appropriate to collect information for a review that has not 
yet been, and may never be, requested. However, paragraph (l)(4) makes 
clear that while the Department may not collect information regarding 
sales of a particular product, it will not disregard those sales for 
purposes of the ongoing review. Instead, the Department will calculate 
dumping margins or CVD rates, and will issue appropriate assessment 
instructions, for sales of such products on the basis of non-adverse 
facts available. Moreover, during the next requested review, if any, 
the Department will examine all sales of the products determined to be 
within the scope of the order or suspended investigation that were sold 
during the time period covered by that review.
    Finally, in connection with proposed Sec. 351.225(k), one commenter 
suggested that the Department should revise its scope criteria by 
developing a framework for analyzing scope issues, and then developing 
a comprehensive set of factors within that framework. In particular, 
according to this commenter, to provide greater certainty for 
industrial users of merchandise that may be covered by an investigation 
or order, the Department should include factors that examine both 
consumption and production substitutability.
    In our view, this suggestion relates to the broader topic of 
domestic non-availability. Accordingly, we have addressed this 
suggestion in the portion of this notice dealing with issues relating 
to domestic non-availability.

Other Procedural Comments

    In addition to the comments discussed above, we received other 
comments relating to AD/CVD procedures that were not necessarily tied 
to a particular provision of the AD Proposed Regulations. These 
comments are addressed below.
    Publication of remand determinations: Numerous commenters 
representing both domestic and foreign interests suggested that the 
Department should make remand determinations more accessible to the 
public, although the details of the particular suggestions differed. 
Some commenters argued that the Department should publish remand 
determinations in the Federal Register, or at least publish a notice 
indicating the existence of a remand determination. Others argued that, 
at a minimum, the Department should make remand determinations more 
easily obtainable once their existence is known.
    The Department agrees that remand determinations constitute an 
important source of precedential material, and that currently it is 
unduly difficult for private parties to obtain access to remand 
determinations. Indeed, in some instances, it has proven unduly 
difficult for Department personnel to obtain copies of these documents. 
Therefore, we agree that new procedures are necessary.
    On the other hand, we do not agree with the assertion that, as a 
legal matter, remand determinations must be published in the Federal 
Register, and we are reluctant to incur the expense of such publication 
when less expensive alternatives are available. In addition, we do not 
believe that it is necessary to publish a Federal Register notice 
announcing the existence of a remand determination, because the court 
or binational panel opinion giving rise to the remand determination 
will indicate to the public that a case has been remanded and that a 
remand determination will be forthcoming.
    Accordingly, the Department intends to take the following steps to 
make remand determinations more readily accessible. First, the 
Department will place the public version of each remand determination 
on its Internet page so that remand determinations will be available 
electronically. While this step may not permit electronic research, if 
there is sufficient interest in conducting such research we would 
expect that one or more of the commercial online research systems would 
begin to include remand determinations in their databases, just as they 
do in the case of ITC determinations that are not published in the 
Federal Register.
    Second, the Department will place the public version of a remand 
determination in the public file (located in the Department's Central 
Records Unit) for the AD/CVD proceeding to which the determination 
pertains. In addition, to further facilitate access, the Central 
Records Unit also will maintain a separate, chronological file 
containing public versions of all remand determinations.
    The Department hopes that through these steps it will have 
addressed the concerns giving rise to the comments. If these steps 
prove to be inadequate, we

[[Page 27331]]

remain open to further suggestions on improvement.
    Third country AD petitions: One commenter suggested that the 
Department include in its regulations a provision for implementing new 
section 783 of the Act, which deals with third country antidumping 
petitions. The commenter also suggested that any regulation should 
expressly provide that such petitions may be filed on behalf of a 
regional industry or industries in the third country. We have not 
adopted this suggestion because we believe that it is more 
appropriately addressed to the Office of the U.S. Trade Representative.
    Binding ruling procedure: A few commenters proposed that the 
Department should institute a system for issuing binding letter rulings 
under which persons could obtain advance rulings regarding the 
application of the Act and the regulations to particular factual 
scenarios. Absent misrepresented, incomplete, or changed facts, these 
rulings would be binding for purposes of an AD/CVD proceeding, unless 
revoked. Even when revoked, the revocation of the ruling would have 
prospective effect only.
    We have not adopted this proposal for several reasons. First, the 
proponents of this binding letter ruling system contemplated an 
essentially ex parte procedure in which the Department would issue 
binding rulings within 30 days of receipt of a request for a ruling. In 
our view, such a procedure would conflict with the numerous procedural 
safeguards in the Act that are designed to ensure that all sides 
involved in an AD/CVD proceeding have an equal opportunity to affect 
the outcome.
    These procedural shortcomings cannot be overcome by the fact that 
parties would be able to challenge the validity of the ruling in, for 
example, an administrative review in order to have the ruling revoked. 
Because, under the proposal, the revocation of the ruling would have 
prospective, rather than retroactive, effect, a successful challenger 
still would have been denied the opportunity to have input concerning 
the application of the AD/CVD law to imports covered by a ruling prior 
to its revocation.
    In addition to these procedural defects, we have serious doubts as 
to the compatibility of a binding letter ruling system with the 
requirements of section 751(a) of the Act. Section 751(a)(2)(C) of the 
Act provides that the Department must assess antidumping and 
countervailing duties (and establish cash deposit rates) in accordance 
with the results of reviews under section 751(a). Thus, a letter ruling 
could affect the rate at which entries are liquidated only to the 
extent that (1) the facts upon which the ruling was based are 
consistent with the administrative record established in the review, 
and (2) the Department adopts in the review the policies set forth in 
the ruling. With certain limited exceptions, it is doubtful that the 
Department could bind itself to apply the results of a letter ruling in 
a review.
    Having said this, we would consider the adoption of a non-binding 
ruling procedure. At this point, however, we are uncertain as to 
whether parties would find such a procedure useful. In addition, the 
resource requirements that such a procedure would entail could be 
substantial. Nevertheless, we intend to continue the dialogue with 
persons having an interest in a possible letter ruling procedure. In 
addition, if a sufficient number of persons indicate an interest, we 
will convene a hearing on this topic.

Subpart C--Information and Argument

    Subpart C of part 351 deals with collection of information and 
presentation of arguments to the Department.

Section 351.301

    Section 351.301 sets forth the time limits for submission of 
factual information in investigations and reviews.
    Time limits for submission of factual information in investigations 
and reviews: Section 351.301(b)(1) provides that with respect to 
investigations, submission of factual information is due no later than 
seven days before the verification of any person is scheduled to 
commence. Several commenters suggested that the deadline be revised to 
provide for submission of factual information no later than seven days 
before the verification of the respondent to which the information 
applies is scheduled to commence. The commenters expressed concern that 
the proposed regulation unjustly penalizes respondents whose 
information will not be verified until very late in the verification 
schedule and that where there are multiple respondents, the different 
respondents may not be aware of the other respondents' verification 
schedules.
    We have not adopted this suggestion. In the past there has been 
some confusion over the deadline for submission of factual information. 
In furtherance of the goal of simplifying the Department's procedures, 
the regulations clarify that the deadline for submission of factual 
information is identical for all parties. Contrary to the suggestion 
that this penalizes respondents scheduled for verification late in the 
verification schedule, a single deadline ensures fairness in that all 
parties have an equal amount of time to submit factual information to 
the Department. Furthermore, a single deadline ensures that Department 
analysts have time to review submitted information before they depart 
for verification, particularly where they are scheduled to perform 
consecutive verifications of different respondents. The Department 
recognizes the concern that different respondents may not be aware of 
other respondents' verification schedules and, as such, will respond 
promptly to inquiries as to the date on which the first verification is 
scheduled to commence once that date has been set.
    Section 351.301(b)(2) provides that with respect to administrative 
reviews, submission of factual information is due no later than 140 
days after the last day of the anniversary month. One commenter 
suggested that the deadline for submission of factual information in 
administrative reviews be triggered by publication of the notice of 
initiation as are the deadlines for submission of factual information 
in other types of reviews. Another commenter suggested that the 
Department allow for submission of factual information in 
administrative reviews up to 30 days after the publication of the 
preliminary determination. A number of commenters also suggested that 
the Department should automatically extend the deadline for submission 
of factual information whenever it extends the deadline for the 
preliminary or final determinations in an administrative review.
    We have not adopted these suggestions. The deadline for submission 
of factual information in administrative reviews is tied to the 
anniversary month because the statutory deadlines for preliminary and 
final determinations are tied to the anniversary month (see section 
751(a)(3) of the Act). In contrast, the deadlines for submission of 
factual information in other types of reviews such as new shipper, 
changed circumstances, or sunset reviews are tied to the publication of 
the notice of initiation because the statutory deadlines for 
preliminary and/or final determinations in these proceedings are either 
tied to initiation or not prescribed (see, e.g., paragraphs (a)(1)(B), 
(b), and (c) of section 751 of the Act). Furthermore, because the 
Department normally conducts verification prior to issuing its 
preliminary determination in an administrative review, a deadline for 
submission of factual information of up

[[Page 27332]]

to 30 days after the preliminary determination would not allow 
sufficient time for analysis and, if necessary, further submissions 
upon request prior to any scheduled verifications. Finally, although 
the regulations do not provide for automatic extension of the deadline 
for submission of factual information in reviews whenever the deadline 
for the preliminary or final determinations is extended, the Department 
may extend any time limit, including deadlines for submission of 
factual information, for good cause (see Sec. 351.302). Because the 
Department's decision to extend the deadline for its determination in 
an administrative review may be based on the fact that, for example, 
there are a significant number of respondents to review or a number of 
complicated issues to resolve, automatic extension of the deadline for 
submission of factual information might result in the filing of 
additional information requiring further analysis and review, thereby 
frustrating the objective of the Department to allow additional time 
for making its determination.
    Proposed sections 351.301(b) (1)-(4) provided 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 complete. Two 
commenters suggested that the seven-day deadline be eliminated and that 
Department analysts be allowed to establish the deadlines for such 
submissions on a case-by-case basis. One commenter suggested in the 
alternative that the regulations should qualify the deadline with the 
word ``normally'' to make it clear that the deadline can be extended 
where appropriate.
    We have not eliminated the seven-day deadline for post-verification 
submissions; however, we have added the word ``normally'' to the 
regulations to clarify that the deadline can be extended where 
appropriate. The seven-day deadline provides an equal amount of time 
for all parties to file post-verification submissions upon request and 
provides guidance to other parties to the proceeding, including 
petitioners, as to when such submissions can be expected. Whether or 
not a regulation includes the qualifier ``normally,'' the Department 
retains the authority to extend any time limit established in these 
regulations unless precluded by statute (see Sec. 351.302(b)). As 
stated in the preamble to the proposed regulations, ``[p]arties should 
not draw an 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'' (61 
FR at 7325).
    One commenter proposed that the regulations provide that 
petitioners are required to submit any pre-verification comments at 
least seven days before verification. We have not adopted this 
proposal. There is no limitation on the submission of comments--as 
opposed to new factual information--prior to verification. Written 
argument may be submitted at any time during the course of an AD/CVD 
duty proceeding through the submission of case and rebuttal briefs (see 
Sec. 351.309 (note that Sec. 351.309(c)(2) provides that the case brief 
must present all arguments that a party wants the Department to 
consider in its final determination or final results of review)). While 
it may be in a party's interest to submit pre-verification comments at 
least seven days before verification so that the Department has 
sufficient time to consider them prior to verification, it is not 
required.
    Time limits for certain submissions: Section 351.301(c) sets forth 
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 AD cases.
    Submission of factual information to rebut, clarify, or correct 
factual information: Section 351.301(c)(1) provides that 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 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. Upon further review, 
we have revised this provision to eliminate potentially confusing 
language and to clarify that in no case will a party have less than 10 
days to submit factual information to rebut, clarify, or correct 
factual information submitted by any other interested party.
    Two commenters proposed that the regulations provide that only 
domestic interested parties be allowed to submit new factual 
information to rebut, clarify, or correct factual information submitted 
by foreign interested parties. According to the commenters, this would 
avoid the selective provision of rebuttal information by foreign 
interested parties. Another commenter proposed that the 10-calendar day 
deadline be changed to 10 business days.
    We have not adopted either of these proposals. The prior 
regulations allowed only domestic interested parties to rebut, clarify, 
or correct factual information submitted by respondent interested 
parties. However, the Department reconsidered the regulation and the 
rationale behind it and determined that the goal of accurate 
determinations is enhanced by allowing any interested party and, as now 
provided in Sec. 351.312, industrial users and consumers, to comment on 
submissions of factual information. One commenter specifically 
expressed support for this change. Additionally, the Department has 
maintained the 10-calendar day deadline. This deadline is relevant only 
where factual information is submitted less than 10 days before, on, or 
after (normally, only with the Department's permission) the applicable 
deadline for submission of factual information; at this point in the 
proceeding, the Department and the parties have an interest in 
finalizing the addition of new factual information to the record. The 
Department believes that 10 calendar days provide ample time for an 
interested party to rebut, clarify, or correct factual information 
submitted by another interested party.
    Two commenters proposed that the regulations provide that any 
interested party may submit factual information to rebut, clarify, or 
correct factual information contained in the Department's verification 
reports. We have not adopted this proposal. Verification is the process 
by which the Department checks, reviews, and corroborates factual 
information previously submitted. Parties are free to comment on 
verification reports and to make arguments concerning information in 
the reports up to and including the filing of case and rebuttal briefs 
(note that Sec. 351.309(c)(2) provides that the case brief must present 
all arguments that a party wants the Department to consider in its 
final determination or final results of review). In making their 
arguments, parties may use factual information already on the record or 
may draw on information in the public realm to highlight any perceived 
inaccuracies in a report. Though comment on the Department's 
verification findings is appropriate, submission of new factual 
information at this stage in the proceeding is not, because the 
Department is unable to verify post-verification submissions of new 
factual information.

[[Page 27333]]

    Questionnaire responses: Section 351.301(c)(2) deals with 
questionnaire responses and other submissions on request. Section 
351.301(c)(2)(ii) provides that the Department must give notice of 
certain requirements to each interested party from whom the Department 
requests information.
    One commenter proposed that the Department should review and revise 
its questionnaire to reduce reporting burdens. In addition, the 
commenter suggested that the Department accept the reporting of 
financial data in the form consistent with the generally accepted 
accounting principles of the respondent's country of origin. The 
Department already has significantly revised its standard questionnaire 
to make it more ``user friendly'' and efficient by simplifying 
information requests and reducing reporting burdens. One of the areas 
in which the Department has simplified reporting burdens is in the 
reporting of cost data. Consistent with past practice and section 
773(f)(1)(A) of the Act, the Department normally will calculate costs 
based on a respondent's records, if such records are kept in accordance 
with the generally accepted accounting principles of respondent's 
country of origin and reasonably reflect the costs associated with the 
production and sale of the merchandise. As such, much of the required 
reporting of cost and financial data is consistent with a respondent's 
normal books and records. However, given the requirements of the AD 
law, it is not always possible to accept the reporting of financial or 
cost data in the form such data are maintained in a respondent's books 
and records. To the extent that a party has specific suggestions for 
improvements in the Department's questionnaire and reporting 
requirements, the Department welcomes those suggestions. Also, if a 
questionnaire requirement poses specific difficulties in a particular 
proceeding, the respondent can request the Department to modify the 
requirement on an ad hoc basis.
    One commenter proposed that the regulations provide a deadline for 
the introduction of issues so that respondents would have adequate time 
to research, draft, and translate a complete response. The Department 
has not adopted this proposal. Barring specific statutory or regulatory 
deadlines or subject matter constraints, parties may raise relevant 
issues which may arise throughout the course of an AD/CVD duty 
proceeding. A generalized deadline on raising issues would have 
unforeseeable consequences such that we do not feel confident in 
foreclosing debate on them in advance. Furthermore, the Department may 
request any person to submit factual information at any time during a 
proceeding (see Sec. 351.301(c)(2)(i)).
    Two commenters proposed that the regulations indicate that the 
Department is required to rapidly respond to a respondent's request for 
clarification of an information request. One of the commenters proposed 
a three-day deadline for response, which, if not met, would lead to an 
automatic extension of the time for the respondent to supply the 
information in question by the length on time it took the Department to 
provide the necessary clarification. The Department has not adopted 
this proposal. The Department makes every effort to respond to requests 
for clarifications as soon as possible. Hence, a specific regulatory 
deadline is unnecessary. While it is possible that the Department might 
find good cause for granting a request for an extension where response 
to a clarification request was delayed, an automatic extension 
provision could lead to the filing of clarification requests simply to 
extend the deadline for filing a questionnaire response or other 
submission.
    One commenter proposed that the regulations provide that the 
Department must notify a party if the information it submitted is 
deficient and provide the party with an opportunity to remedy the 
deficiency. The Department has not adopted this proposal as this issue 
is covered specifically in the statute (see section 782(d) of the Act), 
and, as noted above, the Department has sought to avoid repeating the 
statute in the regulations. Parties will be informed in the initial 
questionnaire, and in supplemental questionnaires, that failure to 
submit requested information in the requested form and manner by the 
date specified may result in the use of facts available under section 
776 of the Act and Sec. 351.308. The Department's practice is to send a 
respondent a supplemental questionnaire where the Department needs 
clarification of a response or the Department seeks additional 
information to address questions arising out of reported information. 
The Department, however, will not necessarily repeat a precise or 
direct question that the respondent has not answered. The decision to 
specifically inform a party that information it submitted is deficient 
is a decision that can only be made on a case-by-case basis taking into 
consideration the Department's initial information request and the 
party's response to that request.
    One commenter suggested that the Department reduce the scope of 
supplemental questionnaires to curb the use of data demands as a 
tactical measure by petitioners to harass respondents by imposing 
additional financial burdens on them. The Department disagrees with the 
characterization of the issuance of supplemental questionnaires as a 
method to harass respondents. In its supplemental questionnaires, the 
Department typically seeks clarification of reported information or 
seeks responses to questions precipitated by reported information. In 
drafting its supplemental questionnaires, the Department may 
incorporate lines of questioning based on input from petitioners. 
However, where the Department chooses to use input from petitioners, it 
does so precisely because such input is constructive. The Department 
only requests information it deems to be necessary and will continue to 
do so. However, a blanket requirement that supplemental data requests 
be reduced is inconsistent with the Department's obligation to conduct 
a thorough investigation based on the necessary facts.
    Section 351.301(c)(2)(iii) provides that interested parties shall 
have at least 30 days from the date of receipt to respond to the full 
initial questionnaire. This subparagraph also provided that the ``date 
of receipt'' will be seven days from the date on which the initial 
questionnaire was ``transmitted.''
    One commenter proposed that the regulations require the Department 
to release the questionnaire within five days after initiation. We have 
not adopted this proposal. Release of the questionnaire immediately 
after initiation, particularly in investigations, often is not possible 
because the Department needs input from companies, for example, to 
identify appropriate respondents, tailor information requests, and 
format requirements to the specific merchandise under investigation. 
The Department will continue its current practice of releasing the 
questionnaire as soon as possible.
    Another commenter proposed that the regulations provide a mechanism 
under which the Department would consult with the parties and decide 
certain issues--such as date of sale, product matching criteria, the 
identity of affiliated parties, whether downstream sales by affiliated 
parties in the home market should be reported, and whether affiliated 
party transactions are at arm's length--prior to the issuance of the 
questionnaire. The Department has not adopted this proposal. Consistent 
with its normal practice, the Department already consults with parties 
and decides certain issues prior to issuance

[[Page 27334]]

of the questionnaire. For example, the Department normally consults 
with the parties to identify appropriate respondents or model matching 
criteria. However, deciding all of the issues listed by the commenter 
prior to release of the questionnaire is not feasible. Either an issue 
cannot be decided until the Department has reviewed and analyzed all of 
the submitted data or it is not practicable to gather all of the data 
necessary to decide the issue prior to release of the questionnaire 
given the statutory time limits for conduct of investigations and 
reviews.
    Two commenters proposed that the regulations provide interested 
parties at least 30 days to respond to a questionnaire or any part of a 
questionnaire. Other commenters proposed that the regulations provide 
for at least 45 days to respond to the questionnaire or for automatic 
15-day extensions upon request. Finally, another commenter proposed 
that the regulations provide for an additional 30 days to respond to a 
questionnaire that requests information on two administrative reviews 
in situations where the Department has deferred initiation of an 
administrative review for one year and that all deadlines for the 
deferred administrative review are counted with respect to the later 
POR's anniversary month. The SAA, at 866, provides that interested 
parties shall have at least 30 days from the date of receipt to respond 
to the full initial questionnaire. As the Department explained in the 
preamble to the proposed regulations, 61 FR at 7324, 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. For example, the 
Department anticipates that the response to section A of an AD 
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. The Department, therefore, has not 
adopted the proposal that parties be granted 30 days to respond to any 
part of the questionnaire. Likewise, the Department has not adopted the 
proposal that the regulatory deadline for questionnaire responses be 
extended to 45 days. Only with prompt responses will the Department be 
able to meet its statutory obligations of conducting timely 
investigations and administrative reviews. Parties can, if necessary, 
request an extension of the time limit for submission of a 
questionnaire response under Sec. 351.302. The Department also has not 
adopted the proposal that the regulations provide a 60-day deadline for 
submission of questionnaire responses where the Department has deferred 
initiation of an administrative review. While the Department will 
examine and would like to adopt schedules that allow a longer 
questionnaire response time for deferred reviews, it is reluctant to 
adopt such a regulation prior to gaining experience in administering 
deferred reviews. The Department also believes that it is appropriate 
to determine a deadline on a case-by-case basis taking into 
consideration the companies and merchandise under review. Because the 
Department has no experience yet with the deferred administrative 
review provision and, hence, cannot foresee every timing issue that 
might arise, it has not codified in the regulations the proposal that 
all deadlines for the deferred administrative review be counted with 
respect to the later POR's anniversary month. The proposal on its face 
makes sense, however, and the Department will attempt to implement it 
in practice.
    With respect to the ``transmission'' of the questionnaire, one 
commenter proposed that the regulations define ``transmitted'' and 
provide for notification of parties when ``transmission'' occurs. 
Another commenter proposed that the regulations provide that seven days 
should be added to the date of transmission of the questionnaire to 
calculate receipt date only where the agency does not have evidence 
that the questionnaire was actually received at an earlier date. One 
commenter opposed this second proposal.
    We have not adopted either proposal. The Department considers the 
date of transmission to be the date the Department indicates on the 
questionnaire. Thus, it is obvious from looking at the document when 
``transmission'' has ccurred, and, as such, it is not necessary to 
codify this definition in the regulations. The Department has not 
adopted the second proposal because it is not practicable for the 
Department to try and keep track of a possible range of receipt dates.
    Section 351.301(c)(2)(iv) 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.
    One commenter proposed that the regulations recognize that the 
Department's questionnaire may be modified to reduce reporting burdens 
under certain circumstances pursuant to section 782(c)(1) of the Act. 
In our view, section 351.301(c)(2)(iv) of these regulations does just 
that.
    Another commenter proposed that any notification by a foreign 
interested party of difficulties in submitting information in response 
to the Department's questionnaire must be placed formally on the record 
of the proceeding. With respect to this suggestion, it was always the 
Department's intent under Sec. 351.301(c)(2)(iv) to require 
notification in writing. However, to avoid any confusion, the final 
regulation clarifies that such notification is to be submitted ``in 
writing.''
    One commenter suggested that the regulations provide petitioners 
with a right to comment on requests to modify an original questionnaire 
at the time the request is made. The Department has not adopted this 
proposal. As the Department explained in the preamble to the proposed 
regulations, parties have the right generally to submit comments on any 
relevant issue throughout the course of a proceeding. As such, the 
Department does not believe that a specific regulation addressing this 
issue is necessary. See 61 FR at 7324.
    One commenter proposed that the regulations ensure that 
difficulties experienced by interested parties (in particular, small 
companies) will be taken into account when the Department requests 
information and plans and conducts verification. In addition, the 
commenter proposed that the regulations include provisions that the 
Department will take into account the size of the respondent in 
assessing the adequacy of a response and also in determining whether 
facts available should be applied, and, if so, whether an adverse 
inference should be drawn.
    With respect to these suggestions, section 782(c)(2) of the Act 
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. The statute does not indicate that the Department is 
specifically required to take into account the size of the company in 
assessing the adequacy of the response or whether application of 
adverse facts available is applicable. Rather, section 776(b) of the 
Act provides for use of an

[[Page 27335]]

adverse inference 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.'' Under this standard the 
Department may consider the size of a company in determining whether it 
acted to the best of its ability. Any decision to do so would be made 
on a case-by-case basis.
    One commenter proposed that the regulations provide that the 14-day 
deadline for notifying the Department under section 782(c)(1) of the 
Act of difficulties in submitting information in response to a 
questionnaire is subject to extension upon request and that the request 
need not be made within the 14-day period. We have not adopted this 
proposal. Section 351.302 of these regulations contains the general 
provision for extensions of time limits upon request. As such, a 
specific provision regarding the 14-day deadline is unnecessary. 
Whether the Department would grant an extension of the 14-day period 
where the request for the extension was filed after the 14-day period 
had expired can only be determined on a case-by-case basis upon review 
of the party's explanation of the ``good cause'' for such a request and 
for the lateness of the request.
    Section 351.301(c)(2)(v) 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. One commenter proposed that the 
regulations clarify that explanations provided during a questionnaire 
presentation are not intended as a modification of the questionnaire or 
as an ``understanding'' between the Department and any respondent 
regarding the questionnaire, except as expressly provided in the 
questionnaire or subsequent modifications and supplements to the 
questionnaire. Furthermore, the commenter proposed that the regulations 
provide that the substance of a questionnaire presentation be 
memorialized for the record.
    The Department agrees in principle with these proposals but does 
not believe that a specific regulation is necessary. Any modifications 
or supplements to the questionnaire, or any agreed-upon changes in 
reporting requirements between a respondent and the Department will be 
reflected in the record.
    Submission of publicly available information to value factors: 
Section 351.301(c)(3) contains the time limits for submission of 
publicly available information to obtain values for factors in 
nonmarket economy AD cases. One commenter expressed support for the 
proposed deadlines. Another commenter proposed changing the deadline 
for such submissions to the date the case briefs are due. The commenter 
argued that this minor difference (the proposed deadlines are 
approximately 10 days before the date for submission of case briefs) 
will still allow the other parties to comment on the new information in 
their rebuttal briefs, while permitting the potential submitting 
parties to make the decision on what information is relevant, worth 
obtaining or placing on the record at a time when arguments in the case 
brief have been drafted, thus preventing missed documents or cluttering 
of the record with documents ultimately deemed unnecessary by the 
submitter.
    While the Department agrees with some of the commenter's reasoning, 
it has not adopted this proposal for several reasons. First, the 
Department is concerned that the short deadline for filing rebuttal 
briefs, i.e., five calendar days after case briefs are filed, will not 
allow parties enough time to prepare rebuttal arguments and review and 
comment on new factor information. Second, the Department does not 
believe that inclusion of new factual information with submission of 
arguments in case briefs allows for thorough analysis by the 
Department. Finally, inclusion of new factual information in case 
briefs is not consistent with the purpose of case briefs; namely to 
comment on what the Department did in its preliminary determination and 
to place before the Department any arguments that continue, in the 
submitter's view, to be relevant to the Secretary's final determination 
or results of review.
    Time limits for certain allegations: Section 351.301(d) sets forth 
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. In response to suggestions from several 
commenters, we have added a time limit for allegations of purchases of 
major inputs from an affiliated party at prices below the affiliated 
party's cost of production.
    Allegations regarding market viability: Section 351.301(d)(1) 
establishes a deadline for allegations regarding market viability of 40 
days after the date on which the initial questionnaire was transmitted. 
Several commenters proposed a longer alternative deadline of 120 days 
after initiation. Another commenter proposed that the deadline for 
allegations regarding market viability be tied to the receipt of the 
response to the relevant section of the questionnaire instead of to the 
date of transmittal of the initial questionnaire.
    We have not adopted either proposal. The information necessary to 
make allegations concerning market viability typically is contained in 
a respondent's section A response. Normally section A responses are due 
no later than 21 days after transmittal of the initial questionnaire. 
The 40-day deadline, therefore, should allow parties sufficient time to 
review the questionnaire responses and, if desired, make market 
viability allegations. The regulation makes clear that the Secretary 
may alter this time limit. The Secretary is likely to do so where the 
deadline for section A responses is extended, the responses themselves 
are so incomplete as to hinder a party's ability to make a market 
viability allegation, or the information necessary to make a market 
viability allegation is not available as part of the section A 
response.
    Allegations of sales at prices below the cost of production: 
Section 351.301(d)(2) establishes 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.
    One commenter proposed that the deadline for cost allegations be 
extended by seven days to take into account the additional seven days 
for receipt of the questionnaire. We have not adopted this proposal 
because the proposed deadlines already take into account the seven days 
for receipt of the questionnaire by tying the deadline to the date of 
receipt of the relevant questionnaire response. Country-wide 
allegations do not depend on information contained in questionnaire 
responses.
    A number of other commenters proposed eliminating entirely the 
notion of company-specific cost allegations for a number of reasons. 
One commenter argued that company-specific costs are not likely to be 
reasonably available to petitioner even after submission of the Section 
B response.
    The Department has not adopted this proposal. Complete company-
specific costs normally are not placed on the record until the 
Department requests them, i.e., typically after the Department has 
initiated a cost investigation. Nonetheless, the Department commonly 
receives adequate company-specific cost allegations based on data that 
are reasonably available to the petitioner. In making company-specific 
cost allegations, petitioners often use data provided for difference in 
merchandise adjustments and data from a

[[Page 27336]]

respondent's financial statements which are submitted with a 
respondent's section A and B questionnaire responses. In addition, a 
domestic interested party may compare company-specific home market 
prices from a respondent's section B response with its own adjusted 
cost data in order to make a company-specific cost allegation (see 
section 773(b)(2)(A)(i) of the Act).
    Two other commenters reasoned that country-wide cost allegations 
may provide reasonable grounds for an investigation of all respondents 
even if submitted after receipt of all sales responses because, for 
example, the allegation could demonstrate that prices among producers 
are similar and could be based on the cost data of the most efficient 
producer. The Department believes that where company-specific 
information has been placed on the record, any subsequent sales below 
cost allegation must take into consideration such information. As the 
Department noted in the preamble to the proposed regulations, 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 AD 
investigation. The Department interprets this to mean that an 
allegation of sales below cost, like an allegation of dumping, must be 
supported by information reasonably available to petitioner, including 
information already on the record. See 61 FR at 7324. Therefore, 
demonstrating that one company's sales are below cost does not 
demonstrate that other companies' sales are below cost if the other 
companies' information is reasonably available.
    Finally, two additional commenters argued that respondents will do 
everything possible to avoid submitting responses that could form the 
grounds for the filing of a COP allegation. It is our experience that 
respondents do not behave in such a manner. We believe that it is 
unlikely respondents would intentionally submit grossly deficient 
responses simply to avoid providing data sufficient to form the basis 
for a cost allegation. To do so might subject them to the application 
of adverse facts available, surely a more daunting prospect than the 
possible initiation of a cost investigation.
    One commenter argued that cost allegations on a country-wide basis 
are not permitted under the statute because the statutory ``reasonable 
grounds to believe or suspect'' standard for initiating a cost 
investigation has not changed since the Department adopted a policy of 
entertaining only company-specific allegations under the CIT's holding 
in Al Tech Specialty Steel Corp. v. United States, 575 F. Supp. 1277, 
1281 (1983). Contrary to the commenter's suggestion, the SAA at 833 
specifically provides for the consideration of cost allegations on a 
country-wide basis. The commenter also argued that a country-wide 
allegation must contain some demonstration of the representativeness of 
the presented data where there are substantial variants of the subject 
merchandise under investigation. The Department agrees that a country-
wide allegation should contain some demonstration of the 
representativeness of the presented data, but only to the extent that 
pertinent data are reasonably available to the petitioner.
    Allegations of purchases of major inputs from an affiliated party 
at prices below the affiliated party's cost of production: In response 
to several comments, we have added a new provision in these final 
regulations establishing deadlines for allegations under section 
773(f)(3) of the Act regarding purchases of major inputs from an 
affiliated party at prices below the affiliated party's cost of 
production. One commenter proposed that the regulations provide that 
such allegations are due within seven days after a COP response is 
filed. Another commenter proposed that the deadlines be identical to 
the deadlines for cost allegations.
    We have not adopted either of these proposed deadlines. Instead, 
new Sec. 351.301(d)(3) provides for filing such allegations within 20 
days after a respondent files a response to the relevant section of the 
questionnaire; i.e., the section D response containing cost data. The 
applicability of this provision is limited, however. Specifically, 
because the Department's normal practice is to analyze an affiliated 
supplier's production cost data for major inputs whenever it conducts a 
cost investigation, this provision is only applicable where the 
Department has determined to base foreign market value on constructed 
value for reasons other than that sales were disregarded under the cost 
test.
    Two commenters additionally proposed that the regulations establish 
a deadline for determining which inputs are deemed to be ``major.'' We 
have not adopted this proposal. The determination of which inputs are 
``major'' must be made on a case-by-case basis taking into 
consideration the nature of the product, its inputs, and the company-
specific information on the record.
    Countervailable subsidy and upstream subsidy allegations: Proposed 
Sec. 351.301(d)(3), now renumbered as Sec. 351.301(d)(4), sets forth 
the time limits for countervailable subsidy allegations in 
investigations and reviews and upstream subsidy allegations in 
investigations. We received one comment regarding this provision which 
was supportive of the Department's treatment of this issue. After a 
further review of this provision, we have left it unchanged except for 
the change in numbering.
    Targeted dumping allegations: Proposed Sec. 351.301(d)(4), now 
renumbered as Sec. 351.301(d)(5), sets forth the time limit for a 
targeted dumping allegation in an AD investigation. A number of 
commenters proposed that the deadline for targeted dumping allegations 
be eliminated, or, at a minimum, revised so as to merely require that 
an allegation of targeted dumping be made no later than the date case 
briefs are due. Two commenters reasoned that a targeted dumping 
analysis does not require the collection of additional data not 
requested in the questionnaire. Two other commenters reasoned that the 
deadline should be eliminated because the Department should always test 
for targeted dumping. One commenter supported the maintenance of a 
deadline for targeted dumping allegations. The Department has not 
adopted the proposals eliminating or changing the proposed deadline for 
targeted dumping allegations. The Department believes that the 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. To extend the deadline 
would make it difficult for the Department to consider the allegation 
for the preliminary determination. However, the Department recognizes 
the burden such a deadline may place on domestic interested parties in 
some situations and intends to be flexible with respect to the deadline 
where appropriate. For example, if the timing of responses does not 
permit adequate time for analysis, the Department will consider that 
``good cause'' to extend the deadline under Sec. 351.302. Additional 
comments concerning the substantive targeted dumping provisions are 
discussed below in connection with Sec. 351.414(f).

Section 351.302

    Section 351.302 sets forth the procedures for requesting an 
extension of a time limit and clarifies the Department's authority to 
grant extensions. In addition, this section explains when and how the 
Department will reject untimely or unsolicited submissions.

[[Page 27337]]

    Extension of time limits: Sections 351.302 (b) and (c) provide 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 extension. One commenter expressed 
support for this provision. Another commenter proposed that extensions 
of up to 15 days will normally be granted upon a reasonable showing of 
good cause. A third commenter argued that the regulation providing for 
extensions for ``good cause shown'' is too restrictive and suggested 
that the regulation provide that the Department will grant an extension 
where it would not delay the completion of an investigation or review 
or cause other interested parties difficulties in representing their 
interests.
    The Department has not specifically adopted these suggestions, but 
does recognize that some of these concepts factor into its decision as 
to whether good cause has been shown. As the Department indicated in 
the preamble to the proposed regulations, 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 a 
particular proceeding. 61 FR at 7326.

Section 351.303

    Section 351.303 contains the procedural rules regarding filing, 
format, service, translation, and certification of documents.
    Time of filing: One commenter proposed that the regulations provide 
that in computing any period of time prescribed or allowed by the 
statute, the regulations, or the instructions of the Department, when 
the last day of the period is not a business day, the period runs to 
the first business day. In our view, the regulations as drafted 
accommodate the commenter's proposition. Specifically, Sec. 351.303(b) 
provides that if the applicable time limit expires on a non-business 
day, the Secretary will accept documents that are filed on the next 
business day (see also Sec. 351.103 describing the location and 
function of Import Administration's Central Records Unit).
    The commenter also proposed that the regulations provide that 
whenever a period is less than 11 days, intermediate non-business days 
are excluded from the count. The Department has not adopted this 
proposal. The very few deadlines in these regulations of less than 11 
days were specifically established by the Department after 
consideration of related timing issues.
    Filing of submissions: One commenter suggested that the regulations 
provide that the additional copies of APO documents should be filed 
within the applicable time limits for filing business proprietary 
versions instead of waiting for the one-day lag rule so that analysts 
have an extra day to review the documents. The Department has not 
adopted this suggestion. A principal reason that the Department revised 
and codified the one-day lag rule in the regulations was to avoid the 
problem of analysts working from documents with mistakes in bracketing 
of business proprietary information. As a result, Sec. 351.303(c)(2)(i) 
provides for filing of only one copy of the business proprietary 
version of a document within the applicable time limit; 
Sec. 351.303(c)(2)(ii) provides for filing of six copies of the 
complete, final business proprietary version, i.e., with bracketing 
mistakes corrected, on the next business day. This final version is the 
one distributed internally to the analysts. If parties wish to send 
additional courtesy copies directly to the analysts, they should 
similarly send this complete, final business proprietary version.
    Document markings: We have made a minor change to 
Sec. 351.303(d)(2)(v) to clarify that only the business proprietary 
version of a document filed under Sec. 351.303(c)(2)(i) of the one-day 
lag rule should include the warning ``Bracketing of Business 
Proprietary Information is Not Final for One Business Day After Date of 
Filing'' on pages containing business proprietary information.
    Translation to English: Section 351.303(e) requires that documents 
submitted in a foreign language be accompanied by an English 
translation. One commenter proposed that regulations provide that 
English language summaries of foreign language documents may be 
submitted in lieu of complete translations. We have not adopted this 
proposal. When parties are unable to comply with the English-
translation requirement, the Department will work with them on an 
acceptable alternative. Furthermore, as explained in the preamble to 
the proposed regulations, parties may submit an English translation of 
pertinent portions of a non-English language document. 61 FR at 7326. 
Another commenter proposed that the regulations include this latter 
clarification. We agree that the clarification that parties may submit 
an English translation of only pertinent portions of a document, as 
opposed to the entire document, is helpful and have included it in the 
final regulations. The regulation makes clear, however, that parties 
must obtain the Department's approval for submission of an English 
translation of only portions of a document prior to submission to the 
Department.
    Service of copies on other persons: Section 351.303(f) provides for 
service of documents filed with the Department on all other persons on 
the service list. The Department has received a number of informal 
suggestions and comments by parties seeking permission to serve certain 
documents by facsimile or other electronic transmission processes. The 
Department believes that under certain conditions, service by means 
other than personal service or first class mail is permissible. As a 
result, we have added new paragraph (f)(1)(ii) to provide for service 
of public versions and business proprietary versions containing only 
the server's own business proprietary information on other persons on 
the service list by facsimile or other electronic means, such as e-
mail, where the intended recipient consents to such service. This 
provision does not apply to filing documents with the Department. 
Proposed paragraph (f)(1) has been renumbered as paragraph (f)(1)(i).
    One commenter proposed that the regulations require the Department 
to serve all parties on the service list copies of any document that 
the Department transmits to another party in the proceeding. The 
commenter also proposed that the regulations require the Department to 
notify immediately all parties whenever it transmits a document to a 
party. A second commenter supported these proposals.
    The Department has not adopted these proposals. We recognize the 
importance of making documents available to parties and believe that 
the current mechanisms for making documents available are adequate. 
Specifically, for documents the Department releases under APO, under 
the terms of the APO application (where parties may ask to receive all 
memoranda generated by the Department) the Department releases such 
documents to all parties under APO. All public documents, including 
public versions of documents containing business proprietary 
information, generated by the Department are made available to parties 
in our Central Records Unit (see Sec. 351.103). As circumstances 
warrant, the Department also releases public

[[Page 27338]]

documents directly to parties other than the recipient and will 
continue to do so.
    Certifications: Section 351.303(g) provides that each submission 
containing factual information must be accompanied by the appropriate 
certification regarding the accuracy of the information. One commenter 
proposed that the regulations provide that the required party 
certification may be submitted for the first time when the party files 
its public version and any corrections to its proprietary version. The 
Department has not adopted this proposal. A person must file the 
applicable certification(s) with each submission of factual 
information, including the original business proprietary version of a 
document filed with the Department, within the applicable time limits 
pursuant to Sec. 351.303(c)(2). The public version and the final 
business proprietary version filed on the following business day must 
be identical to the business proprietary version filed the previous day 
except for any bracketing corrections. Therefore, there is no reason 
why the certification should change.
    Another commenter proposed that to authenticate the date of 
certification, the Department should require an original dated 
certification sworn before an authorized equivalent to a notary public 
for each submission. One commenter opposed this proposal. We have not 
adopted this proposal. The Department believes that such a regulation 
would not provide substantially greater assurance of completeness and 
accuracy of submitted information, yet it would further complicate the 
process of submitting information. We assume that legal counsel, other 
representatives, and company officials are acting in good faith when 
they certify to the completeness and accuracy of a specific submission. 
For this reason, we also have not adopted regulations authorizing 
sanctions for certification violations as proposed by two commenters.

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.
    Conducting verification: One commenter suggested that there is no 
need for automatic verifications where the Department intends to revoke 
an order as the result of a sunset review. The commenter proposed that 
the regulations clarify that verifications for sunset reviews should 
occur only for good cause. The Department has not adopted this 
suggestion. Section 782(i) of the Act mandates that the Department 
conduct verification before revoking an order as the result of a sunset 
review.
    Another commenter proposed that the regulations establish 30 days 
after receipt of the supplemental response as the deadline for 
verification requests. The commenter was concerned that because the 
Department frequently grants extensions to respondents to answer 
questionnaires and supplemental questionnaires, the ability of domestic 
interested parties to demonstrate the requisite ``good cause'' would be 
hampered by time constraints.
    The Department has not adopted this suggestion. While the 
regulations establish a deadline for requesting verification in an 
administrative review upon request where no verification was conducted 
during either of the two immediately preceding administrative reviews 
(Sec. 351.307(b)(1)(v)), there is no deadline for requesting 
verification in an administrative review based on good cause 
(Sec. 351.307(b)(1)(iv)). Thus, nothing prevents domestic interested 
parties from making good cause arguments at any point in the review, 
including after supplemental responses are filed. However, the 
Department's practice is to conduct verification in administrative 
reviews prior to issuing its preliminary results. Good cause arguments 
made late in the proceeding may not allow sufficient time for the 
Department to conduct verification. The third-year verification 
provision has a deadline for domestic interested parties to request 
verification of 100 days after publication of the notice of initiation 
of review. This timeframe allows the Department sufficient time to 
prepare for verification.
    Verification of a sample: Section 351.307(b)(3) provides that the 
Department may select and verify a sample of exporters and producers 
where it is impracticable to verify relevant factual information for 
each person due to the large number of exporters or producers included 
in an investigation or administrative review. One commenter proposed 
that the regulation be revised to provide that sample verifications 
will be relied upon in only exceptional circumstances, and that it is 
the Department's intention, in cases involving numerous potential 
respondents, to select a reasonable number of companies that can be 
examined and verified.
    The Department has not adopted this proposal. As provided in the 
regulation, the Department may verify a sample of respondents where it 
is impracticable to verify every respondent due to the large number of 
companies included in an investigation or review. A decision as to 
whether it is impracticable to verify every respondent is made on a 
case-by-case basis, considering the circumstances particular to a 
specific investigation or review.
    Verification report: Section 351.307(c) provides that the 
Department will issue a verification report. One commenter proposed 
that the regulations require the Department to issue a verification 
report normally no later than 30 days after completion of verification 
in an investigation, and no later than 14 days prior to the issuance of 
preliminary results in an administrative review. Another commenter 
proposed that the regulations provide that documents that are retained 
by the Department and designated as verification exhibits in the 
verification report be served within 48 hours after service of the 
verification report.
    The Department has not adopted these proposals. Because the 
Department's standard practice is to issue verification reports and 
require service of verification exhibits as soon as possible after 
verification, the Department does not believe that specific regulatory 
deadlines are necessary.
    Another commenter proposed that the regulations provide that 
verification reports will not be released to respondent's counsel for 
comments on bracketing proprietary information before release to 
domestic industry counsel because to do so allows respondents to obtain 
an unfair head-start on preparation of verification comments, case 
briefs, etc. An additional commenter proposed that draft verification 
reports, as well as the final report, should be included on the record.
    The Department has not adopted either proposal. Because they are 
not final, draft verification reports, including reports where 
bracketing has not been finalized, are not included in the record or 
released generally to all interested parties. Furthermore, release of 
an unfinished version of the final document risks inadvertent release 
of business proprietary information belonging to the verified 
respondent. The sole purpose of providing this draft is to allow a 
respondent to comment on proper bracketing..
    One commenter suggested that regulations should provide that within 
seven days of the completion of verification, the verifying official 
should memorialize for the administrative record all requests for new 
information as a result of the completed verification, the date 
verification for that company was completed, and any other official

[[Page 27339]]

requests for adjustments to the database relied on in the preliminary 
phase of the proceeding, whether or not considered new information. In 
addition, the commenter proposed that in a cover letter transmitting 
the requested information the government or person supplying the 
requested information should be required to separately identify every 
change to the computer database from the database relied on by the 
Department in the preliminary phase, identify every change to the 
computer database made as a result of the verifying officials' request, 
and certify that no changes have been made to the database relied on by 
the Department in the preliminary phase with the exception of those 
noted in the cover letter.
    The Department does not believe that additional specific 
regulations are necessary, because Department practice already 
incorporates many of the commenters' suggestions. The Department 
intends to incorporate the remaining suggestions into its practice 
because they represent improvements to the verification process.
    Procedures for verification: Section 351.307(d) describes certain 
procedures for verification. A number of commenters proposed that the 
regulations require the Department to provide respondents with the 
complete verification outline, including the date and place of 
verification, the information to be verified, and a detailed outline of 
verification steps to be followed, by a particular date prior to the 
commencement of verification. Some commenters proposed seven days; 
others proposed 14 days.
    With respect to these suggestions, the Department in practice 
issues the verification outline normally not less than seven days prior 
to the commencement of verification. Thus, a specific regulation on 
this issue is unnecessary.
    One commenter proposed that the regulations provide that any member 
of the verification team who is not an officer of the U.S. government 
must agree to be subject to the APO. We have not adopted this 
suggestion, because as part of the Department's standard practice, 
individuals that are not Department employees, such as interpreters or 
embassy personnel, are required to sign a standard non-disclosure 
agreement regarding limited disclosure of business proprietary 
information.
    Two commenters opposed the Department's stated intention to require 
respondents to submit any computer programs used to identify sales 
subject to review in advance of verification. One commenter argued that 
the computer program was not likely to be helpful because it would 
reflect the unique aspects of each company's computer systems and it 
would be very difficult for someone not familiar with the company's 
computer system to understand the program. The other commenter argued 
that the record consists of the sales listing and not the programs used 
to generate that listing. A third commenter expressed support for the 
Department's intention to request the computer programs.
    With respect to these suggestions, where helpful, the Department 
intends to require that, prior to the commencement of verification, 
respondents submit any computer programs used to identify the sales 
subject to investigation or review. If, over time, it becomes clear 
that nothing helpful to the verification process is gained by reviewing 
these computer programs, the Department will end this practice.
    Another commenter proposed that the regulations provide that all 
parties have an opportunity to comment on significant aspects of 
verification, such as notice of verification and the verification 
outline. Another commenter proposed that the regulations provide that 
petitioners must submit any pre-verification comments no later than 14 
days before the scheduled starting date of any verification.
    We have not adopted these suggestions, because subject to the 
applicable statutory, regulatory, or submission-specific deadlines, 
parties are free to comment on any aspect of verification.
    One commenter proposed that the regulations clarify that the scope 
of verification is limited to reviewing the accuracy of factual 
information submitted by respondents and that the Department will pay 
deference to the verification reports prepared by its analysts. The 
Department has not adopted these proposals. Consistent with section 
782(i) of the Act, the Department will verify, where applicable, 
information relied on in making its final determination. The SAA at 868 
states that the Department is not precluded from requesting further 
information during a verification. Contrary to the commenter's 
suggestion, therefore, the Department is not limited during 
verification to reviewing only the accuracy of factual information 
previously submitted by respondents. We agree that verification reports 
are evidence on the record that the Department must consider in making 
its final determination along with all other relevant information on 
the record.
    Another commenter proposed that the regulations provide that if the 
Department is not able to trace information in the responses to 
documents generated by the company or government in the normal course 
of business or is not able to reconcile the cost of production response 
to the company's financial statements, the Department will reject the 
response and use facts available.
    Section 776(a)(2)(D) of the Act provides that the Department may 
use facts available where a person provides information that cannot be 
verified. In the interest of not repeating statutory provisions in the 
regulations, the Department has not adopted this proposal.
    Other comments: One commenter correctly pointed out that the 
preamble to the proposed regulations, 61 FR at 7327, incorrectly states 
that Sec. 351.307(d)(2) provides for access to the records of persons 
not affiliated with respondents. The correct provision is 
Sec. 351.307(d)(3).
    Several commenters expressed support for the Department's rejection 
of suggestions by several other commenters that the Department allow a 
neutral third party to attend verification, copy all documentation 
relied upon in verification, allow all parties to review all draft 
verification reports, include in the record both the draft and final 
versions of the verification reports, conduct verification in 
Washington, and permit domestic counsel and consultants to participate 
at verification. See 61 FR at 7327 (discussing the Department's 
original response to these suggestions in the preamble to the proposed 
regulations). We continue to believe that the original suggestions 
should not be adopted in the final regulations.

Section 351.308

    Section 351.308 deals with determinations on the basis of the facts 
available.
    When to apply facts available: Section 351.308(b) provides that the 
Department may make a determination based on facts available in 
accordance with section 776(a) of the Act.
    Two commenters proposed that the regulations provide that the 
Department should take into account the magnitude of the deficiencies 
or the effect on the margin in applying facts available. One of the 
commenters suggested that total facts available normally should not be 
applied unless there is a consistent pattern of inaccurate and 
unverifiable information which affects the reliability of a substantial 
portion of the information on which the Department

[[Page 27340]]

must rely for its determination. Another commenter proposed that the 
Department only apply total facts available under extreme 
circumstances, for example, where a respondent fails to answer a 
questionnaire, refuses to allow verification, or totally fails 
verification. An additional commenter proposed that the regulations 
require the use of facts available when the government or person 
objects to verification. Another commenter proposed that the 
regulations provide that facts available may be used to fill gaps in 
the record. Another commenter proposed that the regulations provide 
that partial facts available should only be used where the information 
deemed inaccurate or unverifiable affects a large number of the 
necessary costs or price comparisons, the information deemed to be 
inaccurate or unverifiable is likely to have a material effect on the 
outcome of the calculation, and insufficient transactions remain 
unaffected by the deficiency to base the dumping margins on those 
transactions alone.
    We have not adopted these suggestions. Some suggestions 
unnecessarily limit the application of facts available; others already 
are directly covered by the statute or regulations.
    Section 776(a) of the Act provides that the Department 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. 
In addition, Sec. 351.307(b)(4) provides that if a person or government 
objects to verification, the Department may disregard any or all 
information submitted by the person in favor of use of facts available.
    One commenter proposed that the regulations clarify that where 
information has been submitted on the record as to a particular issue, 
facts available will be used only if the information does not meet the 
requirements of section 782(e) of the Act. The commenter also suggested 
that Sec. 351.308(a) should be modified to clarify that the use of 
facts available is subject to sections 782 (c)(1) and (e) of the Act 
regarding the Department's modification of certain information 
requirements and paragraph (e) of Sec. 351.308.
    We have not adopted these suggestions. Section 351.308(e) provides 
that the Department 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 
Department if the conditions listed under section 782(e) of the Act are 
met. This is different from the commenter's proposal that facts 
available will only be used if information does not meet the 
requirements of section 782(e) of the Act. Where the Department agrees 
to modifications of certain information requirements under sections 
782(c)(1) of the Act, it would have no reason to apply facts available 
to a respondent that complied fully with the modified information 
requirements, barring other problems involving, for example, failure of 
verification completely or in part.
    When to make an adverse inference: Section 776(b) of the Act 
provides that the Department may use an inference adverse to the 
interests of a party in selecting facts available where the Department 
finds that that party ``has failed to cooperate by not acting to the 
best of its ability to comply with a request for information.''
    One commenter recognized that the regulations provide the 
Department with significant discretion in determining when a respondent 
is ``acting to the best of its ability,'' and urged the Department to 
apply this standard reasonably and fairly in actual practice. Other 
commenters proposed that the regulations provide that when a respondent 
fails to cooperate, the imposition of adverse inferences should be 
mandatory, not discretionary. These commenters argued that application 
of neutral facts available when a respondent fails to cooperate with 
requests for information would undermine the Department's ability to 
obtain complete, timely, and accurate information when carrying out its 
statutory obligations.
    The Department does not agree that the imposition of adverse 
inferences is mandatory. Section 776(b) of the Act provides that 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, the Department, in reaching its determination, ``may use 
an inference that is adverse to the interests of that party in 
selecting from the facts otherwise available.''
    A number of commenters proposed that the regulations should provide 
that generally a good faith effort to provide information responsive to 
the Department's request meets the ``best of its ability'' requirement. 
Several parties opposed the ``good faith effort'' standard, arguing 
that good faith has nothing to do with ``best of its ability.'' One 
commenter proposed that the regulations provide that in determining 
whether a respondent has acted to the best of its ability to supply 
requested data, the Department should take into account all information 
submitted by respondents. Another commenter suggested that the 
regulations provide that in determining whether a respondent's failure 
to provide certain data constitutes grounds for adverse inferences, the 
Department will consider all circumstances of the respondent's 
position, including the number of reviews in which identical 
information has been requested. One commenter proposed that the 
regulations provide that the Department is required to identify 
affirmative evidence of a respondent's bad faith before making an 
adverse inference. One commenter also proposed that the regulations 
provide that where the Department determines that an interested party 
has not made a good faith effort, the Department should be required to 
state on the record the reasons for its conclusion that the interested 
party had not made a good faith effort before drawing an adverse 
inference.
    The Department has not adopted these proposals. As the Department 
explained in the preamble to the proposed regulations, the 
determination of whether a company has acted to the best of its ability 
will be decided on a fact- and case-specific basis. The Department will 
consider whether a failure to respond was due to practical difficulties 
that made the company unable to respond by the specified deadline. It 
is clear, however, that affirmative evidence of bad faith on the part 
of a respondent is not required before the Department may make an 
adverse inference. See 61 FR at 7327-28.
    One commenter suggested that the regulations reserve ``punitive'' 
use of facts available for cases of deliberate misrepresentation of 
facts because it is not fair to penalize a company for making an 
economically rational decision about the costs and benefits of whether 
to participate in a proceeding. Two other commenters proposed that the 
regulations provide that no adverse inference should be drawn if a 
party submits information that is in the form that is regularly kept 
for corporate records, provided that such information is substantially 
equivalent to the information requested and the party shows that 
submitting the information requested in the required form would pose a 
significant burden. Another commenter proposed that the regulations 
clarify that if late in the

[[Page 27341]]

proceeding the Department disagrees with a respondent's methodology, as 
a result of which the necessary information is not on the record, no 
adverse inference should be drawn if there is no time to supplement the 
record. Other commenters proposed that the regulations require that 
where the Department disagrees with a respondent's methodology on a 
given adjustment or issue, the Department will provide respondents with 
a reasonable opportunity to provide any data necessary so that the 
Department's revised methodology can be based on the company's actual 
data rather than on adverse facts available.
    The Department has not adopted these proposals. As discussed above, 
the Department will make its determination of whether to apply facts 
available on a fact- and case-specific basis. The determination of 
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.
    One commenter proposed that the regulations provide that the 
Department may conclude that a party has ``failed to cooperate by not 
acting to the best of its ability'' even though it has submitted some 
information to the agency, if it has not submitted other information 
requested or failed to clarify an inconsistency the agency identifies. 
In addition, the commenter proposed that the regulations provide that 
the Department may use available data in an adverse manner when the 
Department has determined that a party has failed to cooperate and when 
no alternative ``adverse'' information is available. The commenter was 
concerned that respondents may fail to cooperate by deliberately 
withholding information requested by the Department until verification, 
but then benefit from use of the information discovered at verification 
without an adverse inference being made because it becomes the only 
information available on the record.
    While we do not disagree with the substance of the comment, we do 
not believe that this specific addition to the regulation is necessary. 
Under section 776 of the Act and Sec. 351.308, the Department has the 
authority to adequately address these types of situations as they 
arise.
    Another commenter proposed that the regulations provide that 
respondents must certify that their responses comply with prior 
Department rulings as to reporting requirements applicable to their 
company. The commenter also suggests that the regulations provide that 
the Department will make an adverse inference whenever a respondent 
fails to comply with prior Department rulings with regard to that 
company without identifying and justifying such non-compliance.
    The Department has not adopted these proposals. The Department may 
reconsider its position on an issue during the course of a proceeding 
in light of the facts and arguments presented by the parties. Parties 
are entitled, at the risk of the Department determining otherwise, to 
argue against a prior Department determination.
    Two commenters proposed that the regulations provide that failure 
to produce data from ``affiliated'' parties, over which a respondent 
has no real leverage or control, would not justify the use of adverse 
inferences. Another commenter proposed that the regulations should 
provide that where a respondent has made a good faith effort to obtain 
information from an affiliate, failure of the affiliate to provide the 
information should not give rise to an adverse inference. One commenter 
proposed that the Department avoid use of adverse facts available when 
a foreign law prohibits or constrains an affiliated party from 
providing to the respondent information requested by the Department. 
Several commenters also suggested that the regulations provide that 
failure to produce data where the timeframe for compiling data is 
unduly short, mistakes in calculations and unintentional errors of 
commission or omission, and failures to produce all requested documents 
should not justify the use of adverse inferences.
    While we do not disagree with the substance of some of these 
comments, we do not believe the addition of these specific provisions 
is warranted. The Department will make determinations on the basis of 
the facts available and determine whether to apply adverse inferences 
on a fact- and case-specific basis.
    What to use as facts available: One commenter urged the Department 
to apply its new regulations regarding the selection of facts available 
in a fair and flexible manner so as to faithfully implement the spirit 
of the law. Two other commenters proposed that the regulations provide 
that the Department should consider information submitted by 
respondents for use as facts available even if it is not ideal in all 
respects. Another commenter proposed that the regulations provide that 
in determining what data should be applied as facts available, the 
Department will take into account all information and arguments 
supplied by the parties including comments concerning the accuracy of 
the data to be used as facts available.
    With respect to these suggestions, the Department will consider all 
information on the record, including comments from the parties, in 
determining what to use as facts available. No additional regulation is 
necessary to accomplish this.
    Another commenter proposed that the regulations make clear that the 
Department will not follow its previous policy of applying the highest 
rate ever applied to the respondent to particular sales as ``partial 
BIA.'' This would be an unlawful use of an adverse inference, because 
the respondent would have provided information to allow the calculation 
of margins on the majority of its sales and thus presumably has 
cooperated to the best of its ability. We have not adopted this 
suggestion because, the fact that the Department has not adopted the 
two-tiered methodology for selecting BIA developed under the old law 
(see 61 FR at 7327) does not preclude the Department from applying 
information in a similar manner under the new facts available provision 
where such application would be consistent with the new law and 
regulations.
    Several commenters proposed that the regulations provide that all 
respondents, regardless of the degree to which they are deemed to have 
cooperated, are entitled to submit comments on what to use as facts 
available, and to propose independent sources for use as secondary 
information. Another commenter opposed the proposition that 
noncomplying respondents be entitled to comment on what information 
should be used as facts available.
    Although the Department has not adopted a specific regulation as 
suggested, nothing prevents parties from filing comments regarding what 
to use as facts available. Furthermore, the statute does not limit the 
specific sources from which the Department can obtain facts available.
    One commenter proposed that the regulations provide that data 
contained in a petition will not be used if it is based on unreasonable 
and unsubstantiated assumptions, is otherwise distorted or is not 
corroborated. Another commenter proposed that the regulations provide 
that information in the petition should only be used as a last resort 
or when all parties agree to the use of such information, and that 
petition information may only be used to the extent that it is 
verifiable and consistent with findings in the investigation or review.
    We have not adopted these proposals. Section 776(c) of the Act 
provides that,

[[Page 27342]]

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. The Department 
believes the suggested additional restraints on the use of such 
information are not warranted.
    Corroboration of secondary information: Section 351.308(d) provides 
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.
    One commenter expressed support for the Department's rejection of 
the suggestion that information from a petition be deemed corroborated. 
The commenter suggested that the final regulations retain the 
requirement that information from a petition, like information from any 
other secondary source, must be corroborated.
    We have retained this requirement. Consistent with the SAA at 870 
and section 776(c) of the Act, Secs. 351.308(c) and (d) provide that, 
to the extent practicable, the Department will corroborate secondary 
information, including information derived from a petition.
    Another commenter proposed that the regulations provide that in 
determining what facts available to use, the Department will choose the 
most probative facts available. The Department has not adopted this 
proposal. The SAA at 870 explains that corroborate means that the 
Department must satisfy itself that secondary information to be used as 
facts available has probative value, not that the Department must 
choose the most probative information as facts available.
    One commenter proposed that the regulations provide that the 
Department may consider information provided by industrial users and 
consumers in corroborating secondary information. Section 351.308(d) 
provides that independent sources used to corroborate secondary 
information ``may include, but are not limited to, published price 
lists, official import statistics and customs data, and information 
obtained from interested parties during the instant investigation or 
review.'' The Department has not amended the regulation to include 
information provided by industrial users and consumers because it is 
unnecessary. The Department agrees with the commenter that the 
Department may also consider information provided by industrial users 
and consumers in corroborating secondary information. The regulation is 
clear that the list is not an exhaustive list of independent sources.

Section 351.309

    Section 351.309 deals with written argument. We have made a minor 
change to paragraphs (c)(2) and (d)(2) to encourage parties to include 
a table of statutes, regulations, and cases cited in their case and 
rebuttal briefs in addition to summaries of their arguments.
    Several commenters proposed that the Department accept reply briefs 
after a hearing. With respect to this proposal, in certain 
circumstances, the Department may request parties to file reply briefs 
after a hearing. The Department will decide whether to do so on a case-
by-case basis.
    Another commenter proposed that the deadline for filing rebuttal 
briefs in investigations and reviews, under Sec. 351.309(d), be five 
business days after the filing of case briefs, instead of five calendar 
days. We have not adopted this proposal. Given the statutory time frame 
for completion of investigations and reviews, the Department has 
determined that five calendar days is appropriate.

Section 351.310

    Section 351.310 deals with matters related to hearings.
    One commenter proposed that the regulations retain the provision 
that certain high-level employees chair the hearing to ensure that the 
hearings are effective and useful. The commenter also proposed that the 
regulations provide that all Department employees who have been 
involved in the investigation or review normally will be present at the 
hearing to ensure that those individuals involved in the decision-
making process will be familiar with all relevant issues prior to 
reaching the final determination.
    While we agree with the substance of the comments, we do not 
believe that a specific regulation on this point is necessary. The 
Department's practice is to have a high-level employee chair the 
hearing and to ensure that employees involved in the proceeding attend 
the hearing.
    Two commenters proposed that parties should be allowed to comment 
on any issue raised in the proceeding during the hearing, whether or 
not that issue is specifically addressed in the party's case brief or 
rebuttal brief. One commenter proposed that the regulations allow for 
witness testimony and the collection of new evidence at hearings.
    The Department has not adopted these proposals. The introduction of 
testimony, other new evidence, and new arguments at the hearing is not 
feasible given that parties will have no way to prepare rebuttals or 
respond to introduction of new information and argument. Furthermore, 
the Department would have difficulty analyzing and verifying such new 
information and argument at this stage of the proceeding.
    A number of commenters supported the proposed improvements to the 
hearing process including allowing for closed hearing sessions to 
discuss proprietary data. One commenter proposed that Sec. 351.310(f) 
be revised to allow for consolidated hearings only if all interested 
parties in each case agree. The Department has not adopted this 
proposal. However, the Department certainly will take into 
consideration any opposition to consolidation of hearings in making is 
decision.
    Another commenter proposed that the regulations provide that 
parties will be notified in advance of the hearing of the issues of 
concern to the Department. We have not adopted this proposal. The 
Department has on occasion requested that parties brief specific issues 
of concern to the Department and will continue to do so where 
necessary.

Section 351.311

    Section 351.311 deals with countervailable subsidy practices 
discovered during an investigation or review. We received one comment 
regarding Sec. 351.311 to the effect that the Department should: (1) 
clarify that Sec. 351.311 covers a broad array of subsidies and subsidy 
practices; (2) clarify that petitioners do not carry the burden of 
establishing that a newly discovered subsidy is countervailable, but 
rather than a subsidy need only be potentially countervailable; and (3) 
specify how much time is insufficient to preclude the Department from 
considering a practice in the course of the proceeding. One commenter 
opposed these suggestions.
    We have not adopted these suggestions. With respect to (1), we do 
not believe that the requested change is necessary, because 
Sec. 351.311 is not limited by its terms to particular types of 
subsidies. With respect to (2), we believe that the phrase ``appears to 
provide a countervailable subsidy with respect to the subject 
merchandise'' adequately covers practices for which there may not have 
been a definitive determination of countervailability. Finally, with 
respect to (3), we agree with the opposing commenter that the time 
necessary to investigate a

[[Page 27343]]

particular subsidy practice will vary from case to case.

Section 351.312

    Section 351.312 clarifies the regulatory provisions under which 
industrial users and consumers are entitled to provide information and 
comments and clarifies that all such submissions are subject to the 
Department's standard filing requirements.
    One commenter proposed that the phrase ``concerning dumping or a 
countervailable subsidy'' be deleted from Sec. 351.312(b) because it 
could be interpreted to limit the right of industrial users and 
consumers to comment or file information on only the existence or 
amount of dumping or subsidization. Another commenter proposed that the 
regulations provide that there is no limitation on the issues that 
industrial users may address. A third commenter proposed that the 
regulations define ``relevant factual information'' as used in 
Sec. 351.312(b) to include information relevant strictly to the 
substantive issues before the Department, the sections of the statute 
involved, and the statutory mission of the Department so as to not 
allow already complex proceedings to be sidetracked because of 
information and argument submitted on irrelevant issues, such as the 
impact of orders on consumer prices. The commenter also proposed that 
the regulations provide for the return of information and briefs that 
go beyond this definition so that domestic interested parties would not 
feel obliged to rebut irrelevant argumentation.
    We have not adopted these proposals. The language in Sec. 351.312, 
which provides that industrial users and consumers may submit 
``relevant factual information and written argument * * * concerning 
dumping or a countervailable subsidy'' parallels language in section 
777(h) of the Act. The SAA at 871 also states that industrial users and 
consumers comments ``must concern matters relevant to a particular 
determination of dumping [or] subsidization * * *.'' This language is 
intended to clarify that submissions and comments by industrial users 
and consumers should focus on matters within the purview of the 
Department's statutory authority to investigate and review dumping and 
subsidization. In order to address the concerns raised by the 
commenters, we wish to clarify that industrial users and consumers are 
not limited to commenting on only the existence or amount of dumping, 
and, for example, are entitled to comment on the scope of an 
investigation. However, the Department will not consider comments on 
matters not within the Department's purview in antidumping and 
countervailing duty proceedings to be ``relevant.'' Although we 
recognize the concern raised by the third commenter regarding 
submissions on ``irrelevant'' issues, we do not consider it appropriate 
to have a regulation providing for the rejection of information or 
argument not ``relevant'' to the proceeding because the requisite 
subjective determinations concerning the relevancy of submissions or 
parts of submissions throughout the course of the proceeding would be 
too time consuming.
    Proposed Sec. 351.312(b) provided for the submission of relevant 
factual information and argument to the Department under 
Sec. 351.301(b) and paragraphs (c) and (d) of Sec. 351.309. Two 
commenters proposed that the regulations allow for submission of 
factual information and argument under all provisions of Sec. 351.301 
and Sec. 351.309.
    Upon further review, we have modified Sec. 351.312(b) to allow for 
submission of relevant factual information and written argument by 
industrial users and consumers also under Sec. 351.301(c)(1), providing 
for rebuttal, clarification, or correction of factual information 
submitted by another party, and under Sec. 351.301(c)(3), providing for 
the submission of publicly available information to value factors under 
Sec. 351.408(c). These provisions, in addition to the ones previously 
listed in Sec. 351.312(b) provide industrial users and consumers the 
opportunity to submit relevant information and argument to the 
Department to assist us in our determinations. In addition, we note 
that nothing in the regulations or the statute precludes industrial 
users and consumers from making written submissions upon request from 
the Department.
    One commenter proposed that the Department formally establish a 
practice of seeking industrial users' comments on the issue of industry 
support for a petition. With respect to this suggestion, section 
732(c)(4)(E) of the Act provides for pre-initiation filing of comments 
on the issue of industry support for a petition only by those who would 
qualify as an ``interested party'' if an investigation were initiated. 
As a result, we have not adopted this proposal. However, the Department 
has the authority to seek comments from any person, including 
industrial users, and will determine whether to do so on a case-by-case 
basis.

Subpart D--Calculation of Export Price, Constructed Export Price, Fair 
Value, and Normal Value

    Subpart D, which corresponds to subpart D of part 353 of the 
Department's prior regulations, deals with what is commonly referred to 
as ``AD methodology.'' Specifically, subpart D sets forth rules 
concerning the calculation of export price (``EP''), constructed export 
price (``CEP'') and normal value (``NV'').

Section 351.401

    Section 351.401 deals with principles common to the calculation of 
export price, constructed export price and normal value.
    Adjustments in general: Section 351.401(b) sets forth certain 
general principles that the Department will apply with respect to the 
adjustments that go into the calculation of export price, constructed 
export price, and normal value. We have revised paragraph (b) by 
inserting ``and'' between paragraphs (b)(1) and (b)(2). In addition, 
for the reasons discussed below, we have revised paragraph (b)(1).
    Proposed paragraph (b)(1) stated that the party claiming an 
adjustment must establish the claim to the satisfaction of the 
Secretary. In connection with this paragraph, two commenters suggested 
that the Department expressly provide that the respondent bears the 
burden of establishing that selling expenses incurred in connection 
with home market sales are direct expenses and that selling expenses 
incurred in connection with U.S. sales are indirect expenses. These 
commenters also argued that the regulations should state that the 
respondent has the burden of establishing its entitlement to any 
downward adjustment to normal value and any upward adjustment to export 
price or constructed export price. They argued that, as drafted, 
proposed paragraph (b)(1) could be construed as placing on domestic 
interested parties the burden of establishing any downward adjustment 
to export price or constructed export price.
    In drafting proposed paragraph (b)(1), our intent was not to break 
new ground, but rather to codify an established principle developed and 
applied over the years by the Department and the courts. According to 
this principle, the party in possession of the relevant information has 
the burden of establishing to the satisfaction of the Secretary the 
amount and nature of a particular adjustment. In the context of 
adjustments to normal value, this rule was reflected in 19 CFR 
Sec. 353.54 (1995) of the former regulations, which served

[[Page 27344]]

as the model for proposed paragraph (b)(1). Section 353.54 stated: 
``Any interested party that claims an adjustment under Secs. 353.55 
through 353.58 must establish the claim to the satisfaction of the 
Secretary.''
    Section 353.54, however, dealt only with adjustments to foreign 
market value (now normal value), whereas in proposed paragraph (b)(1), 
the Department was seeking to articulate a principle that would be 
applicable to the calculation of both normal value and export price (or 
constructed export price). Unfortunately, in the context of adjustments 
to the U.S. side of the AD equation, proposed paragraph (b)(1), as 
drafted, could be interpreted as shifting the burden to domestic 
interested parties, something that was not our intent.
    Accordingly, we have revised paragraph (b)(1) to accurately reflect 
the principle discussed above. In particular, instead of referring to a 
``claim'' for an adjustment in an undifferentiated manner, we have 
referred to the two separate components of an adjustment: The amount 
and the nature of an adjustment. With respect to establishing the 
``nature'' of the adjustment, it is our intent to codify the well-
established principle that the Secretary will treat a selling expense 
related to a U.S. sale as a direct expense unless a respondent 
interested party establishes to the Secretary's satisfaction that the 
expense is an indirect selling expense in nature. Conversely, the 
Secretary will treat a selling expense related to a foreign market sale 
as an indirect expense unless a respondent interested party establishes 
that the expense is direct in nature. As the courts have recognized, 
this assignment of the burden of proof is necessary to provide those in 
possession of the relevant information with an incentive to produce it. 
See, e.g., RHP Bearings v. United States, 875 F. Supp. 854, 859 (Ct. 
Int'l Trade 1995), and cases cited therein.
    A different commenter maintained that proposed paragraph (b)(1) 
appropriately reflected the Department's practice of requiring a 
respondent to provide sufficient support for claimed adjustments 
without, at the same time, imposing rigid presumptions concerning the 
nature of adjustments. This commenter suggested, however, that the 
Department should further clarify paragraph (b)(1) by stating that the 
Department will consider both the nature of the expense and the 
individual circumstances of each respondent's records and accounting 
system when determining whether a respondent has provided sufficient 
support for an adjustment at issue.
    This comment relates to another comment addressed in the section 
entitled ``Other Comments'' at the end of our discussion of subpart D. 
The issue common to both comments is the extent to which a firm's 
internal record keeping procedures should dictate the results of an AD 
analysis. As we state below with respect to the other comment, we have 
sought, and will continue to seek, ways in which the AD process can be 
made less onerous for all parties involved. However, the statute 
imposes certain standards, such as standards relating to adjustments to 
normal value and export price and constructed export price, that the 
Department is not free to revise in order to accommodate a particular 
respondent's accounting practices. Thus, while we certainly would take 
a respondent's records and accounting systems into consideration in 
determining whether that respondent had cooperated to the best of its 
ability, we have not adopted this suggestion to revise paragraph 
(b)(1).
    Price adjustments: Proposed paragraph (c) restated the Department's 
practice with respect to price adjustments, such as discounts and 
rebates. The comments we received demonstrated a certain amount of 
confusion concerning the meaning of paragraph (c), as well as the 
nature of ``price adjustments'' in general. This confusion may be due, 
in part, to a lack of precision in the Department's terminology over 
the years.
    In these final regulations, the Department has taken several steps 
aimed at alleviating that confusion. First, we have added a definition 
of the term ``price adjustment'' in Sec. 351.102. As discussed above, 
contrary to the assumption of many commenters, price adjustments are 
not expenses, either direct or indirect. Instead, price adjustments 
include such things as discounts and rebates that do not constitute 
part of the net price actually paid by a customer.
    Second, we have made a clarification in paragraph (c) itself. 
Paragraph (c) now provides that in calculating export price, 
constructed export price, or a price-based normal value, the Secretary 
will use a price that is net of any price adjustment that is reasonably 
attributable to the subject merchandise or the foreign like product. 
This use of a net price is consistent with the view that discounts, 
rebates and similar price adjustments are not expenses, but instead are 
items taken into account to derive the price paid by the purchaser.
    The third clarification relates to the Department's policy 
regarding the allocation of price adjustments. The Department's policy 
concerning the allocation of both expenses and price adjustments is now 
contained in a single paragraph, paragraph (g), and is discussed in 
more detail below.
    One commenter suggested that, at least for purposes of normal 
value, the regulations should clarify that the only rebates Commerce 
will consider are ones that were contemplated at the time of sale. This 
commenter argued that foreign producers should not be allowed to 
eliminate dumping margins by providing ``rebates'' only after the 
existence of margins becomes apparent.
    The Department has not adopted this suggestion at this time. We do 
not disagree with the proposition that exporters or producers will not 
be allowed to eliminate dumping margins by providing price adjustments 
``after the fact.'' However, as discussed above, the Department's 
treatment of price adjustments in general has been the subject of 
considerable confusion. In resolving this confusion, we intend to 
proceed cautiously and incrementally. The regulatory revisions 
contained in these final rules constitute a first step at clarifying 
our treatment of price adjustments. We will consider adding other 
regulatory refinements at a later date.
    Movement expenses: Paragraph (e) deals with adjustments for 
movement expenses. At the outset, we should note that the Department 
has restructured paragraph (e) so that paragraph (e)(1) now deals with 
the term ``original place of shipment'' and paragraph (e)(2) deals with 
warehousing expenses.
    In discussing proposed paragraph (e)(2) (now paragraph (e)(1)), the 
Department explained that in situations where the Department bases 
export price, constructed export price, or normal value on sales made 
by an unaffiliated reseller, the Department intended to measure the 
movement adjustment from the place of shipment by a reseller, as 
opposed to the production facility. See AD Proposed Regulations, 61 FR 
at 7330. One commenter observed that this was only a partial 
explanation, because it did not reflect the principle objective of the 
statute, which is, according to the commenter, to measure the deduction 
of movement expenses from both U.S. and foreign market prices from the 
point of production. Accordingly, the commenter proposed that the 
Department restate the general rule, as well as the application of the 
rule in a reseller situation.
    The Department recognizes that the term ``seller'' in the proposed 
paragraph (e)(2) was subject to misinterpretation. Therefore, the 
Department has modified

[[Page 27345]]

this paragraph (which, again, is now paragraph (e)(1)) to clarify that, 
where the Department bases export price, constructed export price, or 
normal value on sales by the producer of the subject merchandise or 
foreign like product, the Department will deduct all movement expenses 
(including all warehousing) that the producer incurred after the goods 
left the production facility. However, in situations where the 
Department uses sales by an unaffiliated reseller (i.e., a person that 
purchased, rather than produced, the subject merchandise or foreign 
like product and that is not affiliated with the producer), the 
Secretary may limit the deduction to movement and related expenses that 
the reseller incurred after the goods left the place of shipment of the 
reseller.
    The purpose of distinguishing between sales by a producer and sales 
by an unaffiliated reseller is to avoid deducting expenses that form 
part of the reseller's cost of acquisition. In this regard, however, 
one commenter noted that there may be different delivery patterns for 
home market sales and sales to the United States. In response to this 
comment, the Department has made paragraph (e)(1) permissive, in order 
to maintain the flexibility needed to address certain delivery patterns 
by resellers that differ by market.
    Another commenter suggested that paragraph (e) should require 
expressly that the Department limit adjustments to normal value to 
movement expenses that are shown to be reasonably attributable to sales 
of the foreign like product. In addition, the same commenter argued 
that the Department should not limit adjustments to EP or CEP in any 
way unless a respondent demonstrates that certain expenses are not 
reasonably attributable to sales of subject merchandise.
    In our view, the issues raised by this commenter involve the 
allocation of expenses, a topic that the Department has dealt with 
under paragraph (g), discussed below. Therefore, the Department has not 
adopted this suggestion to revise paragraph (e).
    Another commenter proposed that the Department modify paragraph 
(e)(1) (now paragraph (e)(2)) to eliminate the reference to warehousing 
expenses, because whether a particular direct warehouse cost is a 
movement expense or a selling expense is a fact-specific inquiry. This 
commenter argued that the proposed rule misleadingly suggested that all 
warehousing expenses are movement expenses, a concept that is at odds 
with past Department practice, unwarranted by case law, and unwarranted 
given commercial practices. According to the commenter, the proposed 
rule constituted a change in law and practice that was not intended in 
the URAA. As with all expenses and adjustments, the Department can seek 
information regarding the nature of any warehousing expenses in its 
questionnaire, instruct respondents accordingly, and make an 
appropriate determination, based on the record in each case, as to 
whether a particular expense qualifies as a movement expense or a 
selling expense.
    The Department has not adopted this suggestion. The URAA specified, 
for the first time, that the Department is to deduct movement and 
related expenses from export price, constructed export price, and 
normal value, and that this deduction should account for all such 
expenses incurred after the merchandise left the place of production. 
In this regard, the SAA at 823 specifies that in calculating EP and 
CEP, the Department is to deduct ``transportation and other expenses, 
including warehousing expenses, incurred in bringing the subject 
merchandise from the original place of shipment in the exporting 
country to the place of delivery in the United States.'' (Emphasis 
added). The SAA includes similar language with respect to the 
corresponding adjustment to normal value. SAA at 827. In addition, the 
requirement to deduct warehousing expenses as movement expenses is made 
even more plain by the language of the Senate Report, which states that 
the Department must ``when included in the price used to establish 
normal value, deduct * * * transportation, warehousing, and other 
expenses incurred in bringing the merchandise from the original place 
of shipment in the exporting country to the place of delivery in the 
exporting country or a third country.'' S. Rep. No. 412, 103d Cong., 2d 
Sess. 70 (1994).
    In light of these clear legislative instructions, the Department 
has continued to provide in paragraph (e)(2) for the treatment of 
warehousing expenses as movement expenses. However, the Department has 
modified this paragraph to clarify that the Department will not deduct 
factory warehousing as a movement expense.
    Collapsing of producers: Proposed paragraph (f) described the 
circumstances under which the Department will treat two or more 
affiliated producers as a single entity (i.e., ``collapse'' the 
producers). Proposed paragraph (f) provided for the collapsing of 
affiliated producers if (1) the 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 (2) there is a significant potential for the 
manipulation of price or production. In addition, paragraph (f) 
contained a non-exhaustive list of the factors to be considered in 
identifying a significant potential for the manipulation of price or 
production.
    With respect to paragraph (f), several commenters suggested that 
the Department should provide that it will collapse affiliated 
producers only in extraordinary circumstances, an approach which, the 
commenters alleged, is the Department's current practice. These 
commenters also proposed that the regulations contain illustrations of 
the extraordinary circumstances in which the Department will collapse 
affiliated producers.
    Other commenters urged that, in connection with the potential for 
manipulation, the Department delete the word ``significant.'' According 
to these commenters, this constitutes an unduly high threshold for 
collapsing, in conflict with what these commenters alleged to be the 
Department's existing practice.
    Finally, one commenter suggested that the Department clarify that 
(1) not all of the criteria of paragraph (f) need to be present in 
order to collapse affiliated producers, and (2) the Department will 
look to the potential for future price manipulation.
    The differing descriptions of the Department's practice offered by 
the commenters indicates that there has been a degree of confusion 
concerning the Department's practice of collapsing affiliated 
producers. We have promulgated paragraph (f) in order to clarify this 
practice. In particular, the Department has codified the ``significant 
potential'' criterion. The Department has not adopted the suggestion 
that it will collapse only in ``extraordinary'' circumstances. A 
determination of whether to collapse should be based upon an evaluation 
of the factors listed in paragraph (f), and not upon whether fact 
patterns calling for collapsing are commonly or rarely encountered.
    On the other hand, we have retained the word ``significant'' with 
respect to the potential for manipulation. The suggestion that the 
Department collapse upon finding any potential for price manipulation 
would lead to collapsing in almost all circumstances in which the 
Department finds producers to be affiliated. This is neither the 
Department's current nor intended practice. As indicated in paragraph 
(f), collapsing requires a finding of more than mere affiliation.
    We also have declined to include in the regulations examples of 
situations in which the Department will collapse

[[Page 27346]]

affiliated producers. In our view, these determinations are very much 
fact-specific in nature, requiring a case-by-case analysis, as 
reflected in the Department's determinations in actual cases, which are 
published in the Federal Register.
    With respect to the suggestion that not all of the factors 
identified in paragraph (f) need be present in order to collapse 
affiliated producers, to the extent that this suggestion is directed at 
the factors relating to a significant potential for manipulation, we 
agree. However, we believe that this principle already is clearly 
reflected in proposed paragraph (f), and that an additional change is 
not necessary.
    On the other hand, the factors concerning a significant potential 
for manipulation relate to only one of the two elements that must be 
present in order to collapse affiliated producers. In addition to 
finding a significant potential for manipulation, the Secretary also 
must find the requisite type of production facilities. To clarify this 
point, we have revised paragraph (f) so that paragraph (f)(1) refers to 
the two basic elements, while paragraph (f)(2) contains the non-
exhaustive list of factors that the Secretary will consider in 
determining whether there is a significant potential for manipulation.
    With respect to the suggestion that the regulations clarify that 
the Department will consider future manipulation as well as actual 
manipulation in the past, we agree that the Department must consider 
future manipulation. However, we believe the proposed regulation was 
sufficiently clear on this point. In this regard, we selected the 
standard of ``significant potential'' to deal with precisely this 
point. In the past, the Department at times had used a standard of 
``possible manipulation.'' As recognized recently by the Court of 
International Trade, this latter standard may require evidence of 
actual manipulation, whereas a standard based on the potential for 
manipulation focuses on what may transpire in the future. FAG 
Kugelfischer Georg Schafer KGaA v. United States, slip op. 96-108 at 23 
(July 10, 1996).
    In addition to the changes described above, the Department also has 
changed what is now paragraph (f)(2)(ii) to clarify that the Department 
will examine not only whether affiliated producers share management or 
board members, but also whether they share board members or management 
with, for example, a common parent.
    Allocation of expenses and price adjustments: Proposed paragraph 
(g) dealt with the treatment of expenses that are reported on an 
allocated basis. In response to the substantial number of comments we 
received concerning the subject of allocation, we have revised 
paragraph (g) to provide greater clarity with respect to the allocation 
of expenses. In addition, we have expanded the coverage of paragraph 
(g) to include the allocation of price adjustments, and we have revised 
the heading of paragraph (g) accordingly. Also, we have renumbered 
proposed paragraph (g) as paragraph (g)(1).
    By way of background, neither the pre-URAA statute nor the 
Department's prior regulations addressed allocation methods, although 
issues relating to allocation methods arose in almost every AD 
investigation and review. Instead, the Department and the courts 
resolved these issues on a case-by-case basis. The resulting absence of 
guidelines has been responsible for a considerable amount of litigation 
that increased the costs of AD proceedings for all parties involved, 
including the Department. Therefore, the Department believes that its 
administration of the AD law would be enhanced by the adoption of some 
general guidelines on allocation methods that provide a greater measure 
of certainty and predictability.
    The statute, as amended by the URAA, continues to be silent on the 
question of allocation methods. However, the SAA at 823-24 states that 
``[t]he Administration does not intend to change Commerce's current 
practice, sustained by the courts, of allowing companies to allocate 
these expenses when transaction-specific reporting is not feasible, 
provided that the allocation method used does not cause inaccuracies or 
distortions.'' Although this statement was made in the context of 
deductions from constructed export price for direct selling expenses, 
we believe that the principle embodied in the statement applies equally 
to price adjustments and other types of selling expenses, as well.
    The commenters disagreed with respect to the Department's treatment 
of allocated expenses and price adjustments and the interpretation to 
be accorded the language in the SAA. Several commenters argued that all 
allocations result in the attribution of expenses and price adjustments 
to some sales that did not incur them, and remove them from some sales 
that did. These commenters essentially argued that, as compared to 
transaction-specific reporting, all allocation methods are defective. 
Therefore, they asserted, the Department should consider all allocation 
methods to be inaccurate or distortive within the meaning of the SAA.
    With respect to these comments, the Department agrees that 
allocated expenses or price adjustments may not be as exact as expenses 
or price adjustments reported on a transaction-specific basis. However, 
in our view, the drafters of the URAA and the SAA could not have 
intended that all allocations are inherently distortive or inaccurate 
for purposes of the AD law. Under such an interpretation (1) Congress 
and the Administration permitted something less than transaction-
specific reporting, but (2) because allocation methods are per se 
inaccurate and distortive, only transaction-specific reporting is 
acceptable.
    In our view, the drafters of the URAA and the SAA were not dealing 
with abstract concepts, but instead were dealing with issues concerning 
the application of a law to real life factual scenarios. As the Federal 
Circuit stated many years ago in connection with this very issue: ``In 
a purely metaphysical sense, Smith-Corona is correct in that the ad 
expense cannot be directly correlated with specific sales. Yet, the 
statute does not deal in imponderables.'' Smith-Corona Group v. United 
States, 713 F.2d 1568, 1581 (1983). Therefore, when the drafters 
referred to allocation methods as causing ``inaccuracies or 
distortions,'' they must have been referring to allocation methods that 
result in inaccuracies or distortions that are unreasonable in light of 
the objectives of the AD law.
    General rule: With the preceding discussion in mind, we now turn to 
a discussion of the specific provisions of paragraph (g). Paragraph 
(g)(1) contains the basic principle that the Department will follow in 
dealing with allocated expenses and price adjustments, and continues to 
establish a preference for transaction-specific reporting. There are 
two principal changes from proposed paragraph (g).
    First, we have revised paragraph (g)(1) to provide that the 
Secretary will consider allocated expenses and price adjustments if the 
Secretary is satisfied that the allocation method used ``does not cause 
inaccuracies or distortions.'' As discussed above, because all 
allocation methods are, in some sense, inexact, the Department intends 
to reject only those allocations methods that produce unreasonable 
inaccuracies or distortions.
    Second, we have revised paragraph (g)(1) to cover the allocation of 
price adjustments. As discussed in connection with Sec. 351.102(b) and 
the new definition of the term ``price adjustments,'' price adjustments 
are distinguishable from expenses.

[[Page 27347]]

    In this regard, we received several comments that addressed the 
relevance of Torrington v. United States, 82 F.3d 1039 (Fed. Cir. 
1996), to the allocation of price adjustments. In that case, although 
the Court appeared to question whether price adjustments constituted 
expenses at all, id., at 1050, note 15, it held that assuming that the 
price adjustments in question were expenses, they had to be treated as 
direct selling expenses rather than indirect selling expenses. 
According to the Court, ``[t]he allocation of expenses . . . does not 
alter the relationship between the expenses and the sales under 
consideration.'' Id., at 1051.
    In our view, Torrington is of limited relevance to the instant 
issue, because the Court did not address the propriety of the 
allocation methods used in reporting the price adjustments in question. 
Instead, it simply stated that regardless of the allocation methods 
used, the Department could not treat the price adjustments as indirect 
selling expenses. Moreover, these regulations are consistent with the 
holding of the case, because, by distinguishing price adjustments from 
expenses, we have ensured that the Department will not treat price 
adjustments as any selling expenses, including indirect selling 
expenses.
    Reporting allocated expenses and price adjustments: Paragraph 
(g)(2) deals with the information that a party must provide when 
reporting an expense or a price adjustment on an allocated basis. One 
commenter expressed concern that proposed paragraph (g) placed too much 
emphasis on the Department's responsibility to verify an allocation 
method, and insufficient emphasis on a respondent's obligation to 
demonstrate its entitlement to an adjustment based on a particular 
allocation method. We agree with the commenter, and have added 
paragraph (g)(2) in order to address the commenter's concern.
    First, the party must demonstrate to the Secretary's satisfaction 
that it is not feasible to report the expense or price adjustment on a 
more specific basis. Such a demonstration should include an explanation 
of accounting systems, the manner in which the expenses or price 
adjustments are incurred or granted, and an explanation of the 
accounting practices in the industry in question.
    In addition, paragraph (g)(2) also requires a party to explain why 
the allocation method used does not cause inaccuracies or distortions. 
With respect to this latter requirement, it is not our intent to 
require a party to ``prove a negative'' or demonstrate what the amount 
of the expense or price adjustment would have been if transaction-
specific reporting had been used. However, the party must provide a 
sufficiently detailed explanation of the allocation method used so that 
the Department can make an initial judgment at the time when 
information is submitted as to the reasonableness of the method and, if 
necessary, issue a supplemental questionnaire. Of course, allocation 
methods, like any other type of factual information, are subject to 
verification.
    In this regard, we have not identified in paragraph (g) itself 
specific types of allocation methods that the Department would consider 
as acceptable. Before doing so, we first would like to gain more 
experience in applying paragraph (g) in actual cases. However, there 
are certain types of allocation methods that we believe would be 
acceptable.
    One such allocation method applies to cases where the Department 
uses averages, such as when using the average-to-average price 
comparison method under section 777A(d)(1)(A)(i) of the Act and 
Sec. 351.414(d). In such instances, we would consider as acceptable an 
allocation method that allocates total expenses incurred, or total 
price adjustments made, in connection with sales included within an 
averaging group over those sales.
    For example, assume that an averaging group consists of sales of 
products X, Y, and Z. The respondent in question is able to identify 
the warranty expenses incurred in connection with sales of X, Y, and Z 
in the aggregate, but cannot identify the warranty expenses incurred on 
a product-specific basis. In this situation, it would be acceptable for 
the respondent to allocate the total warranty expenses over total sales 
of products X, Y, and Z. Because the sales of products X, Y, and Z will 
be averaged together, transaction-specific reporting, if it were 
feasible, would achieve the same result as the allocation method just 
described.
    In addition, while not addressed in paragraph (g), the Department 
normally will accept an allocation method that calculates expenses or 
price adjustments on the same basis as the expenses were incurred or 
the price adjustments granted. Thus, for example, where a producer 
offers a rebate conditioned on the purchase of a certain amount of 
merchandise, it would not be inaccurate or distortive to spread the 
value of the rebate over the purchases needed to earn the rebate. 
Similarly, if a producer granted a $100 rebate for a particular month, 
it would not be inaccurate or distortive to apportion that $100 over 
all sales made during that month. Such a method merely apportions the 
price adjustment over the sales on which it was actually earned.
    Feasibility: Paragraph (g)(3) deals with the factors the Secretary 
will take into account in determining (1) whether transaction-specific 
reporting is not feasible under paragraph (g)(1); or (2) whether an 
allocation is calculated on as specific a basis as is feasible under 
paragraph (g)(2). Paragraph (g)(3) provides that among the factors the 
Secretary will take into account are: (i) the records maintained by the 
firm in the ordinary course of its business; (ii) normal accounting 
practices in the country and industry in question; and (iii) the number 
of sales made by the firm during the period of investigation or review.
    In this regard, one commenter suggested that the Department should 
clarify that it will accept allocated expenses or price adjustments 
where transaction-specific reporting is neither appropriate nor 
``reasonably feasible.'' In response, another commenter objected to any 
departure from the language of the SAA, which refers to ``feasible'' 
rather than ``reasonably feasible.''
    With respect to these comments, the Department agrees with the 
second commenter that the standard in the SAA is ``feasible,'' not 
``reasonably feasible.'' On the other hand, the feasibility of 
reporting transaction-specific information is not something that the 
Department can analyze in the abstract, but instead is something that 
the Department must consider on a case-by-case basis. For example, what 
may be feasible for firms in one industry may not be feasible for firms 
in another. In our view, paragraph (g)(3) appropriately reflects these 
types of considerations.
    Some commenters suggested that in assessing the feasibility of 
transaction-specific reporting, the Department should look solely to 
the records of the party in question to determine what level of 
detailed reporting is feasible. The Department has not adopted this 
suggestion, because it might provide an incentive for firms that are 
(or are likely to be) subject to an AD proceeding to maintain their 
records in a less specific manner than they otherwise would. Although 
the Department will accept allocated expenses or price adjustments in 
certain circumstances, the regulations still retain a preference for 
transaction-specific information.
    Allocation methods involving ``out-of-scope'' merchandise: 
Paragraph (g)(4) deals with the issue of allocation methods that 
involve ``out-of-scope'' merchandise. Specifically, paragraph (g)(4) 
deals with situations in which an allocation includes expenses or price

[[Page 27348]]

adjustments that were incurred or made in connection with sales of 
merchandise that is not ``subject merchandise'' or a ``foreign like 
product.'' In some cases, the inclusion of ``out-of-scope'' merchandise 
per se has been considered as rendering an allocation method as 
distortive and, thus, automatically unacceptable.
    In our view, such a position is too extreme. An allocation method 
that includes ``out-of-scope'' merchandise is distortive only where the 
expenses or price adjustments likely are incurred or granted 
disproportionately on the out-of-scope or the in-scope merchandise. 
However, based on our experience, there is no basis for irrebuttably 
presuming such disproportionality without regard to the facts of a 
specific case.
    Therefore, paragraph (g)(4) provides that the Secretary will not 
reject an allocation method solely because the method includes ``out-
of-scope'' merchandise. Instead, the Secretary will apply the standards 
of paragraph (g) to ensure that the allocation method used is not 
inaccurate or distortive. However, in the case of these types of 
allocation methods, it will be particularly important that a party 
claiming an adjustment provide the explanation required under paragraph 
(g)(2) as to why the allocation method used is not inaccurate or 
distortive. In addition, the Secretary will pay special attention to 
the extent to which the out-of-scope merchandise included in the 
allocation pool is different from the in-scope merchandise in terms of 
value, physical characteristics, and the manner in which it is sold. 
Such information will be important in determining whether it is more or 
less likely that expenses were incurred, or price adjustments were 
made, in proportionate amounts with respect to sales of out-of-scope 
and in-scope merchandise.
    Additional comments: In connection with the topic of allocation 
methods, many commenters made suggestions as to the manner in which the 
Department should classify expenses and price adjustments as direct or 
indirect. The Department has not adopted these suggestions for the 
following reasons. First, insofar as expenses are concerned, the method 
of allocating an expense does not dictate the nature of the expense. 
Torrington, supra, at 1051. Second, with respect to price adjustments, 
as discussed above, price adjustments are neither direct nor indirect 
expenses, but rather are additions or deductions necessary to arrive at 
the actual price paid by the customer.
    Several commenters stated that the Department must be careful in 
evaluating (1) a respondent's procedures for granting price 
adjustments, and (2) the extent to which allocations used by a 
respondent in its normal business records are non-distortive. According 
to these commenters, if the Department sets standards that, in 
practice, result in the rejection of most or all allocated price 
adjustments and expenses, the result will be distorted comparisons.
    The Department agrees with the notion that it should attempt to use 
allocations that are based on the most precise information available in 
light of a respondent's books and records. Such an approach helps to 
avoid comparisons that do not reflect the actual prices paid by 
customers or the actual expenses incurred by respondents. On the other 
hand, the Department cannot allow a respondent's accounting procedures 
to dictate the Department's methodology in a particular case. The 
Department always must balance the reporting burdens of respondents 
against the objective of obtaining accurate results. If a particular 
allocation method is unreasonably inaccurate or distortive, the 
Department cannot rely on that method simply because it is the only 
method that the respondent's records will allow.
    Another commenter stated that the professed ``need'' to allocate 
price adjustments often flows from artificially narrow agency 
determinations regarding the scope of a proceeding. In addition, this 
commenter contended that the Department should expect foreign companies 
found guilty of injuring an American industry to adjust their 
accounting and bookkeeping practices to conform to the requirements of 
the AD law.
    With respect to this comment, we are not persuaded that there is 
any relationship between the need to allocate adjustments and the 
Department's alleged narrowing of the scope of a proceeding. Moreover, 
the commenter appeared to be arguing more against the wisdom of 
narrowing subject merchandise than the propriety of accepting 
allocations. In our view, questions concerning the narrowness or 
breadth of the scope of a particular proceeding are more appropriately 
addressed on a case-by-case basis in actual AD proceedings. Finally, 
with respect to the comment regarding changes in respondents' record 
keeping practices, if the Department denies an adjustment because a 
firm's record keeping practices do not permit it to use an acceptable 
allocation method, we would expect that the firm would revise those 
practices if it hopes to have the Department grant the adjustment in 
some future segment of the particular proceeding.
    Date of sale: Paragraph (i) deals with the identification of the 
date of sale for sales of the subject merchandise and foreign like 
product. Paragraph (i) continues to provide that the Secretary normally 
will consider the date of invoice, as recorded in a firm's records kept 
in the ordinary course of business, to be the date of sale.
    Use of uniform date of sale: Several commenters supported the 
notion of using a uniform date for purposes of identifying the date of 
sale, and specifically endorsed the use of invoice date. According to 
these commenters, the use of a uniform date of sale would promote 
predictability.
    Other commenters, however, opposed the use of a uniform date. 
According to these commenters, the use of a uniform date of sale is 
inconsistent with Article 2.4.1, note 8 of the AD Agreement. They also 
suggested that a reasonable reading of the statute does not support 
using the date of invoice, because that is not necessarily the date on 
which price and quantity are established, and, thus is not the date on 
which the domestic industry lost the ability to make a sale to a U.S. 
customer. In addition, some of these commenters argued that in 
situations where exchange rates fluctuate between the date on which the 
terms of sale are established and the date of invoice, the results of 
the Department's calculations will become less, rather than more, 
predictable.
    In these final regulations, we have retained the preference for 
using a single date of sale for each respondent, rather than a 
different date of sale for each sale. Contrary to suggestions made by 
some of the commenters, this has been the Department's practice in the 
past.
    Moreover, there are several valid reasons for this practice. First, 
by simplifying the reporting and verification of information, the use 
of a uniform date of sale makes more efficient use of the Department's 
resources and enhances the predictability of outcomes.
    Second, as a matter of commercial reality, the date on which the 
terms of a sale are first agreed is not necessarily the date on which 
those terms are finally established. In the Department's experience, 
price and quantity are often subject to continued negotiation between 
the buyer and the seller until a sale is invoiced. The existence of an 
enforceable sales agreement between the buyer and the seller does not 
alter the fact that, as a practical matter, customers frequently change 
their

[[Page 27349]]

minds and sellers are responsive to those changes. The Department also 
has found that in many industries, even though a buyer and seller may 
initially agree on the terms of a sale, those terms remain negotiable 
and are not finally established until the sale is invoiced. Thus, the 
date on which the buyer and seller appear to agree on the terms of a 
sale is not necessarily the date on which the terms of sale actually 
are established. The Department also has found that in most industries, 
the negotiation of a sale can be a complex process in which the details 
often are not committed to writing. In such situations, the Department 
lacks a firm basis for determining when the material terms were 
established. In fact, it is not uncommon for the buyer and seller 
themselves to disagree about the exact date on which the terms became 
final. However, for them, this theoretical date usually has little, if 
any, relevance. From their perspective, the relevant issue is that the 
terms be fixed when the seller demands payment (i.e., when the sale is 
invoiced).
    Finally, with respect to the arguments that the date on which 
material terms are established is the date on which the domestic 
industry is injured and the date on which respondents rely for exchange 
rate purposes, in our view, these arguments beg the question of ``when 
are material terms established?'' In paragraph (i), we merely have 
provided that, absent satisfactory evidence that the terms of sale were 
finally established on a different date, the Department will presume 
that the date of sale is the date of invoice.
    Therefore, for the foregoing reasons, we have continued to provide 
for the use of a uniform date of sale, which normally will be the date 
of invoice. However, we have revised paragraph (i) in response to 
suggestions that the Department clarify its authority to use a date 
other than date of invoice in appropriate cases. In some cases, it may 
be inappropriate to rely on the date of invoice as the date of sale, 
because the evidence may indicate that, for a particular respondent, 
the material terms of sale usually are established on some date other 
than the date of invoice. In proposed paragraph (i), we had intended 
this type of flexible approach through our use of the word 
``normally.'' In light of the comments, however, we have revised 
paragraph (i) to provide that ``the Secretary may use a date other than 
the date of invoice if the Secretary is satisfied that a different date 
better reflects the date on which the exporter or producer establishes 
the material terms of sale.''
    Although the date of invoice will be the presumptive date of sale 
under paragraph (i), the Department intends to continue to require that 
a respondent provide a full description of its selling processes. Among 
other things, this information will permit domestic interested parties 
to submit comments concerning the selection of the date of sale in 
individual cases. Of course, a respondent also will be free to argue 
that the Department should use some date other than the date of 
invoice, but the respondent must submit information that supports the 
use of a different date. Finally, a respondent's description of its 
selling processes, like any other item of information, will be subject 
to verification.
    If the Department is presented with satisfactory evidence that the 
material terms of sale are finally established on a date other than the 
date of invoice, the Department will use that alternative date as the 
date of sale. For example, in situations involving large custom-made 
merchandise in which the parties engage in formal negotiation and 
contracting procedures, the Department usually will use a date other 
than the date of invoice. However, the Department emphasizes that in 
these situations, the terms of sale must be firmly established and not 
merely proposed. A preliminary agreement on terms, even if reduced to 
writing, in an industry where renegotiation is common does not provide 
any reliable indication that the terms are truly ``established'' in the 
minds of the buyer and seller. This holds even if, for a particular 
sale, the terms were not renegotiated.
    Date of invoice versus date of shipment: Several commenters argued 
that if the Department uses a uniform date of sale, it should use date 
of shipment rather than date of invoice. These commenters claimed that 
because respondents can control the timing of invoice issuance, they 
will be able to manipulate the Department's dumping calculations by 
manipulating the date of sale. According to these commenters, date of 
shipment is ``manipulation-proof,'' because the date on which 
merchandise is shipped is largely determined by the needs of the 
customer.
    For several reasons, the Department has not adopted this 
suggestion. First, date of shipment is not among the possible dates of 
sale specified in note 8 of the AD Agreement. Second, based on the 
Department's experience, date of shipment rarely represents the date on 
which the material terms of sale are established. Third, unlike 
invoices, which can usually be tied to a company's books and records, 
firms rarely use shipment documents as the basis for preparation of 
financial reports. Thus, reliance on date of shipment would make 
verification more difficult.
    Finally, with respect to the commenters' concerns regarding 
possible manipulation, we do not believe that these concerns warrant 
substituting date of shipment for date of invoice as the presumptive 
date of sale. As explained above, the Department will continue to 
require respondents to provide a full description of their sales 
processes. Moreover, these descriptions will be subject to 
verification, and we are confident that we will be able to uncover, 
through verification, attempts at manipulation. For example, the 
Department can verify the average length of time between invoice date 
and shipment date, and can scrutinize deviations from the norm. In 
addition, most firms have a standard invoicing practice (e.g., three 
days after shipment, every two weeks). Where a firm does not have such 
a practice, or where it changes that practice, the Department will be 
particularly attentive to the possibility of manipulation of dates of 
sale.
    Early resolution of date of sale issues: One commenter suggested 
that because issues surrounding date of sale must be resolved in the 
early stages of an investigation or review, the regulations should 
provide a mechanism under which the Department consults with the 
parties and decides these issues prior to the issuance of a request for 
information. This commenter was concerned that unilateral judgments by 
a respondent as to the appropriate date of sale can result in the 
unfair and prejudicial use of ``facts available'' should the Department 
ultimately disagree with that judgment.
    The Department has not adopted this suggestion. While we recognize 
that it is preferable to settle issues regarding the date of sale early 
in an investigation or review, we believe that the mechanisms in place 
are adequate. First, the response to the section of the Department's 
questionnaire that addresses general selling practices, including 
selling processes, is due to the Department earlier than those sections 
that require information pertaining to specific sales, thereby allowing 
parties an early opportunity to comment on date of sale. Second, 
paragraph (i) will put parties on notice that, in the absence of 
information to the contrary, the Department will use date of invoice as 
the date of sale.
    Finally, there is a limit on the Department's ability to guarantee 
that date of sale issues are always resolved

[[Page 27350]]

definitively at the outset of an investigation or review. Among other 
things, domestic interested parties must have an opportunity to comment 
on information describing a respondent's selling processes. In 
addition, the Department also must verify this information. In some 
cases, the Department may be persuaded by the arguments of domestic 
interested parties or the results of verification that its initial 
identification of the date of sale was in error.
    Indirect export price: One commenter proposed that the Department 
make clear that its method for identifying the date of sale will not 
change the determination of when a sale constitutes an ``indirect 
export price'' sale. Although the Department has not revised the final 
regulations in light of this comment, we agree that the method for 
identifying the date of sale does not affect the method for determining 
whether a particular sale constitutes an ``indirect export price'' 
sale.
    Long-term contracts: Several commenters raised issues concerning 
long-term contracts. One commenter suggested that the Department codify 
in the regulations its statement in the AD Proposed Regulations, 61 FR 
at 7330-7331, that the Department will continue to determine the date 
of sale for long-term contracts on a case-by-case basis, without 
presuming that date of invoice is the date of sale. Another commenter 
suggested that the Department should presume that the date of invoice 
is the date of sale in the case of long-term contracts.
    The Department has not adopted either of these suggestions. Because 
of the unusual nature of long-term contracts, whereby merchandise may 
not enter the United States until long after the date of contract, the 
Department will continue to review these situations carefully on a 
case-by-case basis. In our view, paragraph (i) is sufficiently flexible 
so as to eliminate the need for a separate provision addressing long-
term contracts. We should note, however, that date of invoice normally 
would not be an appropriate date of sale for such contracts. The date 
on which the material terms of sale are finally set would be the 
appropriate date of sale for such contracts.
    Effect on reviews: One commenter argued that in implementing 
paragraph (i), the Department should ensure that, in conducting 
administrative reviews, it does not omit sales in those proceedings 
where some date other than invoice date was used as the date of sale in 
prior segments of the proceeding. Another commenter suggested that the 
Department should permit parties to continue to use the date of sale 
method established in prior segments.
    Although we have not revised the regulations in light of these 
comments, the Department will be particularly attentive to the 
possibility that sales may be missed in administrative reviews in which 
the date of sale changes due to the implementation of paragraph (i). 
The Department will address these types of issues on a case-by-case 
basis to ensure that all sales are reviewed.
    Currency conversions: One commenter proposed that the Department 
retain its prior practice, without adopting the date of invoice 
presumption, for purposes of establishing the date on which currency 
will be converted. Essentially, this commenter suggested that the 
Department establish two dates of sale, one for purposes of determining 
which sales to report, and a different one for exchange rate purposes.
    We have not adopted this suggestion. There is no indication in the 
statute, the SAA, or the AD Agreement that the Department should use 
different dates of sale for different purposes. For all purposes, the 
date of sale is the date on which the material terms of sale are 
established. In promulgating paragraph (i), the Department merely has 
adopted a rebuttable presumption that this date is the date of invoice. 
The Department cannot adopt a system under which two different dates 
are identified as being the date on which the material terms of sale 
were established.

Other Comments Concerning Sec. 351.401

    Fair comparison: Two commenters contended that the AD Agreement and 
the URAA require that a dumping margin be based on a ``fair 
comparison.'' They believed that this requirement for a fair comparison 
should be carried forward into the regulations, which should state 
clearly that the Department will apply this principle to all aspects of 
its AD methodology, including decisions regarding the prices to be 
compared and the type and amount of adjustments to make to those 
prices. Another commenter suggested that the regulations, or at least 
the preamble, refer to a ``fair comparison'' as a fundamental 
requirement.
    In response, another commenter, while agreeing that the purpose of 
the AD law is to reach a ``fair comparison'' between the sales being 
compared, argued that there is no reason to insert into the agency's 
regulations a requirement that, in the commenter's view, was vague. 
According to the commenter, in the statute Congress identified in 
detail the method for accomplishing a ``fair comparison.''
    In our view, the regulations do not require any further 
clarification on this particular issue. Congress dealt explicitly with 
this question in the statute itself. Specifically, section 773(a) of 
the Act provides: ``In determining under this title whether subject 
merchandise is being, or is likely to be, sold at less than fair value, 
a fair comparison shall be made between the export price or constructed 
export price and normal value. In order to achieve a fair comparison 
with the export price or constructed export price, normal value shall 
be determined as follows: [i.e., in accordance with the provisions 
discussing the calculation of normal value].'' The House Report on the 
URAA provided further clarification by stating: ``The requirement of 
Article 2.4 of the Agreement that a fair comparison be made between the 
export price or constructed export price, and normal value is stated in 
and implemented by new section 773.'' H.R. Rep. No. 826, Pt. 1, 103d 
Cong., 2d Sess. 82 (1994) (emphasis added). Given the clarity of the 
statute and the legislative history on this point, we do not believe 
that additional elaboration in the regulations is necessary.
    Indirect export price: One commenter suggested that the Department 
codify in the regulations its four-factor test for determining whether 
sales made through an affiliate located in the United States are 
classifiable as ``export price'' (formerly ``purchase price'') 
transactions. According to the commenter, this test for identifying so-
called ``indirect export price sales'' is firmly rooted in Department 
practice, has been repeatedly approved by the courts, and was endorsed 
by Congress in the URAA. The commenter argued that because this test 
involves a fundamental issue in AD proceedings, the public would 
benefit from the codification of the test in the regulations.
    A second commenter, however, objected to codification of the test. 
According to this commenter, because the four factors of the indirect 
export price test continue to be subject to interpretation, the 
Department should not restrict its discretion at this time by issuing a 
regulation. This commenter also disagreed specifically with the first 
commenter's articulation of some of the factors. Finally, referring to 
the factor dealing with inventory, this commenter suggested that if the 
Department should include the test in the regulations, the Department 
should clarify that the merchandise need only be included in inventory, 
not physical inventory.

[[Page 27351]]

    We have not adopted the suggestion of the first commenter that we 
codify the ``indirect export price'' test in the regulations. While we 
do not disagree with the commenter's characterization of the test's 
pedigree, we have not attempted in these regulations to codify all 
aspects of the Department's AD methodology that are well-established. 
We generally have refrained from codifying principles that are clearly 
set forth in the statute and/or the legislative history. In our view, 
the ``indirect export price'' test is one of these principles. As for 
the suggestions of the second commenter, these suggestions are moot in 
light of our decision to refrain from codifying the ``indirect export 
price'' test.

Section 351.402

    Section 351.402 deals with the calculation of export price and 
constructed export price under section 772 of the Act.
    Adjustments to constructed export price: Proposed paragraph (b) 
addressed the expenses that the Department will deduct from the 
starting price in calculating constructed export price (``CEP'') under 
section 772(d) of the Act. In addition to a stylistic change, we have 
made one substantive revision to paragraph (b), as discussed below.
    In proposed paragraph (b), the Department stated that it would 
adjust for ``expenses associated with commercial activities in the 
United States, no matter where incurred.'' Noting that this language 
only required a deduction for expenses associated with United States 
selling activities, several commenters argued that the Department 
should adjust for all expenses incurred on CEP sales, including 
expenses incurred in the foreign market. These commenters contended 
that proposed paragraph (b) was inconsistent with: (1) The plain 
language of section 772(d); (2) judicial precedent interpreting the 
pre-URAA version of the statute, which contained language identical to 
that of section 772(d); and (3) established Department practice.
    A second set of commenters argued in response that, in calculating 
constructed export price, the Department may deduct from the starting 
price only those expenses associated with activities occurring in the 
United States. According to these commenters, expenses incurred in the 
exporting country that are directly attributable to United States sales 
(i.e., that are not indirect expenses) are subject to adjustment under 
the circumstances of sale provision of section 773(a)(6)(C)(iii) of the 
Act.
    In these final regulations, we have clarified that the Secretary 
will deduct only expenses associated with a sale to an unaffiliated 
customer in the United States. With respect to the suggestion of the 
first group of commenters that we deduct all expenses incurred in 
connection with the CEP sale, we do not believe such an approach is 
consistent with the statute. Although section 772(d)(1) is ambiguous on 
this particular point, section 772(f), which deals with the deduction 
of profit from CEP, refers to the expenses to be deducted under section 
772(d)(1) as ``United States expenses,'' thereby suggesting that the 
coverage of section 772(d)(1) is limited to those expenses incurred in 
connection with a sale in the United States. In addition, the SAA makes 
clear that only those expenses associated with economic activities in 
the United States should be deducted from CEP. In discussing section 
772(d)(1), the SAA states that the deduction of expenses in calculating 
CEP relates to ``expenses (and profit) associated with economic 
activities occurring in the United States.'' SAA at 823 (emphasis 
added).
    In addition to conflicting with the SAA, the suggestion that we 
deduct all expenses would disrupt the statutory scheme with respect to 
the level-of-trade (``LOT'') adjustment. The statute clearly 
anticipates that an adjustment for differences in levels of trade will 
not be necessary every time the Department uses CEP. However, under the 
proposed interpretation, because the Department always would calculate 
CEP exclusive of all expenses and normal value inclusive of such 
expenses, CEP and normal value always would be at different levels of 
trade. Thus, an adjustment for differences in levels of trade would be 
necessary in almost every case. This would frustrate the legislative 
intent that the Department make comparisons at the same level of trade 
to the extent possible, and that the Department make level of trade 
adjustments only when such comparisons are not possible.
    Finally, the Department believes that the deduction of all expenses 
from CEP would conflict with Article 2.4 of the AD Agreement. Article 
2.4, on which section 772(d) is based, requires the deduction of costs 
``incurred between importation and resale.'' The suggestion of the 
first group of commenters would call for the deduction of expenses that 
are incurred before importation and that do not relate to activities 
between importation and resale.
    With regard to the argument concerning judicial and administrative 
precedents under the pre-URAA version of the statute, the Department 
notes that the URAA changed the manner in which CEP (formerly 
``exporter's sales price'') is calculated. Because of this change, and 
in light of the clear intent expressed in the SAA, we do not believe 
that these old law precedents govern the interpretation of section 
772(d)(1) with respect to this particular point.
    Although we have not adopted the suggestion that we deduct all 
expenses from CEP, we have revised paragraph (b) to clarify its 
meaning. In the first sentence of paragraph (b), we have deleted the 
phrase ``no matter where incurred'' and have replaced it with the 
phrase ``that relate to the sale to the unaffiliated purchaser, no 
matter where or when paid.'' In addition, we have added the following 
new sentence: ``The Secretary will not make an adjustment for any 
expense that is related solely to the sale to an affiliated importer in 
the United States, although the Secretary may make an adjustment to 
normal value for such expenses under section 773(a)(6)(C)(iii) of the 
Act.''
    The purpose of these changes is to distinguish between selling 
expenses incurred on the sale to the unaffiliated customer, which may 
be deducted under 772(d)(1), and those associated with the sale to the 
affiliated customer in the United States, which may not be deducted. In 
addition, the phrase ``no matter where or when paid'' is intended to 
indicate that if commercial activities occur in the United States and 
relate to the sale to an unaffiliated purchaser, expenses associated 
with those activities will be deducted from CEP even if, for example, 
the foreign parent of the affiliated U.S. importer pays those expenses. 
Finally, the reference to adjustments to normal value reflects our 
agreement with the comment that the Secretary may adjust for direct 
selling expenses (as well as assumed expenses) associated with the sale 
to the affiliated importer under the circumstance of sale provision, 
discussed below.
    One commenter urged the Department to define ``selling expenses'' 
to exclude ``general and administrative expenses.'' The Department has 
not adopted this suggested change. Typically, the primary, if not sole, 
function of an affiliated U.S. importer is to sell. Therefore, many or 
all general and administrative expenses of such firms are properly 
considered as selling expenses and must be deducted under section 
772(d)(1)(D).
    Another commenter stated that, in the past, the Department would 
not deduct selling expenses in calculating CEP (formerly ESP) in AD 
proceedings involving nonmarket economies. According to the commenter, 
the

[[Page 27352]]

Department's stated reason for not making a deduction was its inability 
to make an offsetting circumstance-of-sale adjustment to normal value 
(formerly foreign market value). The commenter stated that the 
Department has reevaluated this particular practice, and now recognizes 
that the statute requires CEP deductions in nonmarket economy cases 
irrespective of whether a circumstance-of-sale adjustment is possible. 
The commenter suggests that the agency's regulations should reflect 
this change in practice, and should make clear that CEP deductions are 
required in nonmarket economy cases.
    With respect to this suggestion, the commenter is correct 
concerning the Department's reevaluation of its practice. In a recent 
determination, the Department stated: ``Regarding the necessity of 
making CEP deductions, we have reevaluated our practice in this area 
and have concluded that CEP deductions are required by the plain 
language of the statute, which states in section 772(d)(2)(D) that CEP 
`shall be reduced' by the selling expenses associated with economic 
activity in the United States. Consequently, we have made deductions to 
CEP for all selling expenses associated with economic activities in the 
United States in accordance with our practice.'' Bicycles from the 
People's Republic of China, 61 FR 19026, 19031 (April 30, 1996). 
However, because the statute is clear on this point, we do not believe 
that a change to paragraph (b) is necessary.
    ``Special rule'' for merchandise with value added after 
importation: Proposed paragraph (c) addressed the ``special rule'' of 
section 772(e) of the Act that is applicable in situations where 
imported merchandise is subject to further manufacture or assembly in 
the United States before it is sold to an unaffiliated customer. Except 
for the modification of the percentage threshold normally used to 
determine when the special rule applies (discussed below), we have not 
changed paragraph (c).
    By way of background, prior to the enactment of the URAA, section 
772(e)(3) of the Act required that the Department calculate ESP (now 
CEP) by deducting the amount of any increased value resulting from a 
process of manufacture or assembly performed on imported merchandise 
prior to its sale to an unaffiliated customer. In situations where the 
amount of value added in the United States was very large, the process 
of calculating this deduction was very difficult and time-consuming for 
the Department. In addition, the legislative history of section 
772(e)(3) provided that if the final product sold did not contain a 
significant amount of the subject merchandise, the Department was to 
refrain from assessing antidumping duties, even though the merchandise 
may have been dumped.
    Congress retained the U.S. value-added adjustment, in modified 
form, in section 772(d)(2) of the Act. However, in the URAA, Congress 
addressed the problems described in the preceding paragraph by 
providing an alternative method for dealing with imported merchandise 
for which a large amount of value is added in the United States. Under 
section 772(e), the merchandise no longer is excepted from the 
assessment of duties. In addition, instead of requiring that the 
Department calculate and deduct the precise amount of value added in 
the United States from the price of the finished product, section 
772(e) permits the Department, in certain circumstances, to determine 
the dumping margin for value-added merchandise on some other basis, 
such as by relying on the dumping margins calculated on sales to 
unaffiliated customers for which no value was added in the United 
States. Under section 772(e), the Department may use an alternative 
method where the value added to the subject merchandise ``is likely to 
exceed substantially'' the value of the subject merchandise as 
imported. The SAA at 826 explains that this ``special rule'' does not 
require the Department to make a precise calculation of the value 
added. Instead, the phrase ``exceed substantially'' means that the 
Department estimates that the value added in the United States is 
``substantially more than half'' of the price of the merchandise as 
sold to the unaffiliated customer. The SAA at 825-826 further explains 
that the intent of the new rule is to avoid requiring the Department to 
calculate and back out large amounts of value added, while also 
avoiding the undesirable result of subject merchandise escaping the 
assessment of antidumping duties entirely.
    Threshold for applying the ``special rule'' and use of transfer 
prices: In proposed paragraph (c)(2), the Department provided that if 
the Secretary estimated the value added in the United States to be at 
least 60 percent of the price charged to the first unaffiliated 
purchaser, the Secretary normally would determine that the value added 
in the United States was likely to exceed substantially the value of 
the subject merchandise; i.e., that the special rule applied. The 
Department reasoned that a 60 percent threshold met the SAA's 
requirement of ``substantially more than half.'' See AD Proposed 
Regulations at 7331. In addition, in estimating the value added, 
proposed paragraph (c)(2) called for the use of transfer prices between 
the foreign exporter/producer and the affiliated U.S. importer.
    Several commenters argued against the adoption of a bright-line 
test for determining whether the estimated value added is 
``substantially more than half,'' the finding that triggers the 
application of the special rule. These commenters argued that a bright-
line test was inappropriate and inconsistent with the SAA. In addition, 
these commenters argued that if the Department insisted upon using a 
bright-line test, it should use a threshold higher than 60 percent. 
Finally, these commenters argued that the Department should not 
estimate the U.S. value added by relying on transfer prices, because of 
the risk that exporters might manipulate these prices to their 
advantage. Instead, they asserted, the Department should compare the 
price charged to unaffiliated customers for the finished goods to the 
constructed value (cost) of the imported merchandise.
    A different group of commenters supported the use of a bright-line 
test and transfer prices. While most of these commenters also supported 
a 60 percent value-added standard, one commenter argued that in 
proceedings where the absolute volume of merchandise is large, the 
standard should be 50 percent value added. This latter commenter argued 
that a 50 percent standard is warranted because of (1) the heavy burden 
of reporting value added information in these types of cases, and (2) 
the alleged distortions in dumping margins caused by the value-added 
calculations.
    With respect to the comments concerning the use of a bright-line 
test, the Department continues to believe that such a test is 
appropriate and desirable. Neither the SAA nor the statute indicates 
that the Department may not adopt guidelines in this area, and there 
are sound policy reasons for having a bright-line test. First, if the 
Department did not adopt a standard in these final regulations, the 
burden of establishing on a case-by-case basis the amount of value 
added that constitutes ``significantly more than half'' would erase the 
administrative savings that Congress intended section 772(e) to 
generate. Second, a bright-line standard enables the Department to 
inform respondents early in an investigation or review as to whether 
they will have to provide detailed value-added information.
    We must emphasize, however, that the Department does not intend 
that its bright-line standard operate as an

[[Page 27353]]

irrebuttable presumption for all cases. The Department may use a 
different threshold where it is satisfied, based on the facts, that a 
different threshold is more appropriate in a particular case. In 
addition, the Department retains the discretion to refrain from 
applying the special rule in situations where there are an insufficient 
number of sales to unaffiliated customers to use as an alternative 
basis for determining the dumping margin on value added sales. Finally, 
because the purpose of section 772(e) is to reduce the administrative 
burden on the Department, the Department retains the authority to 
refrain from applying the special rule in those situations where the 
value added, while large, is simple to calculate.
    With respect to the issue of transfer prices, paragraph (c)(2) 
continues to provide for the use of transfer prices in estimating U.S. 
value added. Section 772 and the SAA are silent on the precise manner 
by which the Department is to estimate the amount of value added. 
However, in discussing the alternate methods that the Department may 
use to determine CEP once the Department has determined that the 
special rule applies, the SAA at 826 states that the Department may use 
transfer prices. This suggests to us that, had the drafters of the 
statute and the SAA focussed on the matter, they would have permitted 
the use of transfer prices in estimating U.S. value added.
    While the Department appreciates the arguments raised concerning 
the possible manipulation of transfer prices, in our view, there are 
several factors that minimize this danger. First, because a respondent 
does not control the selection of the alternative method used in 
situations where the special rule applies, a respondent will not know 
in advance whether it would be better or worse off through the 
application of the special rule. Thus, if a respondent chose to 
manipulate transfer prices, it would do so at its peril. Second, while 
transfer prices may be suspect, there are some independent constraints 
on transfer pricing, such as the transfer pricing rules of the U.S. 
Internal Revenue Service and the valuation rules of the Customs 
Service. Finally, as discussed below, to guard against the misuse of 
transfer prices, the Department has raised the bright-line threshold to 
account for the fact that any estimate of U.S. value added might be 
inflated due to artificial transfer prices.
    We have balanced the dangers of using transfer prices against the 
alternatives. In our view, absent reliance on transfer prices, there is 
no other reasonable way to measure the amount of value added that 
accomplishes the burden-reducing objective of the special rule. The 
alternative suggested by the commenters (use of constructed value of 
the subject merchandise) would be as complex and burdensome a method as 
the method that section 772(e) was intended to replace.
    Having explained our retention of a bright-line test based on the 
use of transfer prices, this brings us to the issue of the precise test 
that the Department should apply. The Department has reviewed proposed 
paragraph (c)(2), and agrees with the commenters that by increasing the 
threshold, the Department would ensure that the special rule applies 
only in appropriate circumstances. While the Department continues to 
believe that 60 percent is ``substantially more than half,'' the 
Department recognizes that section 772(e) requires an imprecise 
``estimate,'' an estimate which, as discussed above, the Department 
must base in part on transfer prices. Because of the imprecision 
inherent in any estimate, in these final regulations we have adopted a 
standard of 65 percent, thereby providing additional assurance that the 
actual value added is substantially greater than half.
    We have not adopted the suggestion that we use a 50 percent 
standard. As discussed above, the SAA states that the Department will 
apply the special rule only where the U.S. value added is 
``substantially more than half'' of the total value of the finished 
product. Therefore, the Department cannot adopt a standard that would 
trigger the use of the special rule when the U.S. value added is only 
one half on the total value. Moreover, while the commenter making this 
suggestion cited the need to reduce the burden on respondents, the SAA 
indicates that the focus of section 772(e) was on reducing the burden 
on the Department. Finally, we do not agree with the commenter that the 
value added calculation is distortive or that the special rule was 
motivated by a concern over distorted calculations. While the 
legislative history demonstrates a recognition that the value added 
calculation is complex and time-consuming, there is no indication that 
Congress or the Administration considered the calculation to be 
distortive.
    One commenter proposed that the regulations contain a presumption 
against use of the ``special rule'' when: (a) The final goods are 
trademarked; (b) an essential feature or characteristic of the further 
manufactured good exists at importation; (c) the transfer price to an 
affiliated person is less than the sales price of the imported 
component to an unaffiliated person; (d) sales to unaffiliated persons 
of identical or similar merchandise are not in significant quantity; or 
(e) the Secretary believes that the circumstances preclude use of the 
special rule. The Department has not incorporated this suggestion into 
the final regulations. However, we believe that under section 772(e) 
and paragraph (c), the Department has sufficient flexibility to refrain 
from applying the special rule where the circumstances so warrant. As 
for the specific circumstances identified by the commenter, whether 
these circumstances would justify a departure from the special rule 
would depend upon the facts of a particular case.
    One commenter proposed that the Department calculate the amount of 
value added by comparing the price at which subject merchandise 
(without value added) is sold to unaffiliated customers to the price at 
which merchandise (with value added) is sold to unaffiliated customers. 
Although we believe that this method would be permissible, given our 
lack of experience in applying section 772(e), we have not codified 
this method in these final regulations.
    Application of alternative methods to determine dumping margins: 
One commenter argued that under proposed paragraph (c)(3), the 
Department might assign dumping margins to special rule entries in 
situations where no dumping margins should be found at all. This 
commenter suggested that the Department should provide in its final 
regulation that its preferred approach in applying the special rule 
will be to determine the export price for sales subject to the rule 
based on the most similar sales of subject merchandise, and that such 
an export price will be used to compare to normal value. This commenter 
urged the Department to give careful consideration to all relevant 
differences between the ``special rule'' sales and the sales used in 
applying the ``special rule.''
    We have not adopted this suggestion. In the Department's view, the 
methodology set forth in proposed paragraph (c)(3) for determining 
dumping margins on merchandise to which the special rule applies is in 
accordance with section 772(e). Section 772(e) authorizes the 
Department to use an alternative means of calculating the dumping 
margin where merchandise has a substantial amount of U.S. value added, 
including reliance on the dumping margins calculated on sales for which 
there is no U.S. value added. In adopting section 772(e), Congress and 
the Administration were aware that the dumping margins determined by 
use of these alternative means might not be

[[Page 27354]]

identical to those that would be determined if the Department were to 
calculate the precise amount of U.S. value added and deduct that amount 
from the price. However, they concluded that the burden on the 
Department of performing the value added calculations far outweighed 
any marginal increase in accuracy gained by such calculations.
    Finally, with respect to the sales from which the Department will 
derive dumping margins to apply to special rule sales, we must 
emphasize that the Department has little experience with this new 
methodology. Therefore, the Department is not in a position at this 
time to provide a great deal of guidance beyond what is contained in 
section 772(e) and the SAA. However, we do believe that whether 
merchandise is identical may be a factor to consider in selecting the 
sales to be substituted for the value added sales. We do not believe, 
however, that most similar in the United States is a consideration, and 
have not, therefore, incorporated this comment in the rule.
    Another commenter asked the Department to clarify that in applying 
the special rule, it will base surrogate margins on sales to 
unaffiliated persons only if those sales have been made in sufficient 
quantities. While the Department agrees with the substance of this 
comment, we do not believe that a regulation is necessary, because 
section 772(e) expressly requires that sales to an unaffiliated person 
be in ``a sufficient quantity.''
    One commenter suggested that the Department clarify that, when the 
special rule applies, the Department will base its alternative methods 
for calculating a dumping margin exclusively on a producer's own 
information, as opposed to information pertaining to another exporter 
or producer. We have not adopted this suggestion. While the Department 
agrees that it should rely on a respondent's own data where possible, 
section 772(e) does not impose such a limitation. In some cases, it may 
be necessary for the Department to rely on another respondent's data, 
such as in situations where all of a particular respondent's sales have 
U.S. value added and are subject to the special rule.
    One commenter proposed that the Department reflect in the final 
regulations the statement in the AD Proposed Regulations that the 
Department normally will base dumping margins for merchandise to which 
the special rule applies on margins calculated on other merchandise. 
The final regulation reflects the particular requirements of section 
772(e) of the Act. As the Department explained in the AD Proposed 
Regulations, in situations in which the special rule applies, the 
Department normally will apply the methodology described in paragraph 
(c)(3); i.e., assigning a margin equal to the weighted-average margin 
calculated based upon the prices of identical or other subject 
merchandise sold to unaffiliated parties.
    CEP profit deduction: Proposed paragraph (d) dealt with the 
deduction of profit from CEP. Although we received several comments 
concerning the CEP profit deduction, for the reasons set forth below, 
we have left paragraph (d) unchanged.
    Several commenters suggested that the Department clarify that the 
amount of profit to be deducted in calculating CEP may never be less 
than zero. In addition, these commenters contended that in calculating 
the total actual profit used to derive the CEP profit deduction, the 
Department must ignore all home market sales made at prices below the 
cost of production.
    The Department has not adopted these suggestions. With respect to 
the first suggestion, we believe that section 772(f) and the SAA at 825 
clearly provide that the profit deduction never may be less than zero. 
Therefore, we do not believe that a regulation is necessary on this 
point.
    Regarding the suggestion concerning the treatment of below-cost 
sales, in order to determine the total actual profit earned by a 
respondent on the relevant sales, the Department must take into account 
sales made at a profit and sales made at a loss. As we stated in the AD 
Proposed Regulations, 61 FR at 7332, ``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.' 
''
    Several commenters urged the Department to retain the flexibility 
to calculate the CEP profit deduction on the basis of something less 
than all sales of the subject merchandise and the foreign like product 
throughout the period of investigation or review (e.g., on the basis of 
a specific model or sales channel, or on a time period less than a full 
year). We have not adopted this suggestion, because we believe that 
paragraph (d)(1) provides the Department with sufficient flexibility to 
use such approaches in those instances where the facts so warrant.
    However, we believe that such instances should be the exception, 
rather than the rule, because the suggested approaches would add yet 
another layer of complexity to an already complicated exercise and 
would be more susceptible to manipulation, which the Department wishes 
to safeguard against, as suggested by the Senate Report.
    One commenter suggested that the Department provide further 
guidance regarding the calculation of the CEP profit deduction in 
situations where there are no useable home market or third country 
sales. We have not adopted this suggestion, because, as stated in the 
AD Proposed Regulations, 61 FR at 7332, the Department currently does 
not have enough experience to provide further guidance on this issue.
    Another commenter, alleging that the Department generally 
calculates profit by deducting expenses from revenues, argued that to 
avoid double-counting, the Department should deduct all expenses, 
including imputed expenses, in calculating the CEP profit deduction. We 
have not adopted this suggestion, because the Department does not take 
imputed expenses into account in calculating cost. Moreover, normal 
accounting principles permit the deduction of only actual booked 
expenses, not imputed expenses, in calculating profit.
    Other commenters proposed that the Department should (1) cap the 
CEP profit deduction by the amount of actual profit accruing on CEP 
sales, and (2) make a corresponding deduction from normal value. We 
have not adopted these suggestions. With respect to the first 
suggestion, as the Department stated in the AD Proposed Regulations, 61 
FR at 7332, the statute does not authorize a cap on the amount of 
profit deducted from CEP. Moreover, the SAA at 825 states that the 
transfer price between the producer and the affiliated importer should 
not be used to determine the profit. In our view, this indicates that 
Congress and the Administration did not intend that there be a cap. 
With respect to the deduction of profit from normal value, we discuss 
this suggestion below in connection with Sec. 351.410.
    Finally, one commenter argued that the Department is required to 
calculate the CEP profit deduction on a transaction-specific basis. The 
final regulations do not reflect this approach. In our view, section 
772(f), through its references to ``total actual profit'' and ``total 
expenses,'' clearly does not contemplate the calculation of the CEP 
profit deduction on a transaction-specific basis.
    Reimbursement of antidumping duties and countervailing duties: 
Paragraph (f) deals with the deduction from export price or CEP of the 
amount of any reimbursed antidumping duties or countervailing duties. 
Although we

[[Page 27355]]

received several comments concerning duty reimbursement, for the 
reasons set forth below, we have left paragraph (f) unchanged.
    Reimbursement of countervailing duties: In proposed paragraph (f), 
the Department expanded the scope of former 19 CFR Sec. 353.26 to 
include the reimbursement of countervailing duties in situations where 
imported merchandise is subject to both AD and CVD orders. As the 
Department explained in the AD Proposed Regulations, 61 FR at 7332, the 
reimbursement of countervailing duties effectively is nothing more than 
a reduction in the price paid by the importer. Absent the 
reimbursement, the effective price paid by the importer would increase 
by the amount of any such duties. As such, a deduction for reimbursed 
countervailing duties is a necessary price adjustment in AD 
calculations.
    Several commenters objected to the proposed change, asserting that 
the Department lacks statutory authority to deduct reimbursed 
countervailing duties. In addition, these commenters argued that such a 
deduction would violate Article 19.4 of the SCM Agreement, which 
prohibits the levying of countervailing duties in excess of the amount 
of subsidization found. They also claimed that the deduction could 
violate section 772(c)(1)(C) of the Act by permitting the imposition of 
both antidumping and countervailing duties to offset the same situation 
of dumping or export subsidization. Other commenters, however, 
supported a deduction for reimbursed countervailing duties, asserting 
that such a deduction is consistent with the SCM Agreement and the Act.
    In these final regulations, we have retained the deduction for 
reimbursed countervailing duties. In the Department's view, this 
deduction is consistent with the SCM Agreement and the Act. A deduction 
for reimbursed countervailing duties neither increases the amount of 
countervailing duties assessed nor imposes duties for the same 
situation of dumping and export subsidization. The deduction simply 
recognizes that the reimbursement of countervailing duties constitutes 
a reduction in the price paid by the purchaser. Moreover, any 
reimbursement of countervailing duties on specific sales is directly 
tied to such sales and is no different in substance from any of the 
other types of price adjustments that the Department routinely factors 
into its calculations. Because antidumping duties are reduced by the 
amount of any countervailing duties attributable to an export subsidy, 
no double assessment is involved.
    Finally, we do not believe that the absence of a statutory 
provision expressly dealing with the reimbursement of countervailing 
duties is fatal. The courts have long recognized the Department's 
ability to develop methodologies to deal with situations not expressly 
addressed by the statute. As the Federal Circuit stated in Melamine 
Chemicals, Inc. v. United States, 732 F.2d 924, 930 (1984), ``there is 
no stultifying requirement that [the Department] cite a statute 
detailing in haec verba the specific action it may take when confronted 
with a particular set of circumstances among the myriad that may 
occur.''
    Reimbursement in general: Referring to situations involving 
affiliated importers, several commenters urged the Department to 
automatically investigate whether the foreign affiliate reimbursed the 
importer for antidumping or countervailing duties. Other commenters 
went even further, arguing that in cases involving affiliated 
importers, the Department should make an irrebuttable presumption that 
reimbursement has occurred, or, at a minimum, a rebuttable presumption. 
They alleged that because the Department treats affiliated exporters 
and importers as a single entity for virtually all other purposes, 
there is no reason to treat them differently for purposes of analyzing 
reimbursement.
    We have not adopted these suggestions, because we do not believe 
that they are necessary or justifiable. As under former 19 CFR 
Sec. 353.26, paragraph (f) applies to affiliated importers, and 
requires that they certify that they have not been reimbursed by the 
exporter. Should an affiliated importer fail to make this 
certification, the Department would deduct the appropriate amount of 
antidumping duties or countervailing duties to establish the EP or the 
CEP, just as it would in the case of an unaffiliated importer. 
Moreover, in our view, it is not justifiable to presume that the 
existence of an affiliation will result in reimbursement or that an 
affiliated U.S. importer, because of its affiliation, is more likely to 
file a false certification.

Section 351.403

    Section 351.403 deals with sales and offers for sale and the use of 
sales to or through an affiliated party. Comments on this section 
addressed paragraph (c) and the approach the Department should take in 
determining whether sales to an affiliated party are an appropriate 
basis for determining normal value (the ``arm's length test''). 
Comments also addressed paragraph (d) and the issue of when the 
Department should require the reporting of sales made by affiliated 
customers (``downstream sales'').
    Arm's length test: The Department's current policy is to treat 
prices to an affiliated purchaser as ``arm's length'' prices if the 
prices to affiliated purchasers are on average at least 99.5 percent of 
the prices charged to unaffiliated purchasers. We received several 
comments asking that we codify the current 99.5 percent test. We also 
received several comments asking that we refrain from codifying the 
99.5 percent test, and that we instead develop and codify a new 
methodology for testing affiliated prices.
    After considering the comments received on this issue, we have 
decided not to codify an arm's length test at this time. We believe 
that, while the 99.5 percent test has functioned adequately in numerous 
cases, there may be other methods available. We will continue to apply 
the current 99.5 percent test unless and until we develop a new method. 
If we develop a new methodology, the Department will describe that 
methodology in a policy bulletin. We will also publicly announce the 
issuance of policy bulletins and ensure that they are easily accessible 
to the public.
    One commenter asked that the Department adopt a separate test for 
situations where the vast majority of a firm's sales are to affiliated 
parties. We have not adopted this suggestion, because we believe that, 
in this context, the appropriate means to make this determination is by 
comparison to known arm's length prices. In order to perform such an 
arm's length test, the Department first must establish that sales to 
unaffiliated purchasers are sufficient in number or quantity sold to 
serve as a benchmark for testing affiliated party transactions. If 
sales to unaffiliated purchasers are insufficient, we simply will not 
use sales to affiliated purchasers to determine normal value.
    One commenter argued that in determining whether sales are at arm's 
length, the Department should consider normal business practices, such 
as volume discounts, preferences for longstanding customers, and 
differences due to level of trade. Many other commenters stated that 
under the 99.5 percent test, the Department correctly limits its 
examination to a comparison of prices.
    The Department agrees that a proper comparison focuses on the 
comparability of prices charged to affiliated and unaffiliated 
purchasers. However, the Department also agrees

[[Page 27356]]

that it should take into account differences in levels of trade, 
quantities, and other factors that affect price. For example, in 
comparing prices charged to affiliated and unaffiliated purchasers, we 
would attempt to make comparisons on the basis of sales made at the 
same level of trade.
    Several commenters argued that the Department should disregard not 
only affiliated party sales that fall below 99.5 percent, but also 
sales that fall above 100.5 percent. We have not adopted this 
suggestion. The purpose of an arm's length test is to eliminate prices 
that are distorted. We test sales between two affiliated parties to 
determine if prices may have been manipulated to lower normal value. We 
do not consider home market sales to affiliates at prices above the 
threshold to have been depressed due to the affiliation. Therefore, the 
Department should treat such sales in the same manner as sales to 
unaffiliated customers. However, if a party wishes to argue that sales 
at high prices to an affiliate are outside the ordinary course of 
trade, the Department would consider such arguments on a case-by-case 
basis.
    Downstream sales: With respect to paragraph (d) and the use of 
``downstream sales,'' certain commenters asked that the regulations 
provide that the Department normally will require a respondent to 
report downstream sales by an affiliated party to the first 
unaffiliated customer. Other commenters argued that the Department 
should require a respondent to report downstream sales only if the 
sales to the affiliated party are not made at arm's length.
    The Department does not believe it necessary or appropriate to 
require the reporting of downstream sales in all instances. Questions 
concerning the reporting of downstream sales are complicated, and the 
resolution of such questions depends on a number of considerations, 
including the nature of the merchandise sold to and by the affiliate, 
the volume of sales to the affiliate, the levels of trade involved, and 
whether sales to affiliates were made at arm's length.
    However, we have decided to codify the Department's current 
practice regarding the reporting of downstream sales when the volume of 
sales to affiliates is small. Under our current practice, we normally 
do not require the reporting of downstream sales if total sales of the 
foreign like product by a firm to all affiliated customers account for 
five percent or less of the firm's total sales of the foreign like 
product. In such situations, the Department calculates normal value on 
the basis of sales to unaffiliated customers and arm's-length sales to 
affiliated customers. In addition, in certain cases, the Department may 
decide that a percentage higher than five percent is an appropriate 
benchmark, and, in such cases, the Department will not require the 
reporting of downstream sales. Also, while the Department normally will 
calculate this percentage on the basis of total sales value, there may 
be cases where it is more appropriate to use total volume or sales 
quantity.
    If the Department determines that an affiliate made downstream 
sales of a foreign like product, the Department usually will not 
require the reporting of both the sales to the affiliate and the 
downstream sales by the affiliate. We will examine the sales between 
the affiliated parties under paragraph (c). If sales to the affiliate 
fail the arm's-length test, the Department will require the respondent 
to report that affiliate's downstream sales. If sales to the affiliate 
pass the arm's-length test, the Department normally will not require 
the respondent to report the affiliate's downstream sales and will 
calculate normal value based on sales to the affiliate.
    The Department will require a respondent to demonstrate in each 
segment of an AD proceeding that the reporting of downstream sales is 
not necessary. Similarly, the Department will analyze affiliated party 
transactions in each segment. In other words, the fact that the 
Department may have determined in an investigation or review that 
affiliated party transactions are at arm's length does not mean that 
the Department automatically will treat such transactions as being at 
arm's length in subsequent segments of a proceeding.
    One commenter stated that the quantity of sales sold in the foreign 
market to an affiliated customer is not necessarily relevant to the 
calculation of a dumping margin, because the Department may compare 
those sales to a large number of sales in the U.S. market. Other 
commenters stated that all home market sales should be reported so that 
Department can address each situation on its facts. Another commenter 
stated that section 771(16) of the Act requires the reporting of all 
downstream sales of the foreign like product.
    With respect to these comments, the Department believes that 
imposing the burden of reporting small numbers of downstream sales 
often is not warranted, and that the accuracy of determinations 
generally is not compromised by the absence of such sales. Even if a 
respondent demonstrates that its sales to affiliated parties account 
for less than five percent of its total sales, the Department still 
will require the respondent to report its sales to the affiliated 
parties. Where all sales to all affiliates represent less than 5 
percent of total sales, and where the only match for a U.S. sale is a 
downstream sale, the Department normally will base normal value on 
constructed value, as opposed to requiring that a respondent report 
downstream sales.
    In our view, this methodology does not conflict with section 
771(16) of the Act, because section 771(16) deals with the type of 
merchandise for which the Department needs to obtain sales information. 
Section 771(16) does not require that the Department obtain information 
on all possible sales of the foreign like product.
    Some commenters argued that where certain types of affiliation are 
involved, such as long-term supplier relationships, the Department 
should not require the reporting of downstream sales under paragraph 
(d), nor should the Department conduct an arm's-length test analysis 
under paragraph (c). We have not adopted this suggestion, because the 
Department believes that it should apply these provisions whenever 
there are transactions between parties that are affiliated within the 
meaning of section 771(33) of the Act. Therefore, if two parties are 
affiliated, any transactions between those parties are subject to 
paragraphs (c) and (d). However, in instances where a respondent does 
not report downstream sales, the Department will consider the nature of 
the affiliation in deciding how to apply facts available.

Section 351.404

    Section 351.404 deals with the selection of the market to be used 
in establishing normal value. We have not made any changes from 
proposed Sec. 351.404.
    Viability, particular market situation, and representative price: 
In proposed paragraph (c)(1), the Department provided that decisions 
concerning the calculation of a price-based normal value generally will 
be governed by the Secretary's determination as to whether the market 
in a particular country is ``viable'' (i.e., whether sales in that 
country constitute 5 percent or more of a firm's sales to the United 
States). In proposed paragraph (c)(2), however, the Department provided 
that the Secretary may decline to calculate normal value based on sales 
in a particular market if it is established to the satisfaction of the 
Secretary that (1) a particular market situation exists that does not 
permit a proper comparison, or (2) in the case of a third country, the 
price is not

[[Page 27357]]

representative. In addition, in the preamble to the AD Proposed 
Regulations, 61 FR at 7334, the Department stated that a party would 
have to submit ``convincing evidence'' in order to overcome a 
determination, based on an application of the 5 percent standard, that 
a particular market is an appropriate basis for calculating normal 
value.
    Several commenters objected to the Department's proposed approach 
to the ``particular market situation'' criterion. According to these 
commenters, section 773(a)(1) of the Act identifies the ``particular 
market situation'' in the exporting country or in a third country as 
one of three coequal factors that the Department must consider in 
determining whether it may use sales in that country as the basis for 
calculating normal value. Therefore, they argued, it is improper for 
the Department to require that parties present ``convincing evidence'' 
of the extraordinary nature of a particular market situation before the 
Department will invoke this statutory provision. Consistent with the 
statute and the SAA, the Department's proposed regulations should not 
impose a higher evidentiary standard for determinations regarding the 
``particular market situation'' than for other determinations that the 
Department makes during the course of an AD proceeding.
    The Department has not revised paragraph (c) in light of these 
comments. There are a variety of analyses called for by section 773 
that the Department typically does not engage in unless it receives a 
timely and adequately substantiated allegation from a party. For 
example, the Department does not engage in a fictitious market analysis 
under section 773(a)(2) absent an adequate allegation from a party. 
See, e.g., Tubeless Steel Disc Wheels from Brazil, 56 FR 14083 (1991); 
and Porcelain-on-Steel Cooking Ware from Mexico, 58 FR 32095 (1993). 
Likewise, the Department does not automatically request information 
relevant to a multinational corporation analysis under section 773(d) 
of the Act in the absence of an adequate allegation. See, e.g., Certain 
Small Business Telephone Systems and Subassemblies Thereof from Taiwan, 
54 FR 31987 (1989); and Appendix B, Antifriction Bearings from the 
Federal Republic of Germany, 54 FR 18993, 19027 (1989). Also, as 
discussed above, the Department and the courts have held that the party 
claiming that a sale is not in the ``ordinary course of trade'' has the 
burden of proof. Significantly, both the ``ordinary course of trade'' 
and the ``particular market situation'' criteria appear in section 
773(a)(1).
    In short, the Department's AD methodology contains presumptions 
that certain provisions of section 773 do not apply unless adequately 
alleged by a party or unless the Department uncovers relevant 
information on its own. In our view, this is an eminently reasonable 
approach. A common feature of these provisions is that they call for 
analyses based on information that is quantitatively and/or 
qualitatively different from the information normally gathered by the 
Department as part of its standard AD analysis. If the Department were 
to routinely seek the information called for by these provisions in 
every case, the Department's ability to comply with its statutory 
deadlines would be significantly impaired. Moreover, in many instances, 
the exercise would prove to be pointless and a waste of resources for 
both the Department and the parties involved. For example, absent an 
adequate allegation, it would not make much sense to routinely 
investigate whether Japan is a nonmarket economy country merely to 
ensure that section 773(c) of the Act does not apply.
    In the Department's view, the criteria of a ``particular market 
situation'' and the ``representativeness'' of prices fall into the 
category of issues that the Department need not, and should not, 
routinely consider. In this regard, we note that the SAA at 822, 
through its repeated use of the words ``may'' and ``might,'' appears to 
treat the ``particular market situation'' criterion as a discretionary 
criterion that is subordinate to the primary criterion of 
``viability.'' In addition, the SAA at 821 recognizes that the 
Department must inform exporters at an early stage of a proceeding as 
to which sales they must report. This objective would be frustrated if 
the Department routinely analyzed the existence of a ``particular 
market situation'' or the ``representativeness'' of third country 
sales.
    Having said this, however, we believe that the language in the 
preamble concerning ``convincing evidence'' was not consistent with 
proposed paragraph (c)(2) and was unartful, at best. It was not the 
Department's intent to establish an entirely new evidentiary standard, 
such as the ``clear and convincing evidence'' standard that is 
sometimes used in civil matters. Instead, by using the phrase ``if it 
is established to the satisfaction of the Secretary'' in paragraph 
(c)(2), we merely were attempting to provide that the party alleging 
the existence of a ``particular market situation'' or that sales are 
not ``representative'' has the burden of demonstrating that there is a 
reasonable basis for believing that a ``particular market situation'' 
exists or that sales are not ``representative.''
    One commenter proposed that the Department recognize that 
significant sales to affiliated parties constitute a ``particular 
market situation'' that may cause a specific market to be 
``inappropriate as a basis for determining normal value.'' The 
Department has not adopted this recommendation, because under the 
statute and these regulations, the Department may use affiliated party 
sales if they are made at arm's-length prices. If affiliated party 
sales are made at arm's-length prices, there is no basis for concluding 
that the mere fact of affiliation precludes a proper comparison. By 
definition, such sales are equivalent to sales to unaffiliated parties.
    Another commenter suggested that the Department revise Sec. 351.404 
to allow the Department to reject a given third-country market if 
prices to that country are ``not representative for reasons other than 
for supporting dumping.'' In other words, if high prices in a third 
country support dumping to the United States, the Department should not 
disregard those prices as ``not representative.'' This commenter also 
argued that it would be useful for the regulations to contain a 
definition of ``representative,'' and that ``representative prices'' 
are market-set prices, as opposed to fictitious or artificial prices.
    The Department has not included a definition of representative 
prices in these regulations, because the Department does not yet have 
sufficient experience with this new statutory term to provide 
meaningful guidance. However, the Department does not agree with the 
implication in the comment that ``not representative'' can mean only 
that the prices are unrepresentatively low, nor does the Department 
agree with the suggestion that it must identify the reasons for a 
particular respondent's pricing scheme.
    Another commenter, referring to the Department's explanation of 
proposed Sec. 351.404, proposed that the final regulation provide that 
the Department will interpret the term ``quantity'' in a broad manner. 
In addition, this commenter argued, the final rule should clarify that 
the Department always will determine quantity on the basis of the 
``aggregate'' sales of the foreign like product. This commenter also 
urged the Department to define the terms ``representative,'' 
``particular market situation,'' and ``proper comparison,''

[[Page 27358]]

and to use narrow definitions based on the language in the SAA. 
Finally, with regard to selection of a third country market, this 
commenter suggested that the Department elaborate on the ``other 
relevant factors'' it will consider under Sec. 351.404(e)(3), and that 
the final regulation include a statement that all of the criteria do 
not have to be present in order to select a market and that no one 
criterion is dispositive.
    The Department has not adopted these suggestions. First, with 
respect to ``quantity,'' because the SAA at 821 is clear that the term 
quantity is to be interpreted broadly, there is no need for a 
regulation. Second, regarding ``aggregate sales,'' the final regulation 
adopts the language of the proposed Sec. 351.404(b)(2), which states 
that the Secretary ``normally'' will determine whether sales are in 
sufficient quantity based on ``aggregate'' sales of the foreign like 
product. We have retained the word ``normally'' in order to provide the 
Department with the flexibility to deal with unusual situations. Third, 
regarding definitions of terms, as suggested previously, ``particular 
market situation'', ``representative'' prices, and ``proper 
comparisons'' are new concepts added to the Act by the URAA. The 
Department does not have sufficient experience in applying these new 
terms to provide any additional guidance at this time. Finally, with 
respect to the selection of a third country market, in proposed 
Sec. 351.404(e)(3), we left the term ``other relevant factors'' 
undefined precisely because we cannot foresee all of the possible 
factual scenarios that we may encounter in future cases. In addition, 
we believe that Sec. 351.404(e) is sufficiently clear that (1) not all 
of the three criteria need be present in order to justify the selection 
of a particular market, and (2) no single criterion is dispositive.
    Time limits: Proposed paragraph (d) cross-referenced proposed 
Sec. 351.301(d)(1), in which the Department provided that allegations 
regarding viability, including allegations regarding a particular 
market situation or the unrepresentativeness of prices, must be 
submitted within 40 days after the date on which the initial AD 
questionnaire was transmitted. Section 351.301(d)(1) also authorized 
the Secretary to alter the 40-day time limit. We have addressed 
comments regarding Sec. 351.301(d)(1) below in connection with our 
discussion of that section.
    One commenter proposed that the regulations explicitly state that 
the Department will make its viability determination early in a 
proceeding. The Department has not adopted this suggestion. We agree 
that the Department should strive to make viability determinations 
early in an investigation or review, and, as noted above, we have 
drafted Sec. 351.404 with this objective in mind. However, there may be 
instances in which the Department must delay or reconsider a decision 
on viability.

Section 351.405

    Section 351.405 deals with the calculation of normal value based on 
constructed value (``CV'').
    Appropriate market for determining profit: Subparagraph (A) of 
section 773(e)(2) of the Act sets forth the preferred method for 
determining the amount of selling, general, and administrative 
(``SG&A'') expenses and profit to be included in constructed value. 
Subparagraph (B) of that section sets forth three alternative methods. 
In proposed Sec. 351.405(b), the Department defined the term ``foreign 
country'' differently for purposes of subparagraphs (A) and (B).
    With respect to these definitions, one commenter argued that well-
established rules of statutory construction preclude the Department 
from defining the term ``foreign country'' differently in different 
subparagraphs of the same statutory provision. This commenter observed 
that section 773(e)(2) provides that for both the preferred method 
under subparagraph (A) and the alternative methods under subparagraph 
(B), the Department must determine SG&A expenses and profit on the 
basis of sales of the foreign like product ``for consumption in the 
foreign country.'' The commenter further noted that the phrase ``for 
consumption in the foreign country'' appears in the statute with 
respect to each of the four methods for computing SG&A and profit. 
Thus, according to the commenter, there is no basis for the Department 
to construe the phrase ``foreign country'' to mean either the home 
market or a third country for purposes of subparagraph (A), while at 
the same time interpreting the identical phrase to mean only the home 
market for purposes of subparagraph (B). The commenter believed that 
the Department should compute SG&A and profit for CV exclusively by 
reference to home market sales.
    Another commenter also argued that the Department should not 
interpret the term ``foreign country'' differently for purposes of 
subparagraphs (A) and (B). However, unlike the prior commenter, this 
commenter believed that the correct interpretation allows the 
Department to compute SG&A and profit on the basis of either home 
market or third country sales, as appropriate, under any of the methods 
listed in section 773(e)(2). In this commenter's view, to limit the 
alternative SG&A and profit methods to home market experience, as the 
Department proposed, would be inconsistent with the intent of the 
drafters of the URAA and the AD Agreement. Moreover, this commenter 
noted, such an interpretation would be logically inconsistent in 
circumstances where, because the Department has found the home market 
to be non-viable, the Department uses third country data for normal 
value. Accordingly, the commenter suggested, the Department should 
revise proposed paragraph (b) in order to retain flexibility to use 
third country profit and SG&A experience in computing CV under the 
alternative methods of subparagraph (B), as well as under the preferred 
method of subparagraph (A).
    The Department has not adopted the suggestions of either commenter. 
With respect to the three alternative methods, the SAA and the AD 
Agreement expressly indicate that profit and SG&A are to be based on 
home market sales. Thus, the Department cannot adopt the proposal to 
use third country profit and SG&A under the alternative methods. By 
contrast, with respect to the preferred method, the SAA and the AD 
Agreement are silent as to the market on which SG&A and profit should 
be based. The absence of any express intent in the SAA or other 
legislative history with respect to the preferred method--in contrast 
to the express intent set forth in these same documents regarding the 
alternative methods--indicates that, in the case of this particular 
issue, the drafters did not intend that the preferred and alternative 
methods be identical.
    The Department believes that in situations where an exporter's 
third country sales form the basis for normal value, but the Department 
resorts to CV (because, for example, third country sales are below 
cost), third country sales constitute the most reasonable and accurate 
basis for calculating profit and SG&A. In such situations, because the 
Department already has rejected a respondent's home market sales as a 
basis for normal value, the Department also must reject SG&A and profit 
based on those sales. Further, where a respondent reports third country 
COP data, use of third country sales is the most practical basis for 
deriving profit and SG&A for both the Department and the respondent, 
because the respondent already will have reported the necessary data.
    Determination of product categories for calculation of SG&A and 
profit: In the AD Proposed Regulations, 61 FR at 7335, the Department 
stated that it would calculate SG&A and profit on the

[[Page 27359]]

basis of aggregate figures for all covered foreign like products. A 
number of commenters disagreed with this approach. Although differing 
somewhat in their respective statutory interpretations and suggestions, 
all of the commenters generally agreed that the Act requires the 
Department to compute SG&A and profit on a basis narrower than that 
contemplated by the Department. In this regard, some of the commenters 
recommended that the regulations provide for the calculation of SG&A 
and profit on the basis of different product groupings, and that such 
groupings be limited to those models of the foreign like products 
capable of comparison to each model of the subject merchandise. Other 
commenters suggested an even narrower, model-specific basis for 
computing SG&A and profit; i.e., when the Department disregards all 
home market sales of a particular model of the foreign like product, it 
would select the next most similar model as the basis for computing 
SG&A and profit.
    The Department recognizes that there are other methods available 
for computing SG&A and profit for CV under section 773(e)(2)(A) of the 
Act, including those suggested by the commenters. We continue to 
believe, however, that an aggregate calculation that encompasses all 
foreign like products under consideration for normal value represents a 
reasonable interpretation of the statute. This approach is consistent 
with the Department's method of computing SG&A and profit under the 
pre-URAA version of the statute, and, while the URAA revised certain 
aspects of the SG&A and profit calculation, we do not believe that 
Congress intended to change this particular aspect of our practice.
    Moreover, the Department believes that in applying the preferred 
method for computing SG&A and profit under section 773(e)(2)(A), the 
use of aggregate data results in a reasonable and practical measure of 
profit that the Department can apply consistently in each case. By 
contrast, a method based on varied groupings of foreign like products, 
each defined by a minimum set of matching criteria shared with a 
particular model of the subject merchandise, would add an additional 
layer of complexity and uncertainty to AD proceedings without 
generating more accurate results.
    Inclusion of below-cost sales in the calculation of profit: One 
commenter argued that, in calculating CV profit, the Department should 
exclude all below-cost sales, whether or not the Department disregarded 
such sales as being outside the ordinary course of trade under section 
773(b) of the Act. This commenter believed that the SAA at 840 supports 
this position in that it provides for the use of profitable sales as 
the basis for calculating CV profit in most cases. In the commenter's 
view, the Department's regulations should implement the legislative and 
administrative intent by providing that the loss resulting from any 
below-cost sale will not enter into the profit calculation for CV.
    Another commenter disagreed with the proposal that the Department 
automatically exclude all below-cost sales from the profit calculation, 
arguing that the statutory directive for computing CV profit (as well 
as SG&A expenses) requires that the Department use sales ``in the 
ordinary course of trade'' in making its profit calculations. This 
commenter contended that if, under its below-cost test, the Department 
does not disregard below-cost sales of a foreign like product, those 
sales are in the ordinary course of trade, notwithstanding that they 
are at below-cost prices. Thus, according to the commenter, the 
Department should account for such sales in the CV profit calculation. 
The commenter further noted that the statute provides no restriction on 
using home market sales in the ordinary course of trade in the first 
and third alternative profit methods under section 773(e)(2)(B) of the 
Act. Accordingly, the commenter maintained, the Department must use all 
home market sales to compute profit under these alternative profit 
methods.
    The Department believes that, in computing profit for CV, the 
automatic exclusion of below-cost sales would be contrary to the 
statute. In computing profit under the preferred and second alternative 
methods, the statute allows for the 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 of the foreign like product are below cost does not 
automatically trigger their exclusion. Instead, such sales must have 
been disregarded under the cost test before the Department will exclude 
from the calculation of CV profit.
    In addition, we believe that the SAA at 840 supports this position. 
The SAA states that unlike the Department's old law practice (under 
which the Department accounted for all sales, including sales 
disregarded as being below-cost, in the computation of profit), the new 
statute precludes the Department from including in its calculation of 
profit any below-cost sales that the Department disregards under 
section 773(b)(1) of the Act. Consequently, under the new law and as 
described in the SAA, profitable sales would constitute the majority of 
the transactions used to compute profit for CV under the preferred and 
second alternative methods.
    With respect to the other alternative profit methods authorized by 
section 773(e)(2)(B), the Department believes that the absence of any 
ordinary course of trade restrictions under the first alternative is a 
clear indication that the Department normally should calculate profit 
under this method on the basis of all home market sales, without regard 
to whether such sales were made at below-cost prices. However, the same 
cannot be said of the third alternative method, which provides for the 
use of ``any other reasonable method'' in determining CV profit. The 
SAA at 841 makes it clear that, given the absence of any comparable 
standard under the prior statute, it would be inappropriate to 
establish methods and benchmarks for applying this alternative. Thus, 
depending on the circumstances and the availability of data, there may 
be instances in which the Department would consider it necessary to 
exclude certain home market sales that are outside the ordinary course 
of trade in order to compute a reasonable measure of profit for CV 
under the third alternative method.
    Abnormally high profits: One commenter recommended that the 
regulations state that above-cost sales are not ``in the ordinary 
course of trade'' for purposes of determining CV profit when the use of 
those sales would lead to irrational or unrepresentative results. This 
commenter noted that the SAA at 834 and 840 refers to sales with 
``abnormally high profits'' and merchandise sold at ``aberrational 
prices'' as examples of transactions that the Department may consider 
as being ``outside the ordinary course of trade'' for purposes of 
determining CV profit. Based on these examples, the commenter posited 
that if the Department excluded the vast majority of a respondent's 
sales from the profit calculation because they were below cost, the few 
remaining above-cost sales, by definition, would be sold at 
aberrational prices. As such, the Department also would have to exclude 
those sale from the CV profit calculation.
    Another commenter suggested that the regulations stringently define 
the phrase ``abnormally high profits.'' This

[[Page 27360]]

commenter argued that the fact that profit margins are relatively high 
is an insufficient basis for determining that profits are ``abnormal.'' 
Instead, the commenter argued, the burden of establishing that a given 
profit amount is ``abnormal'' should be very high, and should be based 
on express economic assumptions.
    The Department agrees that the sales used as the basis for CV 
profit should not lead to irrational or unrepresentative results. 
However, we have not adopted the first commenter's recommendation, 
because there may be instances in which it would be appropriate to base 
profit on a small number of above-cost sales. Specifically, where the 
Department finds a majority of sales of a foreign like product to be at 
below-cost prices (and, thus, excludes those sales from the calculation 
of profit), the fact that only a few sales remain at above-cost prices 
does not, by itself, render such sales outside the ordinary course of 
trade. Rather, it is the below-cost sales that are outside the ordinary 
course of trade. Whether the few remaining above-cost sales are also 
outside the ordinary course of trade is a separate issue that depends 
on the facts and circumstances surrounding these transactions.
    In this regard, the Department believes that the burden of showing 
that profits earned from above-cost sales are ``abnormal'' (or 
otherwise unusable as the basis for CV profit) rests with the party 
making the claim. We do not consider it appropriate, however, to 
establish a stringent evidentiary burden in the regulations, as 
suggested by the second commenter. In most instances, proof that the 
profits earned by respondent on specific sales are abnormal will depend 
on a number of factors, including the type of merchandise under 
investigation or review and the normal business practices of the 
respondent and of the industry in which the merchandise is sold. Thus, 
the Department believes it appropriate to make such ordinary course of 
trade determinations on a case-by-case basis.
    Profit ceiling: One commenter proposed that the regulations impose 
a ceiling on the amount of profit to be used in those cases where no or 
too few foreign market sales are found to be made ``in the ordinary 
course of trade.'' For such a ceiling, the commenter suggested that the 
Department use the average profit rate for the industry that produces/
sells the subject merchandise.
    The Department does not believe that there is a statutory basis for 
imposing a profit ceiling. Consistent with our position in the 
preceding comment, where there are only a few sales made by a 
respondent in the ordinary course of trade, such sales would form the 
basis for CV profit, because they would fulfill the requirement for 
actual profits under section 773(e)(2)(A) of the Act. It would 
contradict the plain language of the statute (which calls for the use 
of respondent's actual profits for a foreign like product) were the 
Department to impose an industry-wide ceiling on the profit used for 
CV.
    Moreover, in instances where there are no sales in the ordinary 
course of trade from which to compute profit, section 773(e)(2)(B) of 
the Act does not provide that a profit ceiling be imposed for each of 
the alternative methodologies. Instead, only the third alternative 
method (i.e., amounts realized under any other reasonable method) 
requires that the Department consider a ``ceiling'' on the amount 
calculated for CV profit. Here too, however, the Department believes 
that the commenter's recommended industry-wide average profit ceiling 
does not conform to the statutory requirement. Section 
773(e)(2)(B)(iii) of the Act provides that the so-called ``profit cap'' 
be determined based on amounts realized by other exporters or producers 
in the foreign country in connection with sales of merchandise that is 
the same general category as the subject merchandise. This differs from 
the commenter's suggestion in two important respects. First, the 
statutory profit cap is to be derived from sales in the general 
category of products and, thus, encompasses a group of products that is 
broader than the subject merchandise. Second, where it relies on the 
third alternative method, the Department is required to determine the 
profit cap figure based on sales in the foreign country exclusive of 
profits realized by the exporter or producer under investigation or 
review. By contrast, the proposed average industry-wide profit figure 
presumably would include sales by all exporters and producers in all 
markets, including sales by the exporter and producer in question and 
sales to the United States. In our view, the statute prohibits the use 
of such sales for this purpose.
    Finally, it is important to note that the SAA at 841 anticipates 
situations in which the Department will be unable to determine a profit 
cap due to an absence of the appropriate data. In these instances, the 
Department may apply the third alternative profit method on the basis 
of facts available. However, the Department will not make adverse 
inferences in applying facts available, unless the respondent did not 
cooperate to the best of its ability during the course of the 
investigation or review.
    Use of other producer's profit data: One commenter suggested that 
the regulations state that, when calculating a respondent's profit for 
CV under section 773(e)(2)(B) of the Act, the Department will resort to 
the second alternative method (other producers' profits for the foreign 
like product) only in exceptional circumstances. The commenter 
contended that the adoption of this principle will help to ensure 
fairness and predictability in AD proceedings.
    In our view, the SAA at 840 makes clear that there is no hierarchy 
or preference among the three alternative methods for calculating 
profit under section 773(e)(2)(B). Rather, the SAA provides that the 
Department's selection of an alternative profit calculation method will 
be made on a case-by-case basis, and will depend, to an extent, on the 
data available with regard to profits earned in the foreign market. For 
this reason, we have not adopted the commenter's recommendation to 
limit the use of the second alternative method to exceptional 
circumstances, because such an approach would impose a preference in 
favor of the first and third alternative methods.

Section 351.406

    Section 351.406 deals with the analysis of whether to disregard 
certain sales as below the cost of production under section 773(b) of 
the Act.
    Extended period of time: Several commenters made suggestions 
regarding the ``extended period of time'' criterion for below-cost 
sales under section 773(b)(1)(A) of the Act. Two of these commenters 
disagreed with the statement in the AD Proposed Regulations, 61 FR at 
7336, that the Department would exclude below-cost sales made during 
only one month of the period of investigation or review. These 
commenters maintained that because one-month's worth of sales do not 
represent the pricing practices of a company over a full investigation 
or review period, the Department should not consider such sales to have 
been made within an extended period of time. Similarly, another 
commenter recommended that the Department establish criteria for 
determining when sales of ``custom'' products (products not 
manufactured continuously throughout the period of investigation or 
review) have been made ``within an extended period of time in 
substantial quantities.''
    The Department has not adopted these suggestions, because we 
believe that the SAA is clear as to when below-

[[Page 27361]]

 cost sales have occurred ``within an extended period of time.'' The 
SAA at 831-832 states that ``below-cost sales need occur only within 
(rather than over) an extended period of time.'' According to the SAA, 
this means that the Department ``no longer must find that below-cost 
sales occurred in a minimum number of months before excluding such 
sales from its analysis.'' Thus, for example, where a particular model 
is sold at prices below the cost of production during one month of the 
period of investigation or review (and where such sales are in 
substantial quantities and are not at prices that would permit cost 
recovery), the Department may disregard these sales in its 
determination of normal value.
    Another commenter made two recommendations regarding the language 
in proposed paragraph (b) that an extended period of time ``normally 
will coincide with the period in which the sales under consideration 
for the determination of normal value were made.'' First, the commenter 
cited the statutory requirement that the substantial quantity of below-
cost sales occur ``within'' the extended period of time, and not 
``over'' that period. Based on this requirement, the commenter argued, 
paragraph (b) should not state that the period required to satisfy the 
``extended period of time'' criterion must be as long as, or 
``coincide'' with, the period of investigation or review. Second, this 
commenter noted that under proposed paragraph (b), the period in which 
``sales under consideration'' are made could vary by model or part 
number. For example, according to this commenter, if a model was 
discontinued only a few months into the period of review, paragraph 
(b), as drafted, would limit the ``extended period of time'' to the 
duration of sales of that model. The commenter suggested that if the 
Department intends that the entire period of investigation or review 
constitute the ``extended period of time,'' it should make this clear 
in the final regulations.
    It was not the Department's intention (nor do we believe it to be 
the case) that the use of the word ``coincide'' in proposed paragraph 
(b) changes the clear language of section 773(b)(1)(A) from ``within an 
extended period of time'' to ``over'' such a period. Instead, proposed 
paragraph (b) merely establishes the duration of that interval which 
the Department normally will consider as being ``an extended period of 
time'' for purposes of determining whether below-cost sales were made 
in substantial quantities under section 773(b)(1) of the Act. Below-
cost sales need only occur within that period in order to be counted 
toward the substantial quantities threshold.
    The Department does not believe it appropriate to redraft paragraph 
(b) to refer to sales within the period of investigation or review. The 
commenter making this suggestion presented a scenario in which a firm 
sells a particular model of a foreign like product only during the 
first few months of a review period. This commenter argued that 
paragraph (b) could be construed in such a way as to limit the extended 
period of time to the duration of sales of that model. We do not 
believe this to be the case, however, because the extended period of 
time is based on the period during which all foreign market sales were 
made, not merely sales of individual models. In other words, although 
it has been the Department's practice to conduct the sales below cost 
analysis on a model-specific basis, the extended period of time 
interval is generally the same for all models of the foreign like 
product that are under consideration for normal value. The fact that a 
firm makes sales of a particular model in only a few months does not 
alter the defined ``extended period of time.''
    This being the case, it is important to note that paragraph (b) 
allows the Department to adhere to the statutory requirement that an 
extended period of time normally be one year. At the same time, 
however, it recognizes that the foreign market sales used as the basis 
for determining normal value (and that may become the subject of a 
sales below cost analysis) can occur over a period that is longer or 
shorter than one year. For example, in an administrative review, 
because of our practice of looking to ``contemporaneous'' sales in 
months other than the month in which the sale of the subject 
merchandise took place, the Department often requests a respondent to 
submit data regarding contemporaneous sales of foreign like products 
for specific months prior to and after the normal one-year period of 
review. In this instance, the extended period of time would be longer 
than twelve months. Likewise, the extended period of time could be 
shorter than one year if, for example, the subject merchandise 
consisted of highly perishable agricultural products with growing and 
selling seasons that are shorter than one year.

Section 351.407

    Section 351.407 contains rules regarding the allocation of costs, 
the application of the major input rule under section 773(f)(3) of the 
Act, and the application of the startup adjustment to CV and COP under 
section 773(f)(1)(C) of the Act.
    Affiliated party transactions/major input rule: In response to a 
number of comments, the Department has added a new paragraph (b) to 
Sec. 351.407 that clarifies the Department's practice with respect to 
the determination of the value of major inputs purchased from 
affiliated suppliers in cases involving cost of production and/or CV. 
(We have redesignated proposed paragraphs (b) and (c) as paragraphs (c) 
and (d), respectively.) The new paragraph provides that, when the 
Department applies the major input rule, the Department normally will 
use the transfer price paid by the producer for a major input so long 
as that price is not below the input's market price or the supplier's 
cost of production for the input. In addition, if both the transfer 
price and the market price for a major input are less than the 
supplier's cost of production for the input, the Department normally 
will use production costs as the appropriate value for the major input 
under section 773(f)(3) of the Act.
    Several commenters made recommendations regarding the Department's 
treatment of production inputs purchased from affiliated parties under 
section 773(f)(2) and (3) of the Act (affiliated party transactions 
disregarded and the major input rule). In general, these commenters 
suggested that, in determining the value of production inputs, the 
Department should place greater reliance on transfer prices between 
producers and their affiliated suppliers, especially where the 
reporting burden on respondents outweighs the value of conducting an 
arm's length test for every input. More specifically, two commenters 
suggested that the regulations establish an arm's-length test for 
inputs obtained from affiliated parties. One commenter believed that 
only significant differences--for instance, plus or minus 10 percent--
between the average price charged to affiliated parties and the average 
price charged to unaffiliated parties should cause the Department to 
reject the affiliated party transactions as not being at arm's-length 
prices. As an alternative, this commenter suggested that the 
regulations provide that affiliated party prices are at arm's length if 
they do not deviate from the average non-affiliated party prices by 
substantially more than the deviation of non-affiliated party prices 
from that average. The other commenter suggested that if record 
evidence demonstrates that a producer cannot manipulate the price of 
inputs purchased from an affiliated party, the Department should

[[Page 27362]]

conclude that the producer purchased the input at arm's length.
    We have not adopted the proposal to include in the regulations an 
arm's-length test for inputs sourced from affiliated suppliers. 
Although a test along these lines may be appropriate in some instances, 
it may not be in others. For instance, where a particular input 
represents a significant portion of the cost of the merchandise under 
investigation, a 10 percent difference between the price charged to the 
affiliated producer and the price charged to unaffiliated producers 
could have a significant effect on the results of the Department's AD 
analysis. In other instances, where inputs sourced from an affiliated 
party represent an immaterial part of the overall manufacturing costs 
of the merchandise, the Department may find it appropriate to accept a 
producer's transfer prices (or to test those prices on a sample basis) 
without conducting a full-blown arm's-length test based on the prices 
paid for all such inputs. Thus, instead of implementing a single arm's-
length test applicable to all situations involving affiliated party 
inputs, we think it is important that the Department consider the facts 
of each case in order to determine the appropriate level of scrutiny it 
should give to affiliated party transactions.
    With respect to the recommendation that the Department consider the 
ability of a producer to manipulate the price of inputs purchased from 
an affiliated party, we do not think that the potential price 
manipulation standard described by the commenter is appropriate for 
purposes of examining the arm's-length nature of input transfer prices. 
The indeterminate nature of such a standard would make it 
unadministrable and impractical. Instead, the Department believes that 
the appropriate standard for determining whether input prices are at 
arm's length is its normal practice of comparing actual affiliated 
party prices with prices to or from unaffiliated parties. This practice 
is the most reasonable and objective basis for testing the arm's length 
nature of input sales between affiliated parties, and is consistent 
with section 773(f)(2) of the Act.
    With respect to the major input rule, two of the commenters 
recommended that the regulations establish a threshold for determining 
when an input will be considered ``major.'' These commenters suggested 
that normally the Department should not consider affiliated party 
inputs to be ``major'' if they represent less than 20 percent of the 
cost of production. Two commenters added that where a producer cannot 
obtain cost data from an affiliated supplier, the Department should 
allow the producer to report transfer prices.
    Another commenter opposed these suggestions, noting that the only 
substantive change made by the URAA with respect to the issue of input 
dumping was to clarify that section 773(f) applies to the calculation 
of both cost of production and CV. Thus, the commenter argued, the 
Department should reject as inappropriate the suggestions of the other 
commenters.
    The Department has not adopted the suggested definitions of ``major 
input.'' We continue to believe that the determination of whether an 
affiliated party input constitutes a ``major input'' in a particular 
case depends on several factors, including the nature of the input and 
the product under investigation. The determination also may depend on 
the nature of the transactions and operations between the producer and 
its affiliated supplier. For example, a producer could purchase a 
number of significant inputs from an affiliated supplier that 
individually account for a small percentage of the total cost of 
production for the subject merchandise, but, when considered in the 
aggregate, comprise a substantial portion of the total cost of 
production. In this instance, it may be appropriate for the Department 
to consider the inputs to be major inputs for purposes of examining the 
affiliated supplier's production costs under section 773(f)(3) of the 
Act. Similarly, the Department may find it necessary to analyze, on a 
sample basis, the production costs incurred for affiliated party inputs 
where a large number of such inputs are purchased from various 
affiliated suppliers and the combined value of the inputs purchased 
represents a significant portion of the total manufacturing cost of the 
subject merchandise.
    These examples illustrate the difficulties inherent in relying on a 
single, all-encompassing definition of ``major input.'' There also is 
an additional problem associated with using a single numerical 
standard. In identifying ``major input,'' the Department generally must 
rely on the transfer price charged by the affiliated supplier. However, 
because the transfer price itself may be below cost, it may not 
constitute an appropriate basis on which to measure the significance of 
the input. Because of this problem, we do not believe that the 
Department would have sufficient flexibility to examine affiliated 
party transactions were we to adopt the 20 percent-of-cost definition 
or any other specific threshold for major inputs suggested by the 
commenters.
    Nonrecurring costs: One commenter suggested that the Department add 
a new paragraph to its regulations to clarify the treatment of 
nonrecurring costs under section 773(f)(1)(B) of the Act. Specifically, 
this commenter recommended that the regulations establish a rebuttable 
presumption that all nonrecurring costs benefit current and/or future 
production, and that the Department either will (1) expense such costs 
to current production, or (2) allocate the costs over current and 
future production, as appropriate.
    As the Department stated in the AD Proposed Regulations, 61 FR at 
7342, the allocation of nonrecurring costs, such as research and 
development costs, for purposes of computing COP and CV is dependent on 
case-specific factors. Section 773(f)(1)(B) recognizes the fact-
specific nature of these allocation issues by providing only that the 
Department adjust costs appropriately to take account of any benefit 
that may accrue to a respondent's current and/or future production as a 
result of incurring such costs. Thus, in these final regulations, we 
have not elaborated on the allocation of nonrecurring costs. Instead, 
the Department will continue to determine the appropriate allocation of 
non-recurring costs on a case-by-case basis.
    Reliance on generally accepted accounting principles: With respect 
to the allocation of costs, one commenter recommended that the 
regulations provide that the Department normally will allocate costs in 
accordance with the generally accepted accounting principles (GAAP) of 
the country of exportation.
    The Department has not adopted this suggestion, because it would 
establish a standard for computing COP and CV different from the 
standard contemplated by the Act. Section 773(f)(1)(A) provides that 
the Department normally will calculate costs ``based on the records of 
the exporter or producer of the merchandise, if such records are kept 
in accordance with generally accepted accounting principles of the 
exporting country (or the producing country, where appropriate) and 
reasonably reflect the costs associated with the production and sale of 
the merchandise.'' Thus, the statute expresses a preference for 
computing costs on the basis of foreign country GAAP only when those 
practices measure costs in a reasonable manner. In addition, where a 
producer does not keep its normal accounting records in accordance with 
foreign country GAAP, the statute does not require that such records be 
made to conform with foreign GAAP.
    We do not mean to suggest that the Department would not look to the

[[Page 27363]]

GAAP of the foreign country (or to U.S. or international accounting 
principles) in establishing whether the normal accounting practices of 
the producer reasonably reflect the costs associated with the 
production of the merchandise in question. Instead, we mean only that, 
for AD purposes, the fact that a producer does not follow its national 
accounting principles does not automatically mean that the producer's 
accounting practices do not reasonably reflect costs.
    Startup adjustment: We received several comments concerning various 
aspects of proposed paragraph (c) (now paragraph (d)) and the new 
startup adjustment.
    Definition of startup: One commenter, stating that the definition 
of terms in proposed paragraph (c) seemed to conform to the statute and 
the AD Agreement, urged the Department to apply paragraph (c) in a 
manner consistent with the SAA and the URAA. Specifically, this 
commenter maintained that the Department should allow for a startup 
adjustment in those instances where a semiconductor producer can 
demonstrate that a substantial investment was required to change a 
design, significantly reduce wafer size, or produce other new types of 
products that fall within a current chip generation.
    Another commenter contended that the definitions of ``new 
products'' and ``new production facilities'' in proposed paragraph 
(c)(1) were exceedingly narrow. This commenter asked the Department to 
confirm that improvements to products or production facilities that 
entail substantial costs and that involve significant decreases in 
productivity will qualify for the startup adjustment.
    Two commenters oppose the suggestions described above. One 
commenter argued that the startup adjustment does not apply to the 
semiconductor design changes described. In support, this commenter 
cited the SAA at 836, which states that ``a 16 megabyte Dynamic Random 
Access Memory (DRAM) chip, for example, would be considered a new 
product if the latest version of the product had been a 4 megabyte 
chip. However, an improved version of a 16 megabyte chip (e.g., a 
physically smaller version) would not be considered a new product.''
    The other commenter opposing the suggestions argued that the 
definition of ``new products'' in proposed paragraph (c)(1)(ii) was too 
broad, and suggested that the regulations provide examples that would 
limit the circumstances under which the ``complete revamping or 
redesign'' of products would be eligible for a startup cost adjustment. 
This commenter noted that in many industries, firms continually revamp 
or redesign products in order to obtain incremental improvements in 
performance or to reduce production costs, or both. In the commenter's 
view, however, such process or performance improvements that do not 
change the dimensions and construction of an article are not sufficient 
to result in a ``new product.'' The commenter recognized that in 
proposed paragraph (c)(1)(ii), the Department sought to distinguish 
``mere improvements'' to products from the ``complete revamping or 
redesign'' of such products. However, the commenter believed that this 
paragraph was unduly vague and that the Department should clarify it by 
means of specific, narrowly defined examples of ``new products.''
    The Department has not incorporated the suggestions made by these 
commenters in the regulations. Nor do we consider this explanatory 
preamble an appropriate vehicle for making determinations as to whether 
situations specific to the semiconductor industry would warrant a 
startup adjustment under section 773(f)(1)(C). Instead, paragraph 
(d)(1) continues to set forth the definitions contained in the SAA at 
836. Given the variety of products and industries with which the 
Department deals and the fact that the startup provision is new to the 
statute, we believe that these examples are well-suited to the task of 
providing guidance to parties without unintentionally expanding or 
limiting the availability of a startup adjustment.
    Standard for granting a startup adjustment: One commenter noted 
that proposed paragraph (c) correctly recognized that the standard for 
granting a startup adjustment is no more or less stringent than those 
applicable to other types of adjustments under the Act. This commenter 
added that because there are numerous situations that may call for some 
form of startup adjustment, proposed paragraph (c) properly left the 
Department wide latitude in analyzing and granting startup adjustments.
    Another commenter, however, argued that the Department should 
strengthen paragraph (c) to ensure that respondents are not encouraged 
to file meritless claims for startup adjustments. To achieve this, the 
commenter recommended that the regulations provide that a respondent 
must submit substantial evidence demonstrating that the expenses for 
which a startup adjustment is sought can be directly tied to a startup 
phase of production.
    A third commenter suggested that, because respondents bear the 
burden of proof in demonstrating they are entitled to a startup 
adjustment, the regulations should clarify the information necessary to 
obtain the adjustment. This commenter asked that the Department give 
specific examples of the types of documentation that will be sufficient 
to meet its requirements.
    With respect to these suggestions, the Department notes that the 
SAA at 838 provides that the burden of establishing entitlement to a 
startup adjustment rests with the party seeking the adjustment. Among 
other things, the claimant must demonstrate that the costs for which an 
adjustment is claimed are directly associated with the startup phase of 
operations. Having said this, however, we have not adopted the 
suggestion that we establish a special burden of proof for startup 
adjustments, because we believe that the burden of establishing 
eligibility for a startup adjustment is the same as that applicable to 
any other AD adjustment. However, as in the case of any other 
adjustment, the Department intends to seek the case-specific 
information and documentation necessary to establish whether a startup 
adjustment is appropriate.
    We also have chosen not to implement the suggestion that the 
Department provide specific examples of the documentation required in 
order to qualify for a startup adjustment. The SAA indicates that 
startup inquiries will be based on the specific facts of each case. For 
example, the SAA at 838 states that ``companies must demonstrate that, 
for the period of 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.'' Here, the SAA clearly contemplates a fact-based inquiry 
that includes consideration of a respondent's specific production 
situation and the unique technical difficulties that led to decreases 
in its normal production output. Moreover, other portions of the SAA 
further support the conclusion that the Department must conduct a fact-
based examination of claims for a startup adjustment. Thus, it would be 
inappropriate, as well as impractical, for the Department to impose a 
mandatory set of information requirements that would apply to all 
cases.

[[Page 27364]]

    Duration of startup period: One commenter recommended that the 
regulations refer expressly to the quality of merchandise produced as a 
criterion to be considered in determining the length of the startup 
period. The commenter argued that where merchandise, although in 
production, is not yet of a quality sufficient for sale, some startup 
adjustment would be appropriate. Another commenter, however, opposed 
this proposal, arguing that the ``quality of a product'' is an 
amorphous concept that respondents could manipulate.
    The Department has not adopted the suggestion to make product 
quality a criterion in determining the length of the startup period, 
because we believe that this suggestion is inconsistent with the 
statute and the SAA. Section 773(f)(1)(C)(ii) of the Act provides that 
the Department will consider startup as having ended as of the time the 
producer achieves a level of commercial production that is 
characteristic of the merchandise, producer, or industry concerned. The 
SAA at 836 states that in making a determination as to when a producer 
reaches commercial production levels, the Department will measure the 
producer's actual production levels based on the number of units 
processed. The SAA also provides that, to the extent necessary, the 
Department will examine other factors (such as historical data 
reflecting the same producer's or other producer's experiences in 
producing the same or similar products) in determining the end of the 
startup period.
    We note also that the SAA does not refer to quality of merchandise 
as a criterion for measuring the length of the startup period, but 
instead relies strictly on the number of units processed as a primary 
indicator of the end of the startup period. In fact, the SAA at 836 
states that the Department will not extend the startup period in a 
manner that would cover product improvements and cost reductions that 
may occur over the life cycle of a product. The Department believes 
this to be a clear reference to product quality and yield improvements 
that may continue to exist long after startup has ended and, if taken 
into consideration, could result in extending the startup period beyond 
the point at which commercial production is achieved.
    Startup costs: One commenter suggested revisions to proposed 
paragraph (c)(4) (now paragraph (d)(4)) regarding the types of costs 
that are eligible for a startup adjustment under the Act. According to 
this commenter, these revisions would help to clarify the legislative 
intent that, in making a startup adjustment, the Department may 
consider only those costs that are tied directly to manufacturing of 
the merchandise.
    We have adopted the revisions suggested by the commenter. These 
changes provide additional clarification regarding the types of non-
production costs that the Department will consider as ineligible for a 
startup adjustment. These costs include general and administrative 
(``G&A'') expenses and general research and development costs that the 
Department normally considers to be part of G&A.
    Amortization of startup costs: One commenter disagreed with the 
Department's position that it should amortize over a reasonable period 
of time any excess between a respondent's actual costs and the costs 
adjusted and calculated for startup costs. In this commenter's view, 
there is no basis under the AD Agreement for such an approach. In 
addition, the commenter maintained that any adjustments for startup 
costs are isolated adjustments that the Department reasonably can take 
into account during the period of investigation or review.
    Another commenter recommended that the Department provide that 
amortized expenses related to prior startup operations be included as 
part of respondent's startup costs during the period under 
investigation or review. This commenter maintained that its 
recommendation was consistent with sound accounting principles and 
would preclude a respondent from receiving an unintended and improper 
benefit as a result of a startup adjustment.
    The Department believes that its position concerning the 
amortization of unrecognized startup costs is fully consistent with the 
URAA and the AD Agreement. As a result of making a startup adjustment 
under section 773(f)(1)(C), the difference between actual production 
costs during the startup phase and costs at the end of the startup 
phase are not accounted for during the startup phase. Because this 
difference represents actual costs incurred by the producer, it is 
reasonable to expect that the producer recoup these costs over an 
appropriate time period. Failing to consider these costs would mean 
ignoring a portion of the actual costs incurred by the producer in 
manufacturing subject merchandise.
    Moreover, as described in the SAA at 837, the difference between 
actual and adjusted startup costs is recouped through amortization over 
a reasonable period of time (subsequent to the startup phase) based on 
the life of the product or production machinery, as appropriate. 
Because the amortization period is based on the estimated life cycle of 
a product or machinery, this period may extend beyond the period of 
investigation or review. Therefore, it is not possible for the 
Department, in all instances, to account for startup costs within the 
investigation or review period.
    The Department also has not adopted the recommendation that 
respondents be required to account for startup operations that may have 
taken place prior to the period of investigation. The Department 
believes that only where respondents have adjusted for startup costs in 
an investigation or review period would they be required to account for 
(through amortization in periods subsequent to the startup phase) the 
difference between actual costs and costs computed for startup. As 
noted above, this practice ensures that respondents account for all 
actual costs incurred to produce the merchandise. Where merchandise was 
produced, or production facilities have been in place, prior to the 
period of investigation, the Department considers it unnecessarily 
burdensome to require that respondents account for previously incurred 
startup costs in the same manner as for startup operations that 
occurred during the investigation or review period. Nor is such a 
requirement contemplated under the statute as a condition for granting 
a startup adjustment.

Section 351.408

    Section 351.408 implements section 773(c) of the Act, which creates 
a special methodology for calculating normal value in AD proceedings 
involving a nonmarket economy (``NME'') country. We received numerous 
comments on this section.
    Market-oriented industry test: Section 773(c)(1) of the Act permits 
the Department, in certain circumstances, to use the ``market economy'' 
methodology set forth in section 773(a) to determine normal value in an 
NME case. To identify those situations where we would apply the market 
economy methodology and calculate normal value based on domestic prices 
or costs in the NME, we developed our so-called ``market oriented 
industry'' or ``MOI'' test. However, we elected not to codify the MOI 
test in the AD Proposed Regulations because of our concern that the 
test did not succeed in ``identifying situations where it would be 
appropriate to use domestic prices or cost in an NME as the basis for 
normal value * * *.'' 61 FR at 7343.
    Several comments were filed concerning the MOI test and whether the 
Department should codify its

[[Page 27365]]

current test or an amended version of the MOI test. One commenter put 
forward numerous arguments against the current MOI test. First, this 
commenter argued that the third leg of the MOI test is unrealistic. 
(The third leg of the test requires that market-determined prices must 
be paid for virtually all inputs before the Department will find a 
particular industry to be an MOI.) In this commenter's view, this third 
leg extends the Department's inquiry beyond the pricing of the input 
itself to factors that only remotely impact the price of the input, 
such as land use and energy policies. Because of the breadth of this 
inquiry, this commenter believed that the Department effectively 
requires an examination of the entire NME economy, an approach that 
contravenes the stated purpose of the MOI test; i.e., to determine 
whether a particular input or sector in the NME is sufficiently subject 
to market forces.
    According to this commenter, another indication that the MOI test 
is unreasonable is that few, if any, market economy countries have 
industries in which every single input is 100 percent subject to market 
forces. To make the MOI test more reasonable, this commenter suggested 
amending the third leg of the test to require only that a reasonable 
portion of inputs be subject to market forces.
    This commenter also questioned the Department's all-or-nothing 
approach under the third leg of the MOI test. Specifically, this 
commenter contended that the Department's requirement that all inputs 
sourced in the NME be obtained at market-determined prices overlooks 
the fact that certain inputs may be purchased at market prices. Where 
certain inputs are purchased at market prices, this commenter argued, 
the Department should use those prices. Moreover, in this commenter's 
view, doing so would be consistent with the Department's policy of 
using the actual input prices paid by an NME producer when the producer 
purchases the input from a market economy supplier and pays for the 
input in a market economy currency. The all-or-nothing approach also 
leads to anomalous results, in this commenter's view. When an NME 
industry is unable to meet the burden of showing that virtually all of 
its inputs are purchased at market-determined prices, the Department 
uses the NME methodology and values the NME producers' inputs in a 
surrogate market economy country that, according to this commenter, 
would itself fail the MOI test.
    This same commenter also questioned the second leg of the MOI test, 
particularly as it applies to the People's Republic of China (``PRC''). 
(In order to qualify under the second leg of the test, the industry 
producing the merchandise should be characterized by private or 
collective ownership.) In this commenter's view, government ownership 
should not be dispositive of whether an industry is subject to market 
forces. The Department investigates many state-owned companies in 
market economy countries, and government ownership of those companies 
does not lead the Department to apply a different AD methodology. 
Moreover, based on its experience in administering the separate rates 
test (see Sec. 351.102(b)), the Department has found on numerous 
occasions that PRC companies ``owned by the people'' operate 
independently of the government. Hence, in this commenter's view, 
ownership by the people should not preclude a PRC industry from 
achieving MOI status.
    On a more general level, this commenter urged the Department to 
apply the MOI test on a company-specific basis rather than to all 
companies within a given industry. The failure of particular companies 
to provide evidence that market forces are at work should not, in this 
commenter's view, work unfairly against those companies that are able 
to satisfy the test. Similarly, according to this commenter, the 
regional nature of certain economic reforms in the PRC argues for a 
company-specific approach.
    Two commenters raised various policy arguments against the rigidity 
of the MOI test. In their view, the MOI test should be applied in such 
a way as to encourage market reforms in NMEs. Instead, they claimed 
that the current MOI test sends a signal to NMEs that the Department 
will not recognize their reforms. Additionally, in the view of one 
commenter, NME producers and exporters would be more willing to 
cooperate in AD proceedings if the Department changed the MOI test, 
because they would have an opportunity to avoid the unfairly high 
margins generated by the NME methodology.
    Two commenters suggested amendments to the current MOI test to make 
it meaningful and fair for ``economies in transition'' to market 
economies. Specifically, they urged the Department to adopt a 
presumption that when the first two legs of the current MOI test are 
met (i.e., there is no government involvement in setting the prices or 
production quantities of the product, and the industry is characterized 
by private and collective ownership), the Department will perform a 
market economy AD analysis. Under their proposal, the presumption could 
be rebutted by evidence showing that the central government set the 
prices paid for inputs constituting a substantial value of the final 
product.
    One commenter urged the Department either to (1) retain the current 
MOI test (on the grounds that it does succeed in identifying those 
situations where it would be appropriate to use prices or costs in the 
NME), or (2) abandon the notion of MOIs altogether. In this commenter's 
view, it is not possible to reconcile the notion that a country is an 
NME with the notion that the prices or costs of some participants in 
that economy are immune from that economy's influences.
    We have not codified the current MOI test in our final regulations. 
Nor have we adopted a modified version of the MOI test. Given the 
changing conditions in NMEs, we believe that we should continue to 
develop our policy in this area through the resolution of individual 
cases, and the comments that were submitted will help us in that 
process. This area of the law continues to be extremely important to 
the agency and will receive the Department's careful attention.
    Surrogate selection: In applying the NME AD methodology, the first 
step is to identify the so-called ``surrogate country'' to be used for 
valuing the NME producers' factors of production. Under section 
773(c)(4) of the Act, the surrogate should be a country (or countries) 
at a level of economic development comparable to the NME and a 
significant producer of merchandise comparable to the merchandise being 
investigated. In proposed paragraph (b), we stated that we would place 
primary emphasis on per capita GDP as the measure of economic 
comparability. More generally with respect to surrogate selection, we 
explained that the relative weights we would place on the two selection 
criteria (i.e., economic comparability and significant production of 
comparable merchandise) would vary based on the specific facts 
presented by individual cases.
    We received two comments on the issue of surrogate selection. One 
commenter suggested that where other economic indicators (e.g., growth 
rates, distribution of labor between the manufacturing, agricultural 
and service sectors) reflect disparities in economic comparability, the 
Department should take this into account. The second commenter agreed 
with the Department's position that surrogate selection should be made 
on the basis of the particular circumstances presented by each case.

[[Page 27366]]

    Regarding the comment on economic comparability, we believe that 
paragraph (b) provides the Department with adequate flexibility to take 
into account economic indicators other than per capita GDP. While 
similar levels of per capita GDP would always be considered the primary 
indicator of comparability, other measures of comparability could 
outweigh it where the circumstances so warranted.
    Valuation of the factors of production: Once the Department 
identifies an appropriate surrogate country, the next step in an AD 
proceeding involving an NME is to value the NME producers' factors of 
production. Proposed paragraph (c) contained rules for determining 
these values. In general, under proposed paragraph (c), we would value 
inputs using publicly available information regarding prices in a 
single surrogate country. However, we articulated certain exceptions to 
this general rule. First, where the NME producer purchases inputs from 
a market economy producer and these inputs are paid for in a market 
economy currency, we would use the price paid by the NME producer to 
value that input. Second, we proposed valuing the NME producer's labor 
input by reference to a regression-derived calculation that effectively 
includes wage information from a number of countries, rather than a 
single country.
    We received several comments on the proposed factor valuation 
rules. One commenter called for the Department to seek internal 
coherence among the factor values by obtaining them from a single 
source. In this commenter's view, the goals espoused by the Department 
(i.e., to achieve accuracy, fairness and predictability) would be 
better served if where there were a tight interrelationship among the 
surrogate values. Moreover, because the Department calculates certain 
values (such as manufacturing overhead, general expenses, and profit) 
relative to labor and material costs, this commenter believed the 
Department should derive all of these amounts from the same source.
    We have not adopted this suggestion. In order to derive 
``internally consistent'' values, as the commenter used the term, it 
would be necessary to obtain valuation data from a single producer in 
the surrogate country. We have tried this approach in the past and it 
has not worked well. Frequently, we have been unable to obtain a 
surrogate producer willing to share this type of information with the 
Department. Moreover, even when we have been able to obtain data, this 
approach is much less transparent than use of publicly available input 
values, because while a surrogate producer might share data with the 
U.S. government, it would be less likely to make it available to a U.S. 
petitioner or an NME producer. Finally, we question the accuracy of 
this approach as it applies to individual input prices. When compared 
to a publicly available price that reflects numerous transactions 
between many buyers and sellers, a single input price reported by a 
surrogate producer may be less representative of the cost of that input 
in the surrogate country. For these reasons, we have continued the 
general schema put forward in the proposed paragraph (c) of relying on 
publicly available data (which will not normally be producer-specific) 
for material inputs, while relying on producer- or industry-specific 
data for manufacturing overhead, general expenses, and profit.
    Two commenters discussed the proposal in paragraph (c)(1) regarding 
the use of prices paid by NME producers when they import the input from 
a market economy and pay for the input in a market economy currency. 
One commenter objected to the Department's approach on the grounds that 
(1) such prices are not publicly available, and (2) they are not 
internally coherent with other values included in the calculation (see 
discussion above). In this commenter's view, if the Department does use 
the prices paid by NME producers, it should ensure that those prices 
are free of any distorting effects attributable to barter transactions 
or savings achieved through centralized purchasing. Moreover, this 
commenter continued, the Department should not use those input values 
except for the specific transactions to which they pertain. Thus, if an 
NME producer sourced some of the input from market economy suppliers 
and the remainder from domestic sources, then the value for the 
domestically-sourced inputs should be based on surrogate values and not 
on the price paid by the NME producers to the market economy suppliers. 
In support, this commenter stated that: (1) relying solely on the price 
paid to the market economy supplier to value the input is inappropriate 
because it assumes that the NME producer could purchase all of its 
needs at this price, and (2) it ignores the statutory requirement that 
the NME producer's factors of production be valued in a surrogate 
market economy country to the extent possible. The second commenter 
supported the Department's proposal to use the price paid by the NME 
producer to a market economy supplier in these situations, because that 
price is a more reasonable and accurate indicator of the value of the 
input than a surrogate price would be.
    We have not adopted the suggestions put forward by the first 
commenter. While we acknowledge that prices paid by the NME producer to 
a market economy supplier will not be publicly available, we have 
weighed this consideration against the increased accuracy achieved by 
our proposal. We note that the Federal Circuit has upheld our practice 
of using prices paid for inputs imported from market economies instead 
of surrogate values. Lasko Metal Products, Inc. v. United States, 43 
F.3d. 1442 (1994) (``Lasko''). While we certainly do not view this 
decision as permitting us to use distorted (i.e., non-arm's length) 
prices, we believe that the Court's emphasis on ``accuracy, fairness 
and predictability'' does provide us with the ability to rely on prices 
paid by the NME producer to market economy suppliers, in lieu of 
surrogate values, for the portion of the input that is sourced 
domestically in the NME. Moreover, as noted in the AD Proposed 
Regulations, 61 FR at 7345, we would not rely on the price paid by an 
NME producer to a market economy supplier if the quantity of the input 
purchased was insignificant. Because the amounts purchased from the 
market economy supplier must be meaningful, this requirement goes some 
way in addressing the commenter's concern that the NME producer may not 
be able to fulfill all its needs at that price.
    Another commenter suggested that the Department should ``test'' 
surrogate values for reasonableness. For example, if the Department has 
two values for a particular input that are very different, but one is 
closer to the price paid by the NME producer in the NME, the Department 
should select the price that is closer to the price paid by the NME 
producer. More generally, this commenter urged the Department to apply 
the law as fairly as possible by closely matching the characteristics 
of the input used by the NME producer with the input selected in the 
surrogate country for valuation purposes.
    We agree that ``aberrational'' surrogate input values should be 
disregarded (see, e.g., Certain Cased Pencils from the People's 
Republic of China, 59 FR 55625, 55630 (1994)). However, we have not 
accepted this commenter's benchmark for determining whether a 
particular surrogate value is reasonable. Use of an NME price as a 
benchmark is inappropriate because it is the unreliability of NME 
prices that drives us to use the special NME methodology in the first 
place. The Department does attempt to match the surrogate product

[[Page 27367]]

used for valuation purposes closely with the input used by the NME 
producer. This practice is reflected in paragraph (c), wherein the 
Department elected to codify a preference for publicly available 
information rather than publicly available published information. This 
approach allows us to use input-specific data instead of the aggregated 
data that frequently appear in published statistics. See AD Proposed 
Regulations, 61 FR at 7344.
    Finally, we received a comment regarding factor valuation in 
general. This commenter urged the Department to add to the regulations 
an illustrative list of the factors of production that are included in 
calculating the normal value of an import from an NME. The commenter 
believed that including such a list will increase the likelihood that 
all the appropriate factors of production will be identified. We have 
not adopted this proposal, because, in our view, the statute is 
sufficiently clear regarding the identify of the factors of production 
to be valued. If a party to a particular proceeding believes that 
certain factors are not being reported, it should raise its concerns 
with the Department in the context of that proceeding.
    Valuation of the labor input: Proposed paragraph (c)(3) included a 
proposal for valuing the labor input in NME cases. Rather than relying 
on the wage rate in the selected surrogate country, under this proposal 
the Department would have valued the labor input using a wage rate 
developed through a regression analysis of wages and per capita GDP. 
After a further review of paragraph (c)(3) and the comments relating 
thereto, we have left paragraph (c)(3) unchanged.
    Three commenters submitted views on the Department's proposal. One 
commenter noted that the proposal did not provide different wage levels 
for skilled and unskilled labor. The second commenter urged the 
Department to allow itself the flexibility to use other types of wage 
data if the record indicated that the other data would be better. Also, 
to value NME labor inputs, this commenter urged the Department to 
include full labor costs rather than simply wages, and to use industry-
specific data because wages can vary dramatically from industry to 
industry within a single surrogate country.
    We agree with the first commenter that the regression-based 
calculation fails to provide differentiated wage rates for skilled and 
unskilled labor. However, this results from limitations on the 
available data, not from the proposed approach. Even using a single 
country as a surrogate, it has been rare for the Department to find 
different wage rates for skilled and unskilled labor. Limitations on 
available data also prevent us from considering whether we should be 
using full labor costs or industry-specific wages, as suggested by the 
second commenter.
    The third commenter also urged the Department not to adopt the 
regression-based wage rate. First, in this commenter's view, the 
proposal ignored the statutory requirement that factors be valued in a 
country that is economically comparable to the NME and is a significant 
producer of comparable merchandise. More specifically, this commenter 
pointed out that because the regression was based on wage rates and per 
capita GDP, the Department would have calculated NME wage values 
without regard to the significant production criterion. In a related 
argument, this commenter stated that the regression-based wage value 
was inconsistent with the intent of Congress that the Department select 
a surrogate country where input prices allow significant production to 
occur. Third, this commenter claimed that the proposal was contrary to 
standard and accepted economic theory on the grounds that when a 
producer locates in a country, that producer will choose the 
appropriate mix of capital and labor based on their relative prices. By 
applying a theoretical wage rate, the Department's proposal would have 
upset that relative price structure with the result that NME 
calculations would be less accurate and less related to real economic 
conditions. Finally, this commenter contended that the premise 
underlying the Department's proposal was unsound. In this commenter's 
view, because many potential factor valuations vary significantly 
between and among eligible surrogate countries, there is no reason for 
singling out labor as a factor to be valued under a regression approach 
while using single values for other inputs.
    Addressing these comments in reverse order, we do not share the 
commenter's concern that the premise underlying our wage rate proposal 
was unsound because values for other factors of production are not 
similarly averaged. In general, we believe that more data is better 
than less data, and that averaging of multiple data points (or 
regression analysis) should lead to more accurate results in valuing 
any factor of production. However, it is only for labor that we have a 
relatively consistent and complete database covering many countries. To 
employ a parallel approach for other factors of production, the 
Department would have to develop a comparable database. Even if we were 
to limit our search for data to those countries that meet both the 
economic comparability criterion and the significant production 
criterion, the burden imposed on the Department in compiling such a 
database normally would outweigh any gains in accuracy.
    Regarding the commenter's point that the proposed approach violates 
standard economic theory, we do not dispute that the relative prices of 
labor and capital are important and that relatively cheap labor usually 
will be substituted for relatively expensive capital. However, in order 
to capture the precise tradeoff between labor and capital that this 
commenter is seeking, we would have to value all factors using 
information from a single surrogate producer. As discussed above, we 
have not adopted that general approach to factor valuation.
    Finally, regarding the argument that proposed paragraph (c)(3) 
ignores the significant manufacturer criterion for surrogate selection, 
we believe that the regression-based wage rate significantly enhances 
the accuracy, fairness, and predictability of our AD calculations in 
NME cases, all of which were attributes highlighted by the Court in 
Lasko. As we stated in the AD Proposed Regulations, for some inputs 
there is no direct correspondence between significant levels of 
production and input price or availability. When looking at a surrogate 
country to obtain labor rates, we believe it is appropriate to place 
less weight on the significant producer criterion, because economic 
comparability is more indicative of appropriate labor rates. As 
discussed above in connection with the calculation of average values 
for other factors, by combining data from more than one country, the 
regression-based approach will yield a more accurate result. It also is 
fairer, because the valuation of labor will not vary depending on which 
country the Department selects as the economically comparable surrogate 
economy. Finally, the results of the regression are available to all 
parties, thus making the labor value in all NME cases entirely 
predictable. Given these attributes of the regression-based wage rate, 
we believe that paragraph (c)(3) is fully consistent with the statute.
    Manufacturing overhead, general expenses, and profit: Regarding 
these factors of production, proposed paragraph (c)(4) stated that the 
Department normally will use information from producers of identical or 
comparable merchandise in the surrogate country.
    One commenter suggested that the Department should rigorously check 
the information it uses to value

[[Page 27368]]

manufacturing overhead, general expense and profit. Specifically, the 
Department should make sure the data are reliable and that they do not 
double-count items such as electricity and water. In this commenter's 
view, the Department could check the reasonableness of these values 
against the experience of the NME producers under investigation.
    For the reasons explained above, we do not believe it is 
appropriate to check surrogate values against the NME respondents' 
experience. Regarding the reliability of the surrogate values for 
manufacturing overhead, general expenses and profit, we do attempt to 
obtain good data and avoid double-counting where possible. Parties to 
the proceeding are encouraged to submit data on these factor values and 
to identify areas where the data are questionable.

Section 351.409

    Section 351.409 sets forth the guidelines for making adjustments to 
normal value for differences in quantities. We have made a few 
revisions in light of the comments received.
    One commenter proposed that the Department liberalize its policy 
regarding quantity adjustments, noting that the Department typically 
ignores the requirement in former 19 CFR 353.55(a) that the Secretary 
normally will use sales of comparable quantities of merchandise. 
Because the statute itself does not require that the Department use 
sales of comparable quantities, but instead merely authorizes an 
adjustment when the Department compares sales in different quantities, 
we have decided to delete this requirement from paragraph (a).
    In addition, we also have deleted the last sentence of proposed 
paragraph (a), which refers to the consideration of industry practice 
in determining whether to make a quantity adjustment. Upon further 
consideration, the Department believes that the granting of an 
adjustment should depend more on the pricing behavior of the individual 
firm in question, and not on whether other firms in the industry engage 
in similar behavior.
    As a matter of calculation mechanics, the Secretary may adjust for 
differences in quantities by deducting from all prices used to 
calculate normal value quantity discounts even if all sales did not 
receive the quantity discount. Paragraph (b) contains standards that 
must be satisfied before the Secretary will calculate normal value in 
this manner.
    One commenter stated that under paragraph (b), the two situations 
in which the Department will make a quantity adjustment are so narrow 
that it is virtually impossible for a respondent to meet the applicable 
standards. The commenter argued that the 20 percent threshold is 
excessively high, that it is not required by section 773(a)(6)(C)(i) of 
the Act, and that there is no rationale to support it. Moreover, 
according to the commenter, the requirement that the discounts be ``of 
at least the same magnitude'' violates the statutory directive that the 
adjustment be made whether the price difference is ``wholly or partly 
due to differences in quantities.'' The commenter suggested that the 
Department provide for additional situations where it will make 
quantity-based adjustments, such as when the exporter or producer can 
correlate quantity levels and prices.
    While the Department does not agree with all of the arguments made 
by the commenter, we agree that former 19 CFR Sec. 353.55(b), which 
formed the basis of paragraph (b), should be modified so as to allow 
other methods of establishing entitlement to a quantity adjustment. 
Therefore, in proposed paragraph (b), the Department added the word 
``normally'' to indicate that the two methods described in paragraph 
(b) are not exclusive.
    Under proposed paragraph (e), the Department stated that it will 
not make both a quantity adjustment and a level of trade adjustment 
unless it is established that the difference in quantities has an 
effect on price comparability that is separate from the difference in 
level of trade. One commenter argued that paragraph (e) was superfluous 
in light of Sec. 351.401(b)(2), which contains a general prohibition 
against the double-counting of adjustments. In addition, this commenter 
contended that the proposed paragraph (e) did not provide any guidance 
(beyond what normally would be required for any claimed adjustment) as 
to the kind of showing necessary to establish the difference in the 
effects of each type of adjustment on price comparability. Third, the 
commenter argued that because the Department will identify level of 
trade differences by focusing primarily on the selling functions, to 
the extent that the quantity sold is one factor in a claimed level of 
trade difference, the Department can determine on a case-by-case basis 
whether an additional claimed quantity adjustment would be duplicative.
    The Department recognizes that the prohibition against double-
counting adjustments in Sec. 351.401(b)(2) applies to situations in 
which a party claims a level of trade adjustment and an adjustment for 
differences in quantities. However, the Department believes that it is 
appropriate to emphasize that, in this specific area, it is 
particularly concerned about the possibility of double-counting. Based 
on our experience, firms tend to sell in different quantities to 
different levels of trade, thereby increasing the possibility of 
double-counting where both adjustments are claimed. This concern is 
expressed in the SAA at 830, where, in discussing the effect on price 
comparability necessary for a level of trade adjustment, the 
Administration stated: ``Commerce will ensure that a percentage 
difference in price is not more appropriately attributable to 
differences in the quantities purchased in individual sales.''
    With respect to the commenter's suggestion that the Department 
provide additional guidance as to the showing necessary to establish 
the individual effect of each adjustment, the Department does not have 
enough experience to provide additional guidance at this time. 
Essentially, we agree with the commenter that the Department, at least 
initially, will have to resolve these issues on a case-by-case basis.

Section 351.410

    Section 351.410 clarifies aspects of the Department's practice 
concerning adjustments to normal value for differences in the 
circumstances of sale (``COS'').
    One commenter, noting that proposed Sec. 351.410 did not indicate 
the types of expenses eligible for a COS adjustment, suggested that the 
final regulation clarify, in accordance with the SAA, that the 
Department will make a COS adjustment only for direct selling expenses 
and assumed expenses, as opposed to indirect selling expenses.
    We agree with the commenter that in proposed Sec. 351.410, we 
failed to connect the definitions of ``direct selling expenses'' and 
``assumed expenses'' in paragraphs (b) and (c) to the COS adjustment 
itself. Therefore, we have revised this section by (1) redesignating 
proposed paragraphs (b) and (c) as paragraphs (c) and (d), 
respectively; (2) redesignating proposed paragraph (d) as paragraph 
(f); and (3) adding a new paragraph (b) that indicates the expenses 
eligible for a COS adjustment. In this regard, however, in paragraph 
(e) we have maintained the special ``commission offset'' rule, 
previously codified in 19 CFR Sec. 353.56(b)(1).
    Another commenter suggested that the Department clarify that it may 
treat allocated expenses as direct selling

[[Page 27369]]

expenses eligible for a COS adjustment. We have not revised 
Sec. 351.410 in light of this comment. However, as stated above in 
connection with Sec. 351.401(g), the Department will accept the 
allocation of direct selling expenses, subject to certain conditions.
    One commenter noted that under proposed Sec. 351.412, the 
Department would establish the level of trade for CEP sales only after 
having made the adjustments required under 772(d) of the Act; i.e., 
after having converted the CEP sale to the equivalent of an export 
price sale. However, this commenter argued, because U.S. resale prices 
are the starting point for calculating CEP, and because such prices may 
differ substantially from one distribution channel to another, some 
sales cannot be compared logically to home market sales at the relevant 
level of trade, absent some appropriate adjustment. Accordingly, this 
commenter maintained, if the Department retains proposed Sec. 351.412, 
the Department should clarify in Sec. 351.410 that it normally will 
compare sales made in the same distribution channels. In this regard, 
the commenter asserted that the new law ``requires Commerce to make 
fair comparisons of price, 19 U.S.C. 1677b(a), and Commerce has 
traditionally used COS to achieve this all-important objective.''
    The Department has not adopted this suggestion. First, as discussed 
below, section 773(a) of the Act specifies the adjustments that are 
required in order to achieve a ``fair comparison.'' Moreover, under the 
statute, the COS adjustment is not a vehicle for identifying sales 
matches. Instead, the Department makes a COS adjustment only after it 
first has identified appropriate sales matches. Finally, the 
commenter's proposal would require the Department to match sales on the 
basis of a level of trade other than the level of trade of the CEP. 
However, section 773(a)(1)(B)(i) of the Act requires the Department to 
identify the level of trade of the CEP (which the SAA at 829 defines as 
a starting price to which the Department has made adjustments), and to 
determine normal value at the same level as the CEP, if possible. If 
the Department must rely on sales in the foreign market that are at a 
level of trade different from the level of trade of the CEP sale, and 
if the level of trade difference is reflected in different selling 
functions and a pattern of consistent price differences, then the 
Department must make an adjustment for the different levels of trade.
    Nevertheless, as discussed in connection with Sec. 351.412, the 
Department has modified the methodology it will use to identify 
different levels of trade. Under Sec. 351.412, as revised, the 
Department will not rely solely on selling activities to identify 
levels of trade, but instead will evaluate differences in selling 
activities in the context of a seller's whole scheme of marketing. This 
new methodology will deal with the problem identified by the commenter.
    One commenter argued that the Department should provide for a COS 
adjustment to normal value for resale profit in situations where the 
Department makes a profit deduction to CEP. The commenter stated that 
``[t]he Department rightly notes in its explanations that the statute 
does not `provide for an adjustment to normal value' '' for resale 
profit. However, the commenter argued that this is a ``grossly 
inadequate rationale'' for refusing to make such an adjustment, because 
neither the statute nor the SAA prohibits such an adjustment, and 
because such an adjustment is necessary ``for proceedings to be fair.'' 
The commenter contended that because the CEP profit deduction will be 
based on profit earned in both the United States and the home market, 
the deduction amounts to double-counting. According to the commenter, 
this is unfair, and it will have the perverse effect of discouraging 
foreign investment in the United States and adding value to imported 
products in the United States.
    Another commenter argued that any time a home market producer sells 
the foreign like product through an affiliated reseller, either in the 
home market or in the third country, a reseller profit will exist. 
However, under the proposed regulations, the Department will deduct 
profit only from CEP sales, and not from sales used to calculate normal 
value. To achieve a fair comparison, the Department should add a new 
provision to Sec. 351.402(d) (special rule for determining profit) and 
deduct this affiliated reseller profit from normal value whenever it 
compares normal value to CEP.
    The Department has not adopted these suggestions. First, with 
respect to the argument concerning a double-deduction of profit, we 
disagree. Under section 772(f), the Department does not deduct the CEP 
profit earned in both the United States and the home market from the 
price in the United States. Instead, because transfer prices cannot be 
relied upon for this purpose, section 772(f) provides for the 
allocation of total profit in the United States and the home market to 
CEP sales based upon the proportion of expenses incurred in the U.S. 
market vis-a-vis total expenses.
    In addition, the statute specifies the adjustments that the 
Department may make to normal value in order to achieve a fair 
comparison between normal value and export price or CEP. Therefore, 
adjustments beyond those called for by the statute (such as an 
adjustment for resale profit) are not appropriate. Finally, the courts 
have made it clear that where, as here, Congress has provided for an 
adjustment to sales made in one market, but not for an adjustment to 
sales made in the other, the Department must comply with the scheme 
established by Congress. Ad Hoc Committee of AZ-NM-TX-FL Producers of 
Gray Portland Cement v. United States, 13 F.3d 398, 401-02 (Fed. Cir. 
1994).
    One commenter stated that the Department should clarify that if 
prices are reported net of any rebated or uncollected taxes, no 
adjustment to normal value under this provision is required. We have 
not adopted this suggestion, because the Department believes that 
section 773(a)(6)(B)(iii) of the Act clearly provides that the 
Department need adjust for taxes only where such taxes are included in 
the price of the foreign like product that is reported to the 
Department. While the topic of taxes has been fertile ground for 
misinterpretation and litigation, Congress has now established 
conclusively that dumping comparisons are to be tax-neutral in all 
cases. SAA at 827.
    Regarding the definition of direct selling expense contained in 
proposed paragraph (b), one commenter suggested that the Department 
specifically state that the allocation of expenses, even over non-scope 
merchandise, does not automatically relieve that expense of its direct 
nature. Again, the Department has addressed this and similar comments 
above in connection with Sec. 351.401(g).

Section 351.411

    Section 351.411 deals with adjustments for differences in physical 
characteristics (also known as ``differences in merchandise'' or 
``DIFMER'' adjustments).
    One commenter suggested that the Department amend Sec. 351.411 to 
provide that the Department will not make DIFMER adjustments when it 
compares merchandise with identical control numbers, or (in the case of 
comparisons involving ``identical'' or ``similar'' merchandise) for 
characteristics that the Department did not select as product-matching 
criteria. In addition, this commenter suggested that the regulations 
state that, in reviews, the Department will use the same product 
matching criteria as it used in the initial investigation, unless 
revised by the Department. Another commenter agreed

[[Page 27370]]

with this commenter, and added that the Department never should base 
DIFMER adjustments upon differences in the ``market value'' of 
products, but instead should base such adjustments only upon 
differences in variable costs. This commenter cited the SAA at 828, 
which states that ``Commerce will continue its current practice of 
limiting this adjustment to differences in variable costs associated 
with physical differences.''
    The Department has not modified Sec. 351.411 in light of these 
suggestions. The final regulation follows the proposed regulation and 
prior regulations in providing that ``the Secretary will not consider 
differences in cost of production when compared merchandise has 
identical physical characteristics.'' By comparing merchandise 
considered identical, the Department can avoid the need to make DIFMER 
adjustments entirely.
    Regarding the proposal that the Department not alter its matching 
criteria after the initial investigation, the Department agrees that 
continuity and consistency from one segment of a proceeding to another 
is desirable. However, the Department must have the flexibility to 
revise these criteria where the facts so warrant.
    Finally, the Department has retained the language concerning the 
use of effect on market value in measuring the amount of a DIFMER 
adjustment. This provision has been in the Department's prior 
regulations, although the Department rarely has quantified a DIFMER 
adjustment on the basis of value. Moreover, the Federal Circuit has 
held that while the Department may maintain a methodological preference 
for cost over value in making adjustments, the Department may not rely 
on cost to the exclusion of value. Smith-Corona Group v. United States, 
713 F.2d 1568, 1577 (1983). In addition, although the SAA discusses the 
Department's practice of making DIFMER adjustments based on variable 
costs, which is the usual basis for such adjustments, it is silent on 
the issue of market value. Therefore, the Department believes it is 
necessary to retain the discretion to use market value in appropriate 
circumstances.
    Another commenter noted that under proposed Sec. 351.411, the 
Department would disregard fixed costs, SG&A, and profit that are 
allocable to the physical differences. This commenter argued that this 
approach is illogical, because the purpose of the DIFMER adjustment is 
to put the price of the similar home market merchandise on the same 
basis as the price of the comparison U.S. merchandise. The commenter 
noted that, in the context of constructed value, the Department 
includes all fixed and variable costs attributable to production of the 
merchandise, plus amounts for general expenses and profit. We have not 
adopted this suggestion, because the SAA at 828 is clear that when the 
Department uses cost to measure the amount of a DIFMER adjustment, it 
is to consider only differences in variable costs associated with 
physical differences in the merchandise.

Section 351.412

    Section 351.412 addresses the Department's methodology for 
identifying differences in LOT and adjusting for such differences, 
where appropriate. It also addresses how and when the Department will 
apply the CEP offset. There have been several changes from the proposed 
regulation.
    First, a number of commenters suggested that the Department abandon 
its efforts to regulate in this area because of the Department's lack 
of experience in making LOT adjustments under new statute. They 
proposed instead that Sec. 351.412 merely track section 773(a)(7)(A) of 
the Act, and provide that an LOT adjustment is allowed only when the 
claimant demonstrates entitlement ``to the satisfaction of Commerce.''
    The Department believes that it is necessary to provide as much 
guidance in this area as it can at this time. The LOT adjustment is one 
of the most significant issues under the new statute and is an area in 
which parties are in need of guidance. It is also an area in which 
there has been considerable debate concerning the requirements of the 
statute and the SAA. Therefore, while we have avoided regulating some 
areas in which the Department needs more experience, such as the 
definition of a ``pattern of consistent price differences,'' discussed 
below, we have clarified our interpretations of the legal requirements, 
and have given as much indication as possible as to how we intend to 
identify, and adjust for, differences in levels of trade.
    One commenter proposed that the regulations make clear that the 
burden of proof is on the respondent to prove entitlement to an LOT 
adjustment to its advantage, just as the burden is on a respondent to 
prove any other adjustment in its favor. The commenter also suggested 
that the regulations make clear that neither adjustments for LOT 
differences nor the CEP offset are automatic, but may be made only 
where the statutory requirements are satisfied.
    While the Department generally agrees with these concepts, we do 
not believe that it is necessary to incorporate them in the 
regulations. The statute provides clear guidelines regarding the 
conditions that must be satisfied before the Department may grant an 
LOT adjustment. In addition, Sec. 351.401(b) makes clear that all 
adjustments, including LOT adjustments, must be demonstrated to the 
satisfaction of the Secretary. New Sec. 351.412(f) also clarifies that 
the Department will grant a CEP offset only where a respondent has 
succeeded in establishing that there is a difference in the levels of 
trade, but, although the respondent has cooperated to the best of its 
ability, the available data do not permit the Department to determine 
whether that difference affects price comparability.
    Section 351.412(b) generally tracks the statute in explaining the 
general conditions precedent to making an LOT adjustment. Although, for 
organizational clarity, we have transposed paragraphs (b) and (c), we 
do not intend this modification to have any substantive impact.
    Section 351.412(c) explains the basis on which the Department will 
determine whether there are differences in the levels of trade of the 
EP or CEP and normal value. Paragraph (c) is substantively the same as 
the proposed regulation. Paragraph (c)(1) explains the basis on which 
the Department will determine the LOT of sales and CV. Paragraph 
(c)(1)(i) provides that the Department will determine the LOT of EP 
sales on the basis of the starting prices of sales to the United 
States, before any adjustments under section 772(c) of the Act. 
Paragraph (c)(1)(ii) provides that the Department will base the LOT of 
CEP on the U.S. affiliate's starting price in the United States, after 
the CEP deductions under section 772(d) of the Act, but before the 
deductions under section 772(c). Paragraph (c)(1)(iii) provides that 
the Department will base the LOT of a price-based normal value on the 
starting prices in the market in which normal value is determined, 
before any deductions under section 773(a)(6) of the Act. The 
Department will base the LOT of CV on the LOT of the sales from which 
the Department derives SG&A and profit under section 773(e) of the Act.
    Section 773(a)(1)(B) of the Act requires that, to the extent 
practicable, the Department base normal value on sales at the same LOT 
as EP or CEP. Sections 772(a) and (b) define EP and CEP, respectively, 
as the starting price in the United States as adjusted under sections 
772(c) and (d). The adjustments under subsection (d) normally change 
the LOT, so that the Department must

[[Page 27371]]

determine the LOT of CEP sales after any deductions under subsection 
(d). The adjustments under subsection (c), however, are made to both EP 
and CEP. Therefore, determining the LOT on the basis of EP or CEP 
before any deductions under subsection (c) yields the LOT of the EP or 
CEP. Similarly, we will not make the adjustments under section 
773(a)(6) before determining the LOT of normal value.
    Several commenters contended that the Department's proposed 
regulation, which identified the LOT of CEP sales based on the price 
after adjustments under section 772(d), was contrary to the statute and 
ignored commercial reality. According to these commenters, the 
Department's proposed analysis would make CEP offsets virtually 
automatic, contrary to the intent of Congress. These commenters 
suggested that the Department revise its proposed regulation to state 
that, in all situations, it will identify LOT on the basis of the 
starting price.
    Other commenters contended that there is no basis for identifying 
the LOT of CEP any differently than the LOT of EP and normal value. 
They argued that such an approach would result in comparing a CEP that, 
in reality, had been reduced to a ``factory door'' price with a normal 
value at a more advanced stage of distribution, thereby necessitating 
an LOT adjustment in virtually every instance. However, other 
commenters argued that the Department's identification of the LOT of 
CEP after adjustments was in accordance with the statute and SAA.
    As discussed above, we have maintained the methodology of the 
proposed regulation. The statute directs the Department to determine 
normal value at the LOT of the CEP, which includes any CEP deductions 
under section 772(d). We note that many of the commenters opposed to 
the use of adjusted CEP appear to believe that the deductions under 
section 772(d) involve all direct and indirect expenses. However, as 
discussed above in connection with Sec. 351.402, the deduction under 
section 772(d) removes only expenses associated with economic 
activities in the United States. Thus, CEP is not a price exclusive of 
all selling expenses, because it contains the same type of selling 
expenses as a directly observed export price.
    Paragraph (c)(2) describes how the Department will determine 
whether two sales were made at different levels of trade. We have 
modified the proposed regulation to provide that the Department will 
not identify levels of trade based solely on selling activities. We 
have made this change in order to avoid any implication that every 
substantial difference in selling functions or activities constitutes a 
difference in the levels of trade.
    Numerous commenters stated that the proposed regulation appeared to 
be inconsistent with the statute because it based the identification of 
levels of trade on the identification of different selling activities. 
These commenters argued that the statute requires that the Department 
identify levels of trade first, and that it consider selling activities 
only to determine whether an LOT adjustment is authorized.
    Other commenters asserted that the proposed regulation 
appropriately made differences in selling activities the test for 
identifying levels of trade. These commenters argued, however, that the 
Department should not merely count the number of different selling 
activities, but instead should take a qualitative approach, weighing 
the extent and importance of each selling activity.
    In the Department's view, while neither the statute nor SAA defines 
level of trade, section 773(a)(7)(A)(i) of the Act provides for LOT 
adjustments where there is a difference in levels of trade and the 
difference ``involves'' the performance of different selling 
activities. Thus, the statute uses the term ``level of trade'' as a 
concept distinct from selling activities. The SAA at 829 reinforces 
this point by explaining that the Department must analyze the functions 
performed by the sellers, but need not find that two levels involve no 
common selling activities before finding two levels of trade. In other 
words, the statute indicates that two sales with substantial 
differences in selling activities nevertheless may be at the same level 
of trade, and the SAA adds that two sales with some common selling 
activities nevertheless may be at different levels of trade. Taken 
together, the two points establish that an analysis of selling 
activities alone is insufficient to establish the LOT. Rather, the 
Department must analyze selling functions to determine if levels of 
trade identified by a party are meaningful. In situations where some 
differences in selling activities are associated with different sales, 
whether that difference amounts to a difference in the levels of trade 
will have to be evaluated in the context of the seller's whole scheme 
of marketing.
    If the Department treated every substantial difference in selling 
activities as a separate LOT, the Department potentially would be 
required to address dozens of levels of trade--many of which would be 
artificial creations. In addition to being extremely burdensome, this 
would make the Department less likely to find ``patterns of consistent 
price differences'' between the apparently different levels of trade. 
This would result either in denial of LOT adjustments altogether or 
routine use of the CEP offset. Neither of these results was intended by 
the URAA.
    Section 351.412(c)(2) states that an LOT is a marketing stage ``or 
the equivalent'' (which means that the merchandise does not necessarily 
have to change hands twice in order to reach the more remote LOT). It 
is sufficient that, at the more remote level, the seller takes on a 
role comparable to that of a reseller if the merchandise had changed 
hands twice. For example, a producer that normally sells to 
distributors (that, in turn, resell to industrial consumers) could make 
some sales directly, taking over the functions normally performed by 
the distributors. Such sales would be at the same LOT as the sales 
through the distributors. Each more remote level must be characterized 
by an additional layer of selling activities, amounting in the 
aggregate to a substantially different selling function. Substantial 
differences in the amount of selling expenses associated with two 
groups of sales also may indicate that the two groups are at different 
levels of trade.
    Although the type of customer will be an important indicator in 
identifying differences in levels of trade, the existence of different 
classes of customers is not sufficient to establish a difference in the 
levels of trade. Similarly, while titles, such as ``original equipment 
manufacturer,'' ``distributor,'' ``wholesaler,'' and ``retailer'' may 
actually describe levels of trade, the fact that two sales were made by 
entities with titles indicating different stages of the marketing 
process is not sufficient to establish that the two sales were made at 
different levels of trade.
    Section 351.412(d) provides that the Department will grant an LOT 
adjustment only if it is demonstrated to the satisfaction of the 
Secretary that the difference between the LOT of the sales in the 
United States and normal value affects price comparability, based on a 
pattern of consistent price differences between sales at those two 
levels of trade in the market in which normal value is determined. The 
Department will develop its practice in this area in the course of 
administrative proceedings, and intends to issue a policy bulletin once 
its methodology is more fully developed.
    Section 351.412(e) provides that the Department will calculate LOT 
adjustments by determining the weighted average of the adjusted prices

[[Page 27372]]

at the two relevant levels of trade in the market in which normal value 
is determined. These two levels are the level corresponding to EP or 
CEP and the level at which normal value is determined. The Department 
will apply the average percentage difference between these weighted 
averages to normal value, as otherwise adjusted.
    Several commenters contended that the Department should base the 
amount of any adjustment on the pattern of consistent price 
differences, rather than on a weighted average. The Department has not 
adopted this proposal. The SAA at 830 clearly states that ``any 
adjustment * * * will be calculated as the percentage by which the 
weighted-average prices at each of the two levels of trade differ in 
the market used to establish normal value.''
    Several commenters proposed that the Department make clear that LOT 
adjustments, or the CEP offset, can be applied when normal value is 
based on CV, as well as when normal value is based on prices. The 
Department agrees, and has revised the proposed regulation to remove 
any suggestion that LOT adjustments will be made only to prices. 
Section 773(a)(8) of the Act provides that the Department may adjust 
CV, as appropriate, under subsection 773(a). Section 773(a)(7)(B) 
provides that the CEP offset is made to ``normal value.'' There is no 
limitation confining the adjustment to home market prices, or 
precluding its application to CV. Therefore, it is clear that LOT 
adjustments are appropriate regardless of the basis on which normal 
value is determined.
    Where there are sales of the foreign like product at the LOT in the 
home market corresponding to the LOT of the EP or CEP, the Department 
will determine normal value on the basis of those sales, and the 
Department will not make an LOT adjustment. In situations where the 
Department seeks to make an LOT adjustment, there may be no usable 
sales of the foreign like product in the market in which normal value 
is determined at the LOT of the EP or CEP. In order to calculate LOT 
adjustments in such situations, the Department will examine price 
differences in the home market either for sales of broader or different 
product lines or for sales made by other companies.
    The regulation also makes clear that the Department will make the 
LOT adjustment on the basis of adjusted prices. Although neither the 
statute nor the SAA stipulates whether the average prices compared to 
determine the amount of the LOT adjustment should be adjusted prices, 
the adjustment can accomplish its purpose only if calculated on the 
basis of adjusted prices. This is because the adjustment is intended to 
eliminate only differences that are: (1) attributable to a difference 
in levels of trade; and (2) not otherwise adjusted for. In order to 
avoid having the LOT adjustment duplicate other adjustments, the LOT 
adjustment must be calculated on the basis of prices to which those 
adjustments have already been made. To achieve this, the Department 
will adjust prices at each level of trade in the foreign market as 
appropriate under section 773(a)(6) before it determines the amount of 
the LOT adjustment.
    One commenter asked the Department to specify that an LOT 
adjustment can have any value, positive, negative, or zero. We have not 
adopted this proposal because the statute and SAA make clear that LOT 
adjustments can be upwards or downwards. SAA at 830.
    Section 351.412(f) describes the situations in which the Department 
will grant a CEP offset. Some commenters suggested that the CEP offset 
is ``automatic.'' This is not the case. The Department will calculate 
CEP by deducting only selling expenses and profit associated with 
selling activities in the United States. Thus, the resulting CEP will 
retain an element of selling expenses and an element of profit, as do 
directly observed export prices. We do not agree that there never will 
be comparable sales in the foreign market.
    The Department will not make a CEP offset where the sales to the 
United States are EP sales or where the Department bases normal value 
on home market sales at the same LOT as the CEP. The Department will 
grant a CEP offset only where: (1) normal value is determined at a more 
remote level of trade than CEP sales; and (2) despite the fact that a 
respondent cooperated to the best of its ability, the data available do 
not provide an appropriate basis to determine whether the difference in 
levels of trade affects price comparability.
    One commenter contended that the Department should make the CEP 
offset in addition to any adjustment for differences in levels of 
trade. The Department has not adopted this proposal. Section 
773(a)(7)(B) of the Act authorizes the Department to make the CEP 
offset only where the data available do not provide an appropriate 
basis to determine an LOT adjustment. Therefore, whenever an LOT 
adjustment can be calculated, the Department cannot also make the CEP 
offset.

Section 351.413

    Section 351.413 deals with the Department's authority to disregard 
insignificant adjustments under section 777A(a)(2) of the Act. More 
specifically, Sec. 351.413 defines the term ``insignificant'' with 
respect to an individual adjustment and a group of adjustments.
    Two commenters observed that proposed Sec. 351.413 provided that 
the Department may ignore any ``group of adjustments'' with an ad 
valorem effect of less than one percent. Because the proposed 
regulations identify three separate ``groups of adjustments,'' it is 
possible that the Department could ignore three separate groups of 
``insignificant'' adjustments for which the combined ad valorem effect 
could be nearly three percent. To prevent this, one commenter suggested 
that the Department delete the final sentence of proposed Sec. 351.413 
dealing with groups of adjustments. The other commenter suggested that 
the Department make clear that the total ad valorem effect of all 
disregarded adjustments can be no more than one percent.
    The Department has not adopted these suggestions. In Sec. 351.413, 
the percentages used and the definition of groups of adjustments 
reflects the legislative history of section 777A(a)(2) of the Act, the 
statutory provision on which the regulation is based. See, e.g., S. Rep 
No. 249, 96th Cong., 2d Sess. 96 (1979). Moreover, with the exception 
of changes in terminology (e.g., from ``foreign market value'' to 
``normal value'') a revision to render this provision applicable to the 
calculation of export price and constructed export price, Sec. 351.413 
is unchanged from former 19 CFR Sec. 353.59(a).
    We believe that part of the commenters' concerns may arise from a 
misperception that the references to ``an ad valorem effect'' in 
Sec. 351.413 relate to the ad valorem dumping margin, so that if the 
Department ignored groups of adjustments with a total ad valorem effect 
of three percent, the Department, for example, might transform a 
dumping margin of 4 percent ad valorem to 1 percent ad valorem. 
However, this is not what is contemplated by Sec. 351.413, because that 
section clearly states that the ad valorem effect in question is the 
percentage change to ``export price, constructed export price, or 
normal value, as the case may be,'' and not the percentage change in 
the dumping margin.
    Finally, we should note that both section 777A(a)(2) and 
Sec. 351.413 give the Department the flexibility to determine, on a 
case-by-case basis, whether it should disregard a particular 
insignificant adjustment. Given this flexibility, and given that 
Sec. 351.413 is taken almost verbatim from the

[[Page 27373]]

legislative history, we do not believe there is a reason to eliminate 
the guidance provided by the last sentence defining ``groups of 
adjustments.''

Section 351.414

    Section 351.414 implements section 777A(d) of the Act and sets 
forth the three statutory methods for establishing and measuring 
dumping margins. Section 351.414(c) sets forth the preference for 
comparisons of average U.S. prices to average comparison market prices 
in investigations, and for comparison of transaction-specific U.S. 
prices to average comparison market prices in administrative reviews.
    Averaging groups: In establishing the particular averaging groups 
to be used for price comparisons, Sec. 351.414(d)(2) of the proposed 
rule stated that 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. 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 are considered relevant.
    One commenter objected to the Department's interpretation of the 
statutory provision, and suggested that the true purpose of averaging 
groups, as reflected in the SAA, is to identify potential targeted 
dumping to certain U.S. customers or certain U.S. regions, not to 
invite a similar division of the home market into such groups as a 
means of thwarting the AD law. The commenter concluded that the 
regulations should make clear that price averaging pertains solely to 
U.S. sales and that no product averaging groups will be undertaken with 
respect to normal value sales.
    We disagree with the comment. The SAA provides that in an 
investigation Commerce will normally establish and measure dumping 
margins on the basis of a comparison of weighted-average normal values 
and weighted-average export or constructed export prices. The SAA 
specifically states:

    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. (Emphasis added.)

SAA at 842.
    In the Department's view, the language of the SAA makes clear that 
Congress and the Administration contemplated the use of averaging 
groups for both U.S. and normal value sales. Nothing in the statute or 
SAA supports the view that normal value sales should not be averaged, 
or that normal value sales should not be averaged on the same basis as 
U.S. sales. Moreover, the purpose of establishing particular price 
averaging groups is to make accurate and meaningful price comparisons, 
not to identify (and address) potential targeted dumping.
    Time period over which weighted-average is calculated: Under 
Sec. 351.414(d)(3) of the proposed rule, the Department normally will 
calculate averages for the entire period of investigation or review 
when the average-to-average method is applied. However, the Secretary 
may calculate weighted-averages for shorter periods when normal values, 
export prices, or constructed export prices differ significantly over 
the course of the period of investigation or review.
    One commenter pointed out that there is no reason to default to the 
entire period given the complete reporting requirements of the law and 
the capability for analysis of prices through computer support. For 
perishable products, the commenter noted that the Department should 
average prices over the shortest period necessary to take account of 
the perishable nature of the products, but should not average prices 
over a period that would mask price trends unrelated to the perishable 
nature of the product.
    For products such as manufactured goods, the commenter contended 
that the Department should adopt a one-month average as the standard 
time period over which prices would be averaged when the Department 
employs the average-to-average method. According to the commenter, use 
of a one-month average time period results in a more precise comparison 
of normal values and export/constructed export prices than would a 
single period-wide average comparison. With a one-month standard, the 
Department may allow averaging over longer periods only where it is 
shown that a longer period does not distort the price-to-price 
comparison.
    Another commenter supported the Department's proposed rule that the 
Department will rely on shorter periods in appropriate circumstances 
and urges the Department to give full consideration to all relevant 
circumstances in applying the rule.
    In the Department's view, price averaging means establishing an 
average price for all comparable sales. In general, we believe it is 
appropriate to average prices across the period of investigation, 
though we recognize that there are circumstances in which other 
averaging periods are more appropriate. Accordingly, the proposed rule 
is designed to ensure that the time periods over which price averages 
and comparisons are made comports with the circumstances of the case, 
while maintaining a preference for period-wide averaging. Where 
perishable products are concerned, the Department has not fashioned a 
rule with respect to a particular type of product because such an 
approach may limit the agency's ability to address, for example, price 
trends unrelated to the perishable nature of the product.
    Use of the average-to-average method in administrative reviews: 
Section 351.414(c)(2) of the proposed regulations states that in a 
review the Secretary normally will use the transaction-to-average 
method. One commenter urged the Department to expand the application of 
the average-to-average price comparison method to administrative 
reviews. In contrast, another commenter contended that such an 
expansion is clearly impermissible. Citing the SAA, the opposing 
commenter argued that both Congress and the Administration recognized 
that the transaction-to-average method would continue to be used in 
administrative reviews. Another commenter agreed and advocated adoption 
of a final rule that would preclude application of the average-to-
average methodology in reviews, other than in exceptional 
circumstances.
    The Department specifically addressed these divergent positions in 
the preamble to the proposed regulation. The final rule reflects the 
SAA, which expressly states that the transaction-to-average method is 
the preferred approach for administrative reviews. SAA at 843. However, 
these regulations do not preclude the use of average-to-average price 
comparisons in every review. Circumstances may exist that warrant 
application of the average-to-average method and the final rule 
reflects the Department's authority to apply this method where 
necessary.
    On the subject of the transaction-to-transaction method of price 
comparisons, one commenter suggested that the final rule state that 
this method be applied ``in appropriate situations,'' rather than 
``only in unusual situations'' as contemplated in the proposed 
regulation, Sec. 351.414(c)(1). In the commenter's view, the language 
of the proposed rule establishes a strong presumption that the 
transaction-to-

[[Page 27374]]

 transaction method should not be used. The commenter believed that 
anyone who advocates use of this alternative method should bear the 
burden of providing good reason for its application, but that the final 
rule should not discourage this option.
    In the Department's view, the SAA makes clear that Congress did not 
contemplate broad application of the transaction-to-transaction method. 
SAA at 842. Specifically, the SAA recognizes the difficulties the 
agency has encountered in the past with respect to this methodology and 
suggests that even in situations where there are very few sales, the 
merchandise in both markets should also be identical or very similar 
before the agency would make transaction-to-transaction comparisons. 
Accordingly, we continue to maintain that the transaction-to-
transaction methodology should only be applied in unusual situations.
    Targeted dumping: Paragraph (f) of Sec. 351.414 of the proposed 
regulation implemented the ``targeted dumping'' provision of section 
777A(d)(1)(B) of the Act. Several parties commented that the final rule 
should provide more specific guidelines as to what constitutes targeted 
dumping. One commenter suggested the Department provide guidance by 
establishing more specific criteria for making targeted dumping 
determinations. Another commenter suggested that the Department needs 
to gain more experience in order to develop the proper standard for 
making such determinations, and should establish guidelines through 
policy bulletins as it develops its practice in this area.
    More specifically, several commenters suggested that the Department 
recognize in its final rule that certain ``common commercial patterns 
of pricing'' do not constitute targeted dumping, such as (1) different 
pricing for larger or smaller orders, (2) seasonal pricing, and (3) 
price changes associated with industry practices, such as downward 
price changes pursuant to lower costs as are typical for 
semiconductors, personal computers, and other technical products. In 
contrast, other commenters contended that common commercial practices 
in an industry can constitute targeted dumping and that such behavior 
should not be excused or ignored simply because it is considered to be 
a common commercial practice.
    Other commenters proposed additional substantive guidance. For 
example, one party suggested that targeted dumping should not be found 
to exist where the pattern of prices exists in both the U.S. and the 
comparison market. Another commenter suggested that the Department not 
obligate itself to use ``standard statistical techniques'' in all of 
its determinations. Several commenters suggested that the Department 
define in the final regulations the evidentiary threshold for 
initiating a targeted dumping inquiry. One commenter, in particular, 
contended that the final rule establish a low threshold for an 
allegation to be accepted, similar to allegations of sales below cost. 
Another commenter expressed concern that the Department's brief 
practice in this area already has established an arbitrarily high 
initiation standard.
    In the preamble to the proposed regulations, the Department 
specifically avoided the adoption of any per se rules on targeted 
dumping due to the Department's limited experience administering this 
provision of the Act. However, the Department recognizes the need to 
establish guidance in this area and thus will issue policy bulletins 
setting forth more specific criteria as the Department develops its 
practice in this area. Moreover, the Department plans to employ common 
statistical methods in its targeted dumping determinations in order to 
ensure that the test is applied on a consistent basis and in a manner 
that ensures transparency and predictability to all parties concerned. 
In addition, the Department will ensure that parties have an 
opportunity to explain whether a particular pattern of export prices or 
constructed export prices constitutes targeted dumping. A policy 
bulletin setting forth some basic guidelines for applying statistical 
techniques to targeted dumping questions will be issued in the near 
future. As we gain more experience in this area, the bulletins will be 
supplemented or replaced.
    Allegation requirement: In proposed Sec. 351.414(f)(3), the 
Department stated that ``the Secretary will not consider targeted 
dumping absent an allegation.'' Many commenters opposed the allegation 
requirement on several grounds. First, they claimed that the burden 
imposed on interested domestic parties is substantial in that these 
parties would have to examine multiple respondents, and then reexamine 
revised responses, sometimes submitted subsequent to verification. 
Second, the commenters added that the Department's proposed rule 
effectively precluded self-initiation of a targeted dumping examination 
by the Department. One commenter contended that the Department should 
place the burden of proof on respondents to demonstrate that they did 
not engage in targeted dumping, thereby removing the improper burden 
placed on domestic interested parties. The commenter went on to state 
that, contrary to the Department's reasoning in the preamble to the AD 
Proposed Regulations, it is the Department, and not domestic interested 
parties, that is in the best position to find targeted dumping. 
According to the commenter, a domestic interested party's knowledge of 
the market in question offers no special insight into whether a foreign 
company has engaged in targeted dumping. While a domestic company may 
recognize that it is losing sales to foreign competitors, it surely can 
have no way of knowing the reasons behind, or pattern emanating from, 
such dumping. According to the commenter, the Department, through its 
power to assess margins based on facts available, is in the best 
position to obtain the information necessary to make a targeted dumping 
determination.
    It is the Department's view that normally any targeted dumping 
examination should begin with domestic interested parties. It is the 
domestic industry that possesses intimate knowledge of regional 
markets, types of customers, and the effect of specific time periods on 
pricing in the U.S. market in general. Without the assistance of the 
domestic industry, the Department would be unable to focus 
appropriately any analysis of targeted dumping. For example, the 
Department would not know what regions may be targeted for a particular 
product, or what time periods are most significant and can impact 
prices in the U.S. market. Ultimately, the domestic industry possesses 
the expertise and knowledge of the product and the U.S. market. 
Information on these factors are significant for both the burden aspect 
and the determination itself. If the Department were required to 
explore the contours of the U.S. market for every product subject to an 
investigation, absent the knowledge as to how the market functions, the 
Department would be compelled to conduct countless comparisons of 
prices between customers, possible regions, and possibly significant 
time periods in every case. Absent any guiding insight as to how the 
market truly functions, such a requirement would be an enormous 
undertaking. Fundamentally, the Department needs the assistance of the 
domestic industry to focus the inquiry and to properly investigate the 
possibility of targeted dumping.
    Nevertheless, there may be instances in which the Department 
recognizes targeted dumping on its own, without an allegation from 
domestic interested parties. In such cases, the Department must be able 
to address the targeted

[[Page 27375]]

dumping behavior regardless of whether any domestic interested party 
filed a timely and sufficient allegation. Accordingly, the Department 
has modified the proposed rule in order to ensure that the regulation 
properly reflects the Department's authority to address instances of 
targeted dumping absent an allegation. However, the final rule 
anticipates that targeted dumping examinations normally will flow from 
allegations of targeted dumping.
    With respect to the availability of information, the Department 
recognizes that parties' access to relevant information on the record 
is crucial for making targeted dumping allegations of merit and will 
continue to take steps to ensure that public summaries provide the 
parties with adequate information. For example, the authority to 
determine margins based on facts available should continue to enable 
the Department to obtain the information necessary for domestic 
interested parties to make targeted dumping allegations. For example, 
the Department intends to calculate dumping margins using the 
transaction-to-average method as facts available for any respondent who 
refuses to supply the necessary data for a targeted dumping 
determination.
    Time in which to file targeted dumping allegations: Section 
351.301(d)(4) sets forth the time in which targeted dumping allegations 
must be filed. Although we received comments on the proposed regulatory 
deadline for filing targeted dumping allegations, for the final rule we 
have adopted the time requirement set forth in the proposed rule for 
the reasons discussed below.
    Under proposed Sec. 351.301(d)(4), the Department stated that an 
allegation of targeted dumping must be filed ``no later than 30 days 
before the scheduled date of the preliminary determination.'' 
Commenters pointed out that there is no reason to impose such a 
deadline for submitting an allegation given that the Department will 
receive the necessary information on targeted dumping in the normal 
course of every investigation. Thus, unlike cost investigations, the 
Department need not request additional information to conduct its 
examination. Accordingly, commenters contended, the Department need not 
require the stringent deadlines set forth in the proposed rule. 
Commenters also contended that the proposed deadline imposed a 
substantial burden in that for many cases the Department has limited, 
unusable information on the record 30 days prior to the preliminary 
determination. Commenters also noted that the proposed early and 
inflexible time limit would impose the added burden on petitioners at a 
time when the domestic industry must examine questionnaire responses 
for identification of deficiencies and for potential below-cost 
allegations. These commenters proposed that the final rule permit 
domestic interested parties to file allegations at any time until the 
deadline for the case briefs, which would allow allegations to include 
information uncovered at verification.
    The Department has adopted the proposed regulation relating to the 
time in which to file targeted dumping allegations. To extend the 
deadline would make it impossible for the Department to consider the 
allegation for the preliminary determination. Furthermore, it would 
make any verification of issues relative to the allegation extremly 
difficult. However, the Department recognizes the burden such a 
deadline may place on domestic interested parties in some situations 
and intends to be flexible with respect to the deadline. For example, 
if the timing of the responses does not permit adequate time for 
analysis, the Department may consider that to be ``good cause'' and 
extend the deadline under section 351.302.
    Limited application of average-to-transaction method: Under 
proposed paragraph (f)(2), the Secretary will normally limit the 
application of average-to-transaction comparisons exclusively to those 
sales in which the criteria for determining targeted dumping are 
satisfied. The preamble to the proposed regulations states that it 
would be ``unreasonable and unduly punitive'' to apply the transaction-
to-average approach to all sales where, for example, targeted dumping 
accounted for only one percent of a firm's total sales. The preamble 
also states that the approach would not always be limited in 
application ``because there may be situations in which targeted dumping 
by a firm is so pervasive that the average-to-transaction method 
becomes the benchmark for gauging the fairness of that firm's pricing 
practices.''
    Several commenters argued that neither the AD Agreement, statute, 
nor the SAA supports limited application, and advocated broad 
application of the transaction-to-average approach to all of a firm's 
sales once targeted dumping is found. In general, these commenters also 
were concerned that limiting the application exclusively to those sales 
in which the targeting criteria are met would have significant 
implications for submitting allegations. One commenter, in particular, 
noted that the ``hybrid approach'' proposed by the Department would 
require an exhaustive recitation, rather than a representative 
allegation, if all instances of targeted dumping are to be addressed. 
The commenter also rejected the view that broad application would be 
``punitive'' and claimed that the average-to-average method was 
designed to simplify the dumping calculations, not to provide more 
accurate means of calculating dumping margins. In the commenter's view, 
the transaction-to-average method should be viewed as a more accurate, 
not more punitive, measure of dumping. Another commenter suggested that 
the targeted dumping provision is intended to prevent foreign producers 
from unduly and inappropriately benefitting from an averaging of U.S. 
sales. The commenter reasoned that once a party engages in targeted 
dumping, it has violated the spirit of the average-to-average method 
and forfeits entirely the privilege of receiving an average-to-average 
calculation. In the alternative, one commenter suggested that the 
Department consider application of the transaction-to-average method 
for all of a firm's sales where it is established that targeted dumping 
exists for 10 percent or more of that firm's sales.
    The Department has considered the scope of application of the 
average-to-transaction methodology raised in the comments on this 
issue. Based upon our examination, the Department is adopting the 
proposed regulation without modification. In the Department's view, 
section 777A(d)(1) of the Act establishes a preference for average-to-
average price comparisons in investigations. The statute contemplates a 
divergence from the normal average-to-average (or transaction-to-
transaction) price comparison out of concern that such a methodology 
could conceal ``targeted dumping.'' SAA at 842. Accordingly, the 
Department will apply the average-to-transaction approach solely to 
address the practice of targeted dumping. Nevertheless, the Department 
contemplates that in some instances it may be necessary to apply the 
average-to-transaction method to all sales to the targeted area, such 
as a region or a customer, or even all sales of a particular 
respondent. For example, where the targeted dumping practice is so 
widespread it may be administratively impractical to segregate targeted 
dumping pricing from the normal pricing behavior of a company. 
Moreover, the Department recognizes that where a firm engages 
extensively in the practice of targeted dumping, the only adequate 
yardstick available to measure such pricing behavior may be the 
average-to-transaction methodology.
    With respect to the contention that limiting the application of the 
transaction-to-average method solely to

[[Page 27376]]

targeted sales would require an extensive allegation, as opposed to a 
representative one, we disagree. The proposed regulation speaks to 
limited application of the transaction-to-average method once targeted 
dumping is found to exist. It does not address the scope of the 
targeted dumping examination itself. Interested parties may make 
representative targeted dumping allegations based upon prices to 
purchasers, regions, or periods of time, provided they explain how the 
evidence examined in the allegations is relevant to prices of other 
products or models, or other companies.

Section 351.415

    Section 351.415 implements section 773A of the Act, which deals 
with the selection of the exchange rate used to convert foreign 
currencies to U.S. dollars. For the reasons set forth below, we have 
not revised Sec. 351.415.
    Forward sales of currency: Section 351.415(b) creates an exception 
to the general rule that the Department will use the actual exchange 
rate on the date of sale to convert foreign currencies to U.S. dollars. 
Under paragraph (b), if a currency transaction on forward markets is 
directly linked to an export sale under consideration, the Department 
will use the exchange rate specified in the forward sales agreement 
instead of the actual exchange rate on the date of sale.
    Two commenters made suggestions regarding the application of the 
``directly linked'' standard. One commenter suggested that if an 
exporter actually applies forward exchange rates to its export sales, 
then the Department should use those forward exchange rates (whether 
they be daily, quarterly, or quarterly averages). The second commenter 
proposed that in order for the Department to use a forward exchange 
rate, the forward sale of currency must relate specifically to the 
export sale, i.e., the forward rate should not be allocated. According 
to the second commenter, this would prevent an exporter from claiming 
that its general hedging operations are directly linked to particular 
export sales. This same commenter also argued that where the forward 
sale agreement spans a period of time, the Department should use the 
exchange rate specified in the agreement only if the date of sale of 
the export transaction falls within that period.
    With respect to these suggestions, while the Department believes 
that it might be desirable to have more detailed rules concerning the 
``directly linked'' standard, we do not have enough experience with 
this standard to provide such rules at this time. Therefore, we intend 
to develop our practice in the context of future investigations and 
reviews.
    Another commenter, noting that forward currency transactions 
usually involve a fee, suggested that the Department either should 
include this fee as part of the forward exchange rate or should make a 
COS adjustment under Sec. 351.410 to account for the fee. We agree that 
the Department should account for these types of fees, but we do not 
believe that an additional regulation is necessary. In the case of 
Sec. 351.410, for example, we believe that the provision is 
sufficiently flexible to encompass a COS adjustment for forward 
exchange rate fees.
    Model for identifying and addressing fluctuations and sustained 
movements in exchange rates: Several commenters made suggestions to 
amend the model proposed by the Department for identifying and 
addressing fluctuations and sustained movements in exchange rates. (We 
described this model briefly in the AD Proposed Regulations, 61 FR at 
7351, and then published a more detailed description in Policy Bulletin 
(96-1): Currency Conversions, 61 FR 9434 (March 8, 1996) (``Policy 
Bulletin 96-1'')). Regarding fluctuations in exchange rates, two 
commenters suggested that the Department replace the 8-week rolling 
average benchmark for determining fluctuations with a 17-week (120-day) 
rolling average. They also suggested that the benchmark should not 
include exchange rates that the Department has determined to be 
fluctuations, because section 773A of the Act requires the Department 
to ignore fluctuations.
    Regarding sustained movements in an exchange rate, certain 
commenters claimed that the Department's model is overly rigid in 
identifying such movements, as evidenced by the fact that the model 
only identifies one sustained movement for one currency in the period 
since 1992. These commenters suggested several amendments to the model 
to ensure that it would serve the purpose of protecting exporters when 
the value of their currency changes faster than they can raise prices. 
These suggestions included: changing the so-called ``recognition 
period'' for sustained movements from 8 weeks to 13 weeks (90 days); 
requiring fewer than 8 consecutive weeks of changes before recognizing 
a sustained movement, or using monthly rather than weekly averages to 
determine whether a sustained movement has occurred; applying an 
historic rate (such as the rate from the quarter preceding the 
recognition period) during the recognition period; and, using the 
official exchange rate from the first day of the recognition period 
during the 60-day adjustment period.
    One commenter argued against the latter two suggestions on the 
grounds that the purpose of section 773A(b) is to allow exporters an 
adjustment period after a sustained movement in exchange rates has 
occurred. Therefore, in this commenter's view, it makes no sense to use 
an exchange rate that predates the sustained movement, nor would 
section 773A(b) permit the use of an historic rate occurring during the 
recognition period. Finally, one commenter requested that the 
Department provide additional guidance on the exchange rate that it 
intends to apply when a foreign currency is depreciating, as opposed to 
appreciating, against the U.S. dollar.
    The Department welcomes the numerous comments submitted on the 
model for identifying and addressing fluctuations and sustained 
movements in exchange rates. As we stated in the AD Proposed 
Regulations, we intend to use the model for one year and then evaluate 
its performance based on public comment. As part of that evaluation, we 
will consider the comments we have received in connection with the 
instant rulemaking. Moreover, as indicated in Policy Bulletin 96-1, we 
will consider comments we received on the model through December 31, 
1996.
    At this time, however, we would like to make two points. First, 
based on a preliminary review of the comments, we do not believe that 
using a benchmark rate that includes past fluctuations contravenes 
section 773A(a). The fluctuations identified under the model are 
fluctuations that are relative to a particular number calculated at a 
particular point in time; i.e., the average of the actual exchange 
rates on each of the prior 40 days. The fact that a particular daily 
rate fluctuates vis-a-vis that number is sufficient to disqualify that 
daily rate for purposes of conversion on that date. However, the 
designation of a particular daily rate as a fluctuation does not render 
that rate unusable for all purposes. In particular, we believe that 
actual exchange rates provide the best gauge of whether a particular 
daily rate should be viewed as a fluctuation. Therefore, we consider it 
appropriate to include past fluctuations in the rolling average 
benchmark.
    Moreover, when the Department deems a particular daily rate to be a 
fluctuation, we believe we should use the benchmark (which includes 
past fluctuations) in lieu of the daily rate. For

[[Page 27377]]

example, the fact that a daily rate three weeks ago is considered to be 
a fluctuation means only that the daily rate varied from the historic 
average as of that time. It does not mean that one should continue to 
view that daily rate as a fluctuation three weeks later. Because the 
designation of fluctuations is time-sensitive in this sense, the 
commenters appear to be reading too much into the statutory prohibition 
against the use of fluctuating exchange rates.
    Second, regarding the comment on our treatment of depreciating 
currencies, we note that the Department addressed this issue in Certain 
Pasta from Turkey, 61 FR 30309, 30325 (June 14, 1996). In that case, 
which involved a situation where the foreign currency was depreciating 
against the U.S. dollar, we used actual daily exchange rates rather 
than the benchmark rates generated by the model. We agree with the 
commenter that we should address depreciating currencies more fully in 
a final model, and we welcome further suggestions on this point.
    Sustained movements: While the model discussed above identifies and 
addresses sustained movements in exchange rates, paragraph (d) sets 
forth a general rule that where there is a sustained movement 
``increasing the value of the foreign currency relative to the U.S. 
dollar,'' exporters will be given 60 days in which to adjust their 
prices. Two commenters claimed that paragraph (d) is ``one-sided.'' 
Specifically, one commenter objected to the fact that paragraph (d) 
only addresses sustained appreciations in a foreign currency relative 
to the U.S. dollar. In this commenter's view, section 773A(b) does not 
specify whether the sustained movement must be upward or downward. The 
second commenter (presumably referring to the fact that paragraph (d) 
does not address sustained depreciations in a foreign currency) pointed 
out that under paragraph (d), respondents can take advantage of 
favorable exchange rates when a foreign currency appreciates, but 
domestic industries do not receive a comparable benefit when the 
currency depreciates. The commenter suggested that the Department 
should address this by establishing a special rule for situations where 
exporters should be raising their U.S. prices in response to exchange 
rate changes, but, instead, are lowering them.
    We are not adopting the proposals put forward by these commenters. 
The language contained in paragraph (d) regarding upward sustained 
movements reflects the legislative intent expressed in the SAA, which 
specifically discusses the granting of an adjustment period following 
``a sustained increase in the value of a foreign currency relative to 
the U.S. dollar.'' SAA at 842. Moreover, we do not believe that the 
statute provides any authority for the Department to deny an adjustment 
period when a sustained increase in the value of a foreign currency 
relative to the U.S. dollar has occurred, even in the event that an 
exporter is lowering U.S. prices.
    Another commenter pointed out that paragraph (d) would provide an 
adjustment period for sustained movements in exchange rates only in 
investigations, and not in reviews. This commenter questioned whether 
such a limitation was consistent with the AD Agreement. In the 
Department's view, paragraph (d) is consistent with the AD Agreement, 
because Article 2.4.1 specifies that the 60-day period for adjusting 
prices applies ``in an investigation.''
    Finally, one commenter urged the Department to use the exchange 
rate in effect on the date that the price and quantity terms of a sale 
are first established, rather than under the methodology used to 
identify the date of sale for other purposes. We have not adopted this 
suggestion because section 773A(a) of the Act directs the Department to 
use the exchange rate in effect on the ``date of sale of the subject 
merchandise.'' We have clarified how we will identify the date of sale 
in section 351.401(i) of these regulations. The Department cannot 
establish a different date of sale for currency conversion purposes 
from that which is used for all other purposes. This issue is discussed 
further with respect to that provision, above.

Other Comments

    In addition to the comments discussed above, the Department also 
received several comments that did not relate to a particular provision 
in the AD Proposed Regulations. A common theme of these comments, 
however, was the extent to which the Department should rely on data as 
recorded in a firm's books and records.
    One commenter criticized the Department's practice of requiring 
that respondents submit data in the specific format established by the 
Department. According to the commenter, this requirement was 
unnecessary, it rendered the cost of complying with Department 
information requests excessively high, and, when combined with the 
Department's tight deadlines, it made the entire process extremely 
onerous for a firm attempting to comply with a request for data. 
Another commenter, citing the increasing convergence of accounting 
standards as companies compete with one another for capital on an 
international level, proposed that the Department accept data responses 
in a format that conforms to the generally accepted accounting 
principles of the company's home country. Another commenter supported 
these proposals.
    With respect to these comments, we first must note that in 
enforcing the AD law, the Department must balance two different 
objectives. On the one hand, the Department has a responsibility to 
identify and measure dumping accurately and in accordance with the 
standards set forth in the AD law. In some instances, this may mean 
that the Department must seek information of a type that is not readily 
retrievable from a company's accounting or financial records or that is 
in a format different from the format in which a company maintains its 
records. On the other hand, the Department is cognizant of the need to 
avoid imposing, in the words of section 782(c) of the Act, ``an 
unreasonable burden'' on respondents.
    In implementing the URAA, we have reviewed our practices and 
regulations in light of the two objectives described above. As a 
result, we have taken several steps that we believe will make the AD 
process less onerous for parties, but that, at the same time, preserve 
the Department's ability to apply the standards of the AD law. For 
example, the Department has revised its standard AD questionnaire to 
clarify that the Department will be flexible in accepting responses 
that reflect different accounting standards and systems. In addition, 
as discussed above, in the final regulations relating to allocations, 
date of sale, and CEP profit, we also have taken steps to accommodate 
different accounting standards and systems. In our view, in addition to 
making the AD process less onerous for parties, these changes will make 
the Department's verifications more efficient and effective, thereby 
enhancing the Department's ability to enforce the AD law.
    On a somewhat related topic, one commenter stated that the 
regulations should address the matter of ``model-matching'' 
methodology.3 According to

[[Page 27378]]

the commenter, the Department currently instructs respondents as to the 
relative importance of physical characteristics of the subject 
merchandise and the foreign like product, rather than permitting 
respondents to make that determination, as under traditional practice. 
The commenter also alleged that there were two principal problems with 
the Department's current approach: (1) the Department's manner of 
identifying product characteristics, and the relative importance 
assigned to those characteristics, bears no necessary relation to the 
product coding system used by a respondent for commercial purposes; and 
(2) the use of the product coding system formulated by the Department 
in individual cases often results in inappropriate comparisons. 
Therefore, the commenter argued, the Department should make clear in 
the preamble to its regulations that the Department generally will use 
a respondent's existing product coding system as the starting point for 
identifying identical and similar merchandise. The Department then can 
make modifications and additions to those codes to the extent necessary 
to reflect desired model-match criteria.
---------------------------------------------------------------------------

    \3\ ``Model-matching'' is a shorthand expression for the process 
the Department uses to identify identical or similar home market or 
third-country merchandise. In order to identify and measure dumping, 
the Department must compare a U.S. sale of a particular type or 
model of merchandise to a home market or third-country sale of 
identical or similar merchandise. Typically, in an AD proceeding, 
the Department will develop ``model-matching'' criteria for 
identifying identical or similar merchandise in that particular 
case.
---------------------------------------------------------------------------

    We have not adopted the suggestion. Under section 771(16) of the 
Act, the starting point for model-matching is always the physical 
characteristics of the product. Based on our experience, a company's 
internal product coding system often does not provide sufficient 
information to allow the Department to match products in accordance 
with their physical characteristics. Therefore, we do not believe that 
it would be appropriate to establish what, in effect, would be a 
rebuttable presumption that a company's internal product coding system 
should be used for purposes of model-matching.
    On the other hand, however, we do not intend to suggest that a 
company's product coding system is irrelevant to the model-matching 
exercise. We agree that the model-matching methodology used by the 
Department in a particular case should reflect the most significant 
physical characteristics of a product. We also agree that it often is 
the case that a company's product coding system is informative, if not 
dispositive, as to what those characteristics are. For example, the 
fact that the product coding systems of every respondent involved in an 
AD proceeding capture a particular physical characteristic usually is a 
good indication that the characteristic is significant. Therefore, the 
Department will continue to consider producer coding systems in 
developing model-match methodologies in particular cases, and will use 
these codes where such use is consistent with the standards set forth 
in section 771(16).

Subpart G--Effective Dates

    Subpart G consists of a single Sec. 351.701 which (1) establishes 
the dates on which the new regulations contained in Part 351 will 
become effective, and (2) explains the extent to which the Department's 
prior regulations will govern segments of proceedings to which the new 
regulations do not apply. Section 351.701 also explains the limited 
role of these new regulations in proceedings to which they do not 
apply.
    The new regulations will apply to all investigations and other 
segments of proceedings (such as scope requests), other than 
administrative reviews, initiated on the basis of petitions filed or 
requests made more than thirty days after the date on which the new 
regulations are published. The new regulations also will apply to all 
investigations or other segments of proceedings that the Department 
self-initiates more than thirty days after the date on which the new 
regulations are published. In addition, the new regulations will apply 
to all administrative reviews initiated on the basis of requests filed 
in the month following the month in which the date 30 days after 
publication of this notice falls. The slight difference in effective 
date for administrative reviews is to avoid confusion over whether the 
new regulations apply to administrative reviews requested by different 
parties on different days during the month in which the new regulations 
become effective for investigations and other segments of proceedings 
(in other words, during the month that includes the day thirty days 
after the date on which these regulations are published).
    Investigations, reviews, and other segments of proceedings to which 
these regulations do not apply will continue to be governed by the old 
regulations, except to the extent that those regulations were 
invalidated by the URAA or were replaced by the interim final 
regulations published on May 11, 1995 (60 FR 25130 (1995)).
    For segments of proceedings to which these regulations do not 
apply, but which are subject to the Act as amended by the URAA because 
they were initiated on the basis of petitions filed or requests made 
after January 1, 1995 (the effective date of the URAA), the new 
regulations will serve as a restatement of the Department's 
interpretation of the amended Act. In other words, the new regulations 
describe the administrative practice that the Department will follow, 
unless there is a reason consistent with the amended Act to depart from 
that practice. The AD Proposed Regulations no longer will serve that 
purpose.

Annexes to Part 351

    We have revised Annexes I through V to reflect changes made in 
these final regulations, as well as to correct typographical errors 
identified in the annexes attached to the AD Proposed Regulations. In 
addition, we have revised the charts to include certain deadlines that 
were not included in the AD Proposed Regulations.
    One commenter suggested that the Department should refrain from 
adopting the ``inflexible deadlines'' outlined in the annexes, and 
instead should adapt the timetable to the complexity of each 
investigation or review. With respect to this suggestion, we must 
emphasize that the tables and charts contained in Annexes I through VII 
are intended to serve only as a guide to potential petitioners and 
respondents, as well as other persons potentially interested or 
involved in an AD/CVD proceeding. The tables themselves are not 
``rules,'' and they do not represent the timetables that the Department 
will follow in all proceedings. In fact, they may not represent the 
timetables that the Department will follow in a majority of 
proceedings. The tables and charts simply cross-reference relevant 
provisions of the regulations so that parties and other persons will be 
aware of when such things as extensions or postponements might occur. 
As stated previously, under Sec. 351.302(b), the Secretary may, for 
good cause, extend any time limit established by Part 351 unless such 
an extension is expressly precluded by statute.

Classification

E.O. 12866

    This final 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 final rule will 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 AD and CVD proceedings as a result of the 
streamlining and

[[Page 27379]]

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, a 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 final 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 AD and CVD 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 final 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 requirements.

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: May 2, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.

    For the reasons stated, 19 CFR chapter III is amended 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.
351.107  Deposit rates for nonproducing exporters; rates in 
antidumping proceedings involving a nonmarket economy country.

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 rulings.

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.
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 
the 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.

[[Page 27380]]

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.

Subpart G--Applicability Dates

351.701  Applicability dates.
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 New Regulations
Annex VI--Countervailing Investigations Timeline
Annex VII--Antidumping Investigations Timeline

    Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303 
note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.

PART 351--ANTIDUMPING AND COUNTERVAILING 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, Pub. L. 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. 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. 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.
    (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: corporate or family 
groupings; franchise or joint venture agreements; debt financing; and 
close supplier relationships. The Secretary will not find that control 
exists on the basis of these factors unless the relationship has the 
potential to impact decisions concerning the production, pricing, or 
cost of the subject merchandise or foreign like product. The Secretary 
will consider the temporal aspect of a relationship in determining 
whether control exists; normally, temporary circumstances will not 
suffice as evidence of control.
    Aggregate basis. ``Aggregate basis'' means the calculation of a 
country-wide subsidy rate based principally 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 administrative protective order.
    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.
    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.

[[Page 27381]]

    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 if the 
Secretary determines, based on an evaluation of all of the 
circumstances particular to the sales in question, that such sales or 
transactions have characteristics that are extraordinary for the market 
in question. Examples of sales that the Secretary might consider as 
being outside the ordinary course of trade are 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.
    Price adjustment. ``Price adjustment'' means any change in the 
price charged for subject merchandise or the foreign like product, such 
as discounts, rebates and post-sale price adjustments, that are 
reflected in the purchaser's net outlay.
    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.
    Respondent interested party. ``Respondent interested party'' means 
an interested party described in subparagraph (A) or (B) of section 
771(9) of the Act.
    Sale. A ``sale'' includes a contract to sell and a lease that is 
equivalent to a sale.
    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, or a scope inquiry 
under Sec. 351.225, each would constitute a segment of a proceeding.
    Sunset review. ``Sunset review'' means a review under section 
751(c) of the Act.
    Suspension of liquidation. ``Suspension of liquidation'' refers to 
a suspension of liquidation ordered by the Secretary under the 
authority of title VII of the Act, the provisions of this Part, or 
section 516a(g)(5)(C) of the Act, or by a court of the United States in 
a lawsuit involving action taken, or not taken, by the Secretary under 
title VII of the Act or the provisions of this Part.
    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 document to the submitter, if the document was 
returned because:
    (A) The document, although otherwise timely, contains untimely

[[Page 27382]]

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 that, although designated as business 
proprietary by the person submitting it, is in a form that cannot be 
associated with or otherwise used to identify activities of a 
particular person or that 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 Secretary will treat as de minimis any 
weighted-average dumping margin or countervailable subsidy rate that is 
less

[[Page 27383]]

than 0.5 percent 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.


Sec. 351.107  Cash deposit rates for nonproducing exporters; rates in 
antidumping proceedings involving a nonmarket economy country.

    (a) Introduction. This section deals with the establishment of cash 
deposit rates in situations where the exporter is not the producer of 
subject merchandise, the selection of the appropriate cash deposit rate 
in situations where entry documents do not indicate the producer of 
subject merchandise, and the calculation of dumping margins in 
antidumping proceedings involving imports from a nonmarket economy 
country.
    (b) Cash deposit rates for nonproducing exporters. (1) Use of 
combination rates. (i) In general. In the case of subject merchandise 
that is exported to the United States by a company that is not the 
producer of the merchandise, the Secretary may establish a 
``combination'' cash deposit rate for each combination of the exporter 
and its supplying producer(s).
    (ii) Example. A nonproducing exporter (Exporter A) exports to the 
United States subject merchandise produced by Producers X, Y, and Z. In 
such a situation, the Secretary may establish cash deposit rates for 
Exporter A/Producer X, Exporter A/Producer Y, and Exporter A/Producer 
Z.
    (2) New supplier. In the case of subject merchandise that is 
exported to the United States by a company that is not the producer of 
the merchandise, if the Secretary has not established previously a 
combination cash deposit rate under paragraph (b)(1)(i) of this section 
for the exporter and producer in question or a noncombination rate for 
the exporter in question, the Secretary will apply the cash deposit 
rate established for the producer. If the Secretary has not previously 
established a cash deposit rate for the producer, the Secretary will 
apply the ``all-others rate'' described in section 705(c)(5) or section 
735(c)(5) of the Act, as the case may be.
    (c) Producer not identified. (1) In general. In situations where 
entry documents do not identify the producer of subject merchandise, if 
the Secretary has not established previously a noncombination rate for 
the exporter, the Secretary may instruct the Customs Service to apply 
as the cash deposit rate the higher of:
    (i) the highest of any combination cash deposit rate established 
for the exporter under paragraph (b)(1)(i) of this section;
    (ii) the highest cash deposit rate established for any producer 
other than a producer for which the Secretary established a combination 
rate involving the exporter in question under paragraph (b)(1)(i) of 
this section; or
    (iii) the ``all-others rate'' described in section 705(c)(5) or 
section 735(c)(5) of the Act, as the case may be.
    (d) Rates in antidumping proceedings involving nonmarket economy 
countries. 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.

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. Petitioners are 
also advised to refer to the Commission's regulations concerning the 
contents of petitions, currently 19 CFR 207.11.
    (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, address, and telephone number 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, addresses, and telephone numbers 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)

[[Page 27384]]

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, address, and telephone number 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
    (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). Other filing requirements are set forth in 
Sec. 351.303.
    (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 
Director for Policy and Analysis, Import Administration, International 
Trade Administration, Room 3093, U.S. Department of Commerce, 
Pennsylvania Avenue and 14th Street, NW, Washington, DC 20230; (202) 
482-1768.
    (i) Pre-initiation communications. (1) In general. During the 
period before the Secretary's decision whether to initiate an 
investigation, the Secretary will not consider the filing of a notice 
of appearance to constitute a communication for purposes of section 
702(b)(4)(B) or section 732(b)(3)(B) of the Act.
    (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

[[Page 27385]]

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 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(c)(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) 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  Time periods 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 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

[[Page 27386]]

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 initially selected for individual examination) in accordance with 
section 782(a) of the Act.
    (2) Acceptance of voluntary respondents. The Secretary will 
determine, as soon as practicable, whether to examine a voluntary 
respondent individually. A voluntary respondent accepted for individual 
examination under subparagraph (d)(1) of this section will be subject 
to the same requirements as an exporter or producer initially selected 
by the Secretary for individual examination under section 777A(c)(2) or 
section 777A(e)(2)(A) of the Act, including the requirements of section 
782(a) of the Act and, 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) Exclusion of nonproducing exporter. (i) In general. In the case 
of an exporter that is not the producer of subject merchandise, the 
Secretary normally will limit an exclusion of the exporter to subject 
merchandise of those producers that supplied the exporter during the 
period of investigation.
    (ii) Example. During the period of investigation, Exporter A 
exports to the United States subject merchandise produced by Producer 
X. Based on an examination of Exporter A, the Secretary determines that 
the dumping margins with respect to these exports are de minimis, and 
the Secretary excludes Exporter A. Normally, the exclusion of Exporter 
A would be limited to subject merchandise produced by Producer X. If 
Exporter A began to export subject merchandise produced by Producer Y, 
this merchandise would be subject to the antidumping duty order, if 
any.
    (4) Countervailing duty investigations conducted on an aggregate 
basis and requests for exclusion from 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 the exporter's 
supplier) 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

[[Page 27387]]

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 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

[[Page 27388]]

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 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 (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 antidumping investigation involving a 
nonmarket economy country or a countervailing duty investigation, 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, 7 days after the date 
of issuance of the preliminary determination.
    (ii) Postponement of final determination. Where a proposed 
suspension agreement is submitted in an antidumping investigation, an 
exporter or producer or, in an 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.
    (iii) Special rule for regional industry determination. If the 
Commission makes a regional industry determination in its final 
affirmative determination under

[[Page 27389]]

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 antidumping investigation 
involving a nonmarket economy country or a countervailing duty 
investigation, 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)(iii) 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, an industrial user of the subject merchandise or a 
representative consumer organization, as described in section 777(h) of 
the Act, 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)(iii) 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)(iii) 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 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 revision 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

[[Page 27390]]

of the notice of cancellation 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:
    (A) 90 days before the date of publication of the notice of 
suspension of liquidation; or
    (B) 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 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 Secretary's final determination is affirmative, in 
most instances the Commission will issue a final injury determination 
(except in certain countervailing duty investigations). Also, if the 
Secretary's preliminary determination was negative but the final 
determination is affirmative, the Secretary will impose provisional 
measures. If the Secretary's final determination is negative, the 
proceeding, including the injury investigation conducted by the 
Commission, terminates. 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

[[Page 27391]]

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. 
(1) In general. 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.
    (2) Requests by exporters. In the case of a request submitted under 
paragraph (e)(1) of this section by exporters who account for a 
significant proportion of exports of subject merchandise (see section 
735(a)(2)(A) of the Act), the Secretary will not grant the request 
unless those exporters also submit a request described in the last 
sentence of section 733(d) of the Act (extension of provisional 
measures from a 4-month period to not more than 6 months).
    (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.
    (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 certain countervailing duty 
investigations) 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

[[Page 27392]]

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).


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 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 cash deposit of, or bond for, estimated antidumping 
duties or countervailing duties required on that merchandise at the 
time of entry, or withdrawal from warehouse, for consumption; 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.
    (f) Special rule for regional industry cases. (1) In general. If 
the Commission, in its final injury determination, found a regional 
industry under section 771(4)(C) of the Act, the Secretary may direct 
that duties not be assessed on subject merchandise of a particular 
exporter or producer if the Secretary determines that:
    (i) The exporter or producer did not export subject merchandise for 
sale in the region concerned during or after the Department's period of 
investigation;
    (ii) The exporter or producer has certified that it will not export 
subject merchandise for sale in the region concerned in the future so 
long as the antidumping or countervailing duty order is in effect; and
    (iii) No subject merchandise of the exporter or producer was 
entered into the United States outside of the region and then sold into 
the region during or after the Department's period of investigation.
    (2) Procedures for obtaining an exception from the assessment of 
duties. (i) Request for exception. An exporter or producer seeking an 
exception from the assessment of duties under paragraph (f)(1) of this 
section must request, subject to the provisions of Sec. 351.213 or 
Sec. 351.214, an administrative review or a new shipper review to 
determine whether subject merchandise of the exporter or producer in 
question should be excepted from the assessment of duties under 
paragraph (f)(1) of this section. The exporter or producer making the 
request may request that the review be limited to a determination as to 
whether the requirements of paragraph (f)(1) of this section are 
satisfied. The request for a review must be accompanied by:

[[Page 27393]]

    (A) A certification by the exporter or producer that it did not 
export subject merchandise for sale in the region concerned during or 
after the Department's 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; and
    (B) A certification from each of the exporter's or producer's 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 
Department's period of investigation.
    (ii) Limited review. If the Secretary initiates an administrative 
review or a new shipper review based on a request for review that 
includes a request for an exception from the assessment of duties under 
paragraph (f)(2)(i) of this section, the Secretary, if requested, may 
limit the review to a determination as to whether an exception from the 
assessment of duties should be granted under paragraph (f)(1) of this 
section.
    (3) Exception granted. If, in the final results of the 
administrative review or the new shipper review, the Secretary 
determines that the requirements of paragraph (f)(1) of this section 
are satisfied, the Secretary will instruct the Customs Service to 
liquidate, without regard to antidumping or countervailing duties 
(whichever is appropriate), entries of subject merchandise of the 
exporter or producer concerned.
    (4) Exception not granted. If, in the final results of the 
administrative review or the new shipper review, the Secretary 
determines that the requirements of paragraph (f)(1) are not satisfied, 
the Secretary:
    (i) Will issue assessment instructions to the Customs Service in 
accordance with paragraph (b) of this section; or
    (ii) If the review was limited to a determination as to whether an 
exception from the assessment of duties should be granted, the 
Secretary will instruct the Customs Service to assess duties in 
accordance with paragraph (f)(1) or (f)(2) of this section, whichever 
is appropriate (automatic assessment if no review is requested).


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) None of the following persons objects to the deferral: the 
exporter or producer for which deferral is requested, an importer of 
subject merchandise of that exporter or producer, a domestic interested 
party and, in a countervailing duty proceeding, the foreign government.
    (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) and submitting 
factual information (see Sec. 351.302(b)(2)) will run from the last day 
of the next anniversary month.
    (d) Rescission of administrative review. (1) Withdrawal of request 
for review. The Secretary will rescind an administrative review under 
this section, in whole or in part, if a party that requested a review 
withdraws the request within 90 days of the date of publication of 
notice of initiation of the requested review. The Secretary may extend 
this time limit if the Secretary decides that it is reasonable to do 
so.
    (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 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

[[Page 27394]]

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 by a 
domestic interested party within 30 days of the date of publication of 
the notice of 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 that is affiliated with such exporter or 
producer. The request must include the name(s) of the exporter or 
producer for which the inquiry is requested.
    (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.
    (3) In determining under paragraph (j)(1) of this section whether 
antidumping duties have been absorbed, the Secretary will examine the 
antidumping duties calculated in the administrative review in which the 
absorption inquiry is requested.
    (4) The Secretary will notify the Commission of the Secretary's 
determination if:
    (i) In the case of an administrative review other than one to which 
paragraph (j)(2) of this section applies, the administrative review 
covers all or part of a time period falling between the third and 
fourth anniversary month of an order; or
    (ii) In the case of an administrative review to which paragraph 
(j)(2) of this section applies, the Secretary initiated the 
administrative review in 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 the exporter's 
supplier) 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.
    (l) Exception from assessment in regional industry cases. For 
procedures relating to a request for the exception from the assessment 
of antidumping or countervailing duties in a regional industry case, 
see Sec. 351.212(f).


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.

[[Page 27395]]

    (b) Request for new shipper review. (1) Requirement of sale or 
export. Subject to the requirements of section 751(a)(2)(B) of the Act 
and this section, an exporter or producer may request a new shipper 
review if it has exported, or sold for export, subject merchandise to 
the United States.
    (2) Contents of request. A request for a new shipper review must 
contain the following:
    (i) 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;
    (ii) If the person requesting the review is the exporter, but not 
the producer, of the subject merchandise:
    (A) The certification described in paragraph (b)(2)(i) of this 
section; and
    (B) 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 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;
    (iii)(A) A certification that, since the investigation was 
initiated, such exporter or producer has never 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;
    (B) 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;
    (iv) Documentation establishing:
    (A) 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;
    (B) The volume of that and subsequent shipments; and
    (C) The date of the first sale to an unaffiliated customer in the 
United States; and
    (v) 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)(2)(iv)(A) 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) Absence of entry and sale to an unaffiliated customer. The 
Secretary may rescind a new shipper review, in whole or in part, if the 
Secretary concludes that:
    (i) As of the end of the normal period of review referred to in 
paragraph (g) of this section, there has not been an entry and sale to 
an unaffiliated customer in the United States of subject merchandise; 
and
    (ii) An expansion of the normal period of review to include an 
entry and sale to an unaffiliated customer in the United States of 
subject merchandise 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. (i) In general. 
Except as provided in paragraph (g)(1)(ii) of this section, 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:
    (A) 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
    (B) 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.
    (ii) Exceptions. (A) If the Secretary initiates a new shipper 
review under this section in the month immediately following the first 
anniversary month, the review normally will cover, as appropriate, 
entries, exports, or sales during the period from the date of 
suspension of liquidation under this part to the end of the month 
immediately preceding the first anniversary month.
    (B) If the Secretary initiates a new shipper review under this 
section in the month immediately following the first semiannual 
anniversary month, the review normally will cover, as appropriate, 
entries, exports, or sales during the period from the date of 
suspension of liquidation under this part to the end of the month 
immediately preceding the first semiannual anniversary month.

[[Page 27396]]

    (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 the Secretary did not select 
for individual examination or that the Secretary did not accept as a 
voluntary respondent (see Sec. 351.204(d)) may request a review under 
this paragraph (k). An exporter must submit a request for review within 
30 days of the date of publication in the Federal Register of the 
countervailing duty order. 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;
    (ii) The requester is not affiliated with an exporter or producer 
that the Secretary individually examined in the investigation; and
    (iii) The requester has informed the government of the exporting 
country that the government will be required to provide a full response 
to the Department's questionnaire.
    (2) Initiation of review. (i) In general. The Secretary will 
initiate a review in the month following the month in which a request 
for review is due under paragraph (k)(1) of this section.
    (ii) Example. The Secretary publishes a countervailing duty order 
on January 15. An exporter would have to submit a request for a review 
by February 14. The Secretary would initiate a review in March.
    (3) Conduct of review. The Secretary will conduct a review under 
this paragraph (k) in accordance with the provisions of this section 
applicable to new shipper reviews, subject to the following exceptions:
    (i) The period of review will be the period of investigation used 
by the Secretary in the investigation that resulted in the publication 
of the countervailing duty order (see Sec. 351.204(b)(2));
    (ii) The Secretary will not permit the posting of a bond or 
security in lieu of a cash deposit under paragraph (e) of this section;
    (iii) The final results of a review under this paragraph (k) will 
not be the basis for the assessment of countervailing duties; and
    (iv) The Secretary may exclude from the countervailing duty order 
in question any exporter for which the Secretary determines an 
individual net countervailable subsidy rate of zero or de minimis (see 
Sec. 351.204(e)(1)), provided that the Secretary has verified the 
information on which the exclusion is based.
    (l) Exception from assessment in regional industry cases. For 
procedures relating to a request for the exception from the assessment 
of antidumping or countervailing duties in a regional industry case, 
see Sec. 351.212(f).


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. 
Within 45 days after the date on which a request is filed, the 
Secretary will determine whether to initiate a changed circumstances 
review.
    (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.

[[Page 27397]]

    (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, or within 45 days if all 
parties to the proceeding agree to the outcome of the review.


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 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. (1) Initial 
sunset review. 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).
    (2) Subsequent sunset reviews. In the case of an order or suspended 
investigation that is continued following a sunset review initiated 
under paragraph (c)(1) of this section, no later than 30 days before 
the fifth anniversary of the date of the last determination by the 
Commission to continue the order or suspended investigation, the 
Secretary will publish a notice of initiation of a sunset review (see 
section 751(c)(2) of the Act).
    (3) Early initiation. The Secretary may publish a notice of 
initiation at an earlier date than the dates described in paragraph (c) 
(1) and (2) of this section 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.
    (4) Transition orders. The Secretary will initiate sunset reviews 
of transition orders, as defined in section 751(c)(6)(C) of the Act, in 
accordance with section 751(c)(6) of the Act.
    (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

[[Page 27398]]

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 requests for section 753 investigations by a domestic 
interested party; and 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:
    (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;
    (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; and
    (iii) May refrain from issuing questionnaires under paragraph 
(b)(2) of this section.
    (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:

[[Page 27399]]

    (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 will:
    (i) 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 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 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.
    (3) Revocation of nonproducing exporter. In the case of an exporter 
that is not the producer of subject merchandise, the Secretary normally 
will revoke an order in part under paragraph (b)(2) of this section 
only with respect to subject merchandise produced or supplied by those 
companies that supplied the exporter during the time period that formed 
the basis for the revocation.
    (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 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.
    (4) Revocation of nonproducing exporter. In the case of an exporter 
that is not the producer of subject merchandise, the Secretary normally 
will revoke an order in part under paragraph (c)(3) of this section 
only with respect to subject merchandise produced or supplied by those 
companies that supplied the exporter during the time period that formed 
the basis for the revocation.
    (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

[[Page 27400]]

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 any year between 
the first and final year of the consecutive period on which revocation 
or termination is conditioned.
    (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 
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 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 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 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

[[Page 27401]]

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's 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. The Secretary will 
revoke a countervailing duty order, 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 
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).
    (k) Revocation based on Article 4/Article 7 review.
    (1) In general. The Secretary may revoke a countervailing 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.

[[Page 27402]]

    (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 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 calculations 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. Comments 
concerning ministerial errors made in the preliminary results of a 
review should be included in a party's case brief.
    (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.

[[Page 27403]]

    (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 Sec. 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 rulings.

    (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. (1) Contents and service of 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:
    (i) A detailed description of the product, including its technical 
characteristics and uses, and its current U.S. Tariff Classification 
number;
    (ii) A statement of the interested party's position as to whether 
the product is within the scope of an order or a suspended 
investigation, including:
    (A) A summary of the reasons for this conclusion,
    (B) Citations to any applicable statutory authority, and
    (C) Any factual information supporting this position, including 
excerpts from portions of the Secretary's or the Commission's 
investigation, and relevant prior scope rulings.
    (2) Deadline for action on application. Within 45 days of the date 
of receipt of an application for a scope ruling, the Secretary will 
issue a final ruling under paragraph (d) of this section or will 
initiate a scope inquiry under paragraph (e) of this section.
    (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 persons 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:

[[Page 27404]]

    (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 or 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 may determine the value of the part or 
component on the basis of the cost of producing the part or component 
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 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

[[Page 27405]]

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 
unliquidated entry of the product entered, or withdrawn from warehouse, 
for consumption on or after the date of initiation of the scope 
inquiry. 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 unliquidated entry of the product entered, or withdrawn from 
warehouse, for consumption on or after the date of initiation of the 
scope inquiry. 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 persons on the Department's 
scope service list. For purposes of this section, the ``scope service 
list'' will include all persons 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 persons 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 normally 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 normally 
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 normally 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 information requested by the verifying officials from a 
person normally 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. If factual information is submitted less than 10 
days before, on, or after (normally only with the Department's 
permission) the applicable deadline for submission of such factual 
information, an interested party may submit factual information to 
rebut, clarify, or correct the factual information no later than 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.

[[Page 27406]]

    (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 following: 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 to be submitted in writing 
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) Purchases of major inputs from an affiliated party at prices 
below the affiliated party's cost of production. An allegation of 
purchases of major inputs from an affiliated party at prices below the 
affiliated party's cost of production made by the petitioner or other 
domestic interested party is due within 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 limits.
    (4) 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.
    (5) 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 granted to a party 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 
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.

[[Page 27407]]

    (b) Where to file; time of filing. Persons must address and submit 
all documents to the Secretary of Commerce, Attention: Import 
Administration, Central Records Unit, Room 1870, 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, circumvention 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.'' 
Indicate ``Business Proprietary Treatment Requested'' on the top of 
each page containing business proprietary information. In addition, 
include the warning ``Bracketing of Business Proprietary Information is 
Not Final for One Business Day After Date of Filing'' on the top of 
each page containing business proprietary information in the copy of 
the business proprietary version filed under Sec. 351.303(c)(2)(i) 
(one-day lag rule). Do not include this warning in the copies of the 
final business proprietary version filed on the next business day under 
Sec. 351.303(c)(2)(ii) (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 of the entire 
document or of only pertinent portions, where appropriate, unless the 
Secretary waives this requirement for an individual document. A party 
must obtain the Department's approval for submission of an English 
translation of only portions of a document prior to submission to the 
Department.
    (f) Service of copies on other persons. (1)(i) 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.
    (ii) Service of public versions or a party's own business 
proprietary information. Notwithstanding paragraphs (f)(1)(i) and 
(f)(3) of this section, service of the public version of a document or 
of the business proprietary version of a document containing only the 
server's own business proprietary information, on persons on the 
service list, may be made by facsimile transmission or other electronic 
transmission process, with the consent of the person to be served.
    (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

[[Page 27408]]

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 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 (g)(1) of 
this section and, in addition, if the person has legal counsel or 
another representative, the certification in paragraph (g)(2) of this 
section:
    (1) For the person's officially 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

[[Page 27409]]

    (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 
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 and using the secondary information in 
question.
    (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 and a table of statutes, 
regulations, and cases cited.
    (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 and a table of statutes, 
regulations, and cases cited.


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. Secs. 551-559, and 
Sec. 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

[[Page 27410]]

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.
    (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 paragraphs (b), (c)(1), and (c)(3) of 
Sec. 351.301 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) The interested party that is in possession of the relevant 
information has the burden of establishing to the satisfaction of the 
Secretary the amount and nature of a particular adjustment; and
    (2) The Secretary will not double-count adjustments.
    (c) Use of price net of price adjustments. In calculating export 
price, constructed export price, and normal value (where normal value 
is based on price), the Secretary will use a price that is net of any 
price adjustment, as defined in Sec. 351.102(b), that is 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. (1) Original place of 
shipment. In making adjustments for movement expenses to establish 
export price or constructed export price under section 772(c)(2)(A) of 
the Act, or normal value under section 773(a)(6)(B)(ii) of the Act, the 
Secretary normally will consider the production facility as being the 
``original place of shipment. However, where the Secretary bases export 
price, constructed export price, or normal value on a sale by an 
unaffiliated reseller, the Secretary may treat the original place from 
which the reseller shipped the merchandise as the ``original place of 
shipment.''
    (2) Warehousing. The Secretary will consider warehousing expenses 
that are incurred after the subject merchandise or foreign like product 
leaves the original place of shipment as movement expenses.
    (f) Treatment of affiliated producers in antidumping proceedings. 
(1) In general. 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.
    (2) Significant potential for manipulation. In identifying a 
significant potential for the manipulation of price or production, the 
factors the Secretary may consider include:
    (i) The level of common ownership;
    (ii) The extent to which managerial employees or board members of 
one firm sit on the board of directors of an affiliated firm; and
    (iii) 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 and price adjustments. (1) In general. 
The Secretary may consider allocated expenses and price adjustments 
when transaction-specific reporting is not feasible, provided the 
Secretary is satisfied that the allocation method used does not cause 
inaccuracies or distortions.
    (2) Reporting allocated expenses and price adjustments. Any party 
seeking to report an expense or a price adjustment on an allocated 
basis must demonstrate to the Secretary's satisfaction that the 
allocation is calculated on as specific a basis as is feasible, and 
must explain why the allocation methodology used does not cause 
inaccuracies or distortions.
    (3) Feasibility. In determining the feasibility of transaction-
specific reporting or whether an allocation is calculated on as 
specific a basis as is

[[Page 27411]]

feasible, the Secretary will take into account the records maintained 
by the party in question in the ordinary course of its business, as 
well as such factors as the normal accounting practices in the country 
and industry in question and the number of sales made by the party 
during the period of investigation or review.
    (4) Expenses and price adjustments relating to merchandise not 
subject to the proceeding. The Secretary will not reject an allocation 
method solely because the method includes expenses incurred, or price 
adjustments made, with respect to sales of merchandise that does not 
constitute subject merchandise or a foreign like product (whichever is 
applicable).
    (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 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. However, the Secretary may use 
a date other than the date of invoice if the Secretary is satisfied 
that a different date better reflects the date on which the exporter or 
producer establishes the material terms of sale.


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. In 
establishing constructed export price under section 772(d) of the Act, 
the Secretary will make adjustments for expenses associated with 
commercial activities in the United States that relate to the sale to 
an unaffiliated purchaser, no matter where or when paid. The Secretary 
will not make an adjustment for any expense that is related solely to 
the sale to an affiliated importer in the United States, although the 
Secretary may make an adjustment to normal value for such expenses 
under section 773(a)(6)(C)(iii) of the Act.
    (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 
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 
65 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 (sales at less than cost of production).)
    (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.
    (iii) Ordinarily, under paragraph (f)(1)(i) of this section, 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

[[Page 27412]]

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)(5) of 
the Act (indirect sales or offers for sale).)
    (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. However, the Secretary normally will not calculate 
normal value based on the sale by an affiliated party if sales of the 
foreign like product by an exporter or producer to affiliated parties 
account for less than five percent of the total value (or quantity) of 
the exporter's or producer's sales of the foreign like product in the 
market in question or if sales to the affiliated party are comparable, 
as defined in paragraph (c) of this section.


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 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 (price used 
for determining normal value)); 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 (use of third country prices in 
determining normal value)).
    (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 (use of constructed 
value)).


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.

[[Page 27413]]

    (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, such sales 
will be disregarded only if they are made within an extended period of 
time, in substantial quantities, and are not at prices which permit 
recovery of costs within a reasonable 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) Determination of value under the major input rule. For purposes 
of section 773(f)(3) of the Act, the Secretary normally will determine 
the value of a major input purchased from an affiliated person based on 
the higher of:
    (1) The price paid by the exporter or producer to the affiliated 
person for the major input;
    (2) The amount usually reflected in sales of the major input in the 
market under consideration; or
    (3) The cost to the affiliated person of producing the major input.
    (c) 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.
    (d) 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.
    (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 factory overhead. The 
Secretary will not consider sales expenses, such as advertising costs, 
or other general and administrative or non-production costs (such as 
general research and development 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 supplier 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 supplier and the 
remainder from a nonmarket economy supplier, 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. The Secretary will 
calculate the wage rate to

[[Page 27414]]

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 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.)
    (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 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) In general. With the exception of the allowance described in 
paragraph (e) of this section concerning commissions paid in only one 
market, the Secretary will make circumstances of sale adjustments under 
section 773(a)(6)(C)(iii) of the Act only for direct selling expenses 
and assumed expenses.
    (c) Direct selling expenses. ``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.
    (d) Assumed expenses. Assumed expenses are selling expenses that 
are assumed by the seller on behalf of the buyer, such as advertising 
expenses.
    (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 considerations, 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.
    (f) 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.


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 difference 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) Adjustment for difference in level of trade. The Secretary will 
adjust normal value for a difference in level of trade if:
    (1) The Secretary calculates normal value at a different level of 
trade from the level of trade of the export price or the constructed 
export price (whichever is applicable); and
    (2) The Secretary determines that the difference in level of trade 
has an effect on price comparability.
    (c) Identifying levels of trade and differences in levels of trade. 
(1) Basis for identifying levels of trade. The Secretary will identify 
the level of trade based on:
    (i) In the case of export price, the starting price;
    (ii) In the case of constructed export price, the starting price, 
as adjusted under section 772(d) of the Act; and
    (iii) In the case of normal value, the starting price or 
constructed value.
    (2) Differences in levels of trade. The Secretary will determine 
that sales are made at different levels of trade if they are made at 
different marketing stages (or their equivalent). Substantial 
differences in selling activities are a necessary, but not sufficient, 
condition for determining that there is a difference in the stage of 
marketing. Some overlap in selling activities will not preclude a 
determination that two sales are at different stages of marketing.
    (d) Effect on price comparability. (1) In general. The Secretary 
will determine that a difference in level of trade has an

[[Page 27415]]

effect on price comparability only if it is established to the 
satisfaction of the Secretary that there is a pattern of consistent 
price differences between sales in the market in which normal value is 
determined:
    (i) At the level of trade of the export price or constructed export 
price (whichever is appropriate); and
    (ii) At the level of trade at which normal value is determined.
    (2) Relevant sales. Where possible, the Secretary will make the 
determination under paragraph (d)(1) of this section on the basis of 
sales of the foreign like product by the producer or exporter. Where 
this is not possible, the Secretary may use sales of different or 
broader product lines, sales by other companies, or any other 
reasonable basis.
    (e) Amount of adjustment. The Secretary normally will calculate the 
amount of a level of trade adjustment by:
    (1) Calculating the weighted-averages of the prices of sales at the 
two levels of trade identified in paragraph (d), after making any other 
adjustments to those prices appropriate under section 773(a)(6) of the 
Act and this subpart;
    (2) Calculating the average of the percentage differences between 
those weighted-average prices; and
    (3) Applying the percentage difference to normal value, where it is 
at a different level of trade from the export price or constructed 
export price (whichever is applicable), after making any other 
adjustments to normal value appropriate under section 773(a)(6) of the 
Act and this subpart.
    (f) Constructed export price offset. (1) In general. The Secretary 
will grant a constructed export price offset only where:
    (i) Normal value is compared to constructed export price;
    (ii) Normal value is determined at a more advanced level of trade 
than the level of trade of the constructed export price; and
    (iii) Despite the fact that a person has cooperated to the best of 
its ability, the data available do not provide an appropriate basis to 
determine under paragraph (d) of this section whether the difference in 
level of trade affects price comparability.
    (2) Amount of the offset. The amount of the constructed export 
price offset will be the amount of indirect selling expenses included 
in normal value, up to the amount of indirect selling expenses deducted 
in determining constructed export price. In making the constructed 
export price offset, ``indirect selling expenses'' means selling 
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.
    (3) Where data permit determination of affect on price 
comparability. Where available data permit the Secretary to determine 
under paragraph (d) of this section whether the difference in level of 
trade affects price comparability, the Secretary will not grant a 
constructed export price offset. In such cases, if the Secretary 
determines that price comparability has been affected, the Secretary 
will make a level of trade adjustment. If the Secretary determines that 
price comparability has not been affected, the Secretary will not grant 
either a level of trade adjustment or a constructed export price 
offset.


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-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

[[Page 27416]]

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 was 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) As determined through the use of, among other things, standard 
and appropriate statistical techniques, 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 determines that such differences cannot be taken 
into account using the average-to-average method or the transaction-to-
transaction method and explains the basis for that determination.
    (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 normally 
will examine only targeted dumping described in an allegation, filed 
within the time indicated in Sec. 351.301(d)(5). 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;
    (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.

Subpart G--Applicability Dates


Sec. 351.701  Applicability dates.

    The regulations contained in this part 351 apply to all 
administrative reviews initiated on the basis of requests made

[[Page 27417]]

on or after the first day of July, 1997, to all investigations and 
other segments of proceedings initiated on the basis of petitions filed 
or requests made after June 18, 1997 and to segments of proceedings 
self-initiated by the Department after June 18, 1997. Segments of 
proceedings to which part 351 do not apply will continue to be governed 
by the regulations in effect on the date the petitions were filed or 
requests were made for those segments, to the extent that those 
regulations were not invalidated by the URAA or replaced by the interim 
final regulations published on May 11, 1995 (60 FR 25130 (1995)). For 
segments of proceedings initiated on the basis of petitions filed or 
requests made after January 1, 1995, but before part 351 applies, part 
351 will serve as a restatement of the Department's interpretation of 
the requirements of the Act as amended by the URAA.

    Annex I.--Deadlines for Parties in Countervailing Investigations    
------------------------------------------------------------------------
           Day \1\                    Event              Regulation     
------------------------------------------------------------------------
0 days......................  Initiation..........  ....................
31 days \2\.................  Notification of       351.301(c)(2)(iv)   
                               difficulty in         (14 days after date
                               responding to         of receipt of      
                               questionnaire.        initial            
                                                     questionnaire).    
37 days.....................  Application for an    351.305(b)(3).      
                               administrative                           
                               protective order.                        
40 days.....................  Request for           351.205(e) (25 days 
                               postponement by       or more before     
                               petitioner.           preliminary        
                                                     determination).    
45 days.....................  Allegation of         351.206(c)(2)(i) (20
                               critical              days before        
                               circumstances.        preliminary        
                                                     determination).    
47 days.....................  Questionnaire         351.301(c)(2)(iii)  
                               response.             (30 days from date 
                                                     of receipt of      
                                                     initial            
                                                     questionnaire).    
55 days.....................  Allegation of         351.301(d)(4)(ii)(A)
                               upstream subsidies.   (10 days before    
                                                     preliminary        
                                                     determination).    
65 days (Can be extended)...  Preliminary           351.205(b)(1).      
                               determination.                           
72 days.....................  Submission of         351.208(f)(1)(B) (7 
                               proposed suspension   days after         
                               agreement.            preliminary        
                                                     determination).    
75 days \3\.................  Submission of         351.301(b)(1) (7    
                               factual information.  days before date on
                                                     which verification 
                                                     is to commence).   
75 days.....................  Submission of         351.224(c)(2) (5    
                               ministerial error     days after release 
                               comments.             of disclosure      
                                                     documents).        
77 days \4\.................  Request to align a    351.210(i) (5 days  
                               CVD case with a       after date of      
                               concurrent AD case.   publication of     
                                                     preliminary        
                                                     determination).    
102 days....................  Request for a         351.310(c) (30 days 
                               hearing.              after date of      
                                                     publication of     
                                                     preliminary        
                                                     determination).    
119 days....................  Critical              351.206(e) (21 days 
                               circumstances         or more before     
                               allegation.           final              
                                                     determination).    
122 days....................  Requests for closed   351.310(f) (No later
                               hearing sessions.     than the date the  
                                                     case briefs are    
                                                     due).              
122 days....................  Submission of briefs  351.309(c)(1)(i) (50
                                                     days after date of 
                                                     publication of     
                                                     preliminary        
                                                     determination).    
125 days....................  Allegation of         351.301(d)(4)(ii)(B)
                               upstream subsidies.   (15 days before    
                                                     final              
                                                     determination).    
127 days....................  Submission of         351.309(d) (5 days  
                               rebuttal briefs.      after dead-line for
                                                     filing case brief).
129 days....................  Hearing.............  351.310(d)(1) (2    
                                                     days after         
                                                     submission of      
                                                     rebuttal briefs).  
140 days (Can be extended)..  Final determination.  351.210(b)(1) (75   
                                                     days after         
                                                     preliminary        
                                                     determination).    
150 days....................  Submission of         351.224(c)(2) (5    
                               ministerial error     days after release 
                               comments.             of disclosure      
                                                     documents).        
155 days....................  Submission of         351.224(c)(3) (5    
                               replies to            days after filing  
                               ministerial error     of comments).      
                               comments.                                
192 days....................  Order issued........  351.211(b).         
------------------------------------------------------------------------
\1\ Indicates the number of days from the date of initiation. Most of   
  the deadlines shown here are approximate. The actual deadline in any  
  particular segment of a proceeding may depend on the date of an       
  earlier event or be established by the Secretary.                     
\2\ Assumes that the Department sends out the questionnaire within 10   
  days of the initiation and allows 7 days for receipt of the           
  questionnaire from the date on which it was transmitted.              
\3\ Assumes about 17 days between the preliminary determination and     
  verification.                                                         
\4\ Assumes that the preliminary determination is published 7 days after
  issuance (i.e., signature).                                           


    Annex II.--Deadlines for Parties in Countervailing Administrative   
                                 Reviews                                
------------------------------------------------------------------------
           Day \1\                    Event              Regulation     
------------------------------------------------------------------------
0 days......................  Request for review..  351.213(b) (Last day
                                                     of the anniversary 
                                                     month).            
30 days.....................  Publication of        351.221(c)(1)(i)    
                               initiation notice.    (End of month      
                                                     following the      
                                                     anniversary month).
66 days \2\.................  Notification of       351.301(c)(2)(iv)   
                               difficulty in         (14 days after date
                               responding to         of receipt of      
                               questionnaire.        initial            
                                                     questionnaire).    
75 days.....................  Application for an    351.305(b)(3).      
                               administrative                           
                               protective order.                        

[[Page 27418]]

                                                                        
90 days \3\.................  Questionnaire         351.301(c)(2)(iii)  
                               response.             (At least 30 days  
                                                     after date of      
                                                     receipt of initial 
                                                     questionnaire).    
120 days....................  Withdrawal of         351.213(d)(1) (90   
                               request for review.   days after date of 
                                                     publication of     
                                                     initiation).       
130 days....................  Request for           351.307(b)(1)(v)    
                               verification.         (100 days after    
                                                     date of publication
                                                     of initiation).    
140 days....................  Submission of         351.301(b)(2).      
                               factual information.                     
245 days (Can be extended)..  Preliminary results   351.213(h)(1).      
                               of review.                               
282 days \4\................  Request for a         351.310(c);         
                               hearing and/or        351.310(f) (30 days
                               closed hearing        after date of      
                               session.              publication of     
                                                     preliminary        
                                                     results).          
282 days....................  Submission of briefs  351.309(c)(1)(ii)   
                                                     (30 days after date
                                                     of publication of  
                                                     preliminary        
                                                     results).          
287 days....................  Submission of         351.309(d)(1) (5    
                               rebuttal briefs.      days after deadline
                                                     for filing case    
                                                     briefs).           
289 days....................  Hearing.............  351.310(d)(1) (2    
                                                     days after         
                                                     submission of      
                                                     rebuttal briefs).  
372 days (Can be extended)..  Final results of      351.213(h)(1) (120  
                               review.               days after date of 
                                                     publication of     
                                                     preliminary        
                                                     results).          
382 days....................  Submission of         351.224(c)(2) (5    
                               ministerial error     days after release 
                               comments.             of disclosure      
                                                     documents).        
387 days....................  Replies to            351.224(c)(3) (5    
                               ministerial error     days after filing  
                               comments.             of comments).      
------------------------------------------------------------------------
\1\ Indicates the number of days from the end of the anniversary month. 
  Most of the deadlines shown here are approximate. The actual deadline 
  in any particular segment of a proceeding may depend on the date of an
  earlier event or be established by the Secretary.                     
\2\ Assumes that the Department sends out the questionnaire 45 days     
  after the last day of the anniversary month and allows 7 days for     
  receipt of the questionnaire from the date on which it was            
  transmitted.                                                          
\3\ Assumes that the Department sends out the questionnaire on day 45   
  and the response is due 45 days later.                                
\4\ Assumes that the preliminary results are published 7 days after     
  issuance (i.e., signature).                                           


     Annex III.--Deadlines for Parties in Antidumping Investigations    
------------------------------------------------------------------------
           Day \1\                    Event              Regulation     
------------------------------------------------------------------------
0 days......................  Initiation..........  ....................
37 days.....................  Application for an    351.305(b)(3).      
                               administrative                           
                               protective order.                        
50 days.....................  Country-wide cost     351.301(d)(2)(i)(A) 
                               allegation.           (20 days after date
                                                     on which initial   
                                                     questionnaire was  
                                                     transmitted).      
51 days \2\.................  Notification of       351.301(c)(2)(iv)   
                               difficulty in         (Within 14 days    
                               responding to         after date of      
                               questionnaire.        receipt of initial 
                                                     questionnaire).    
51 days.....................  Section A response..  None.               
67 days.....................  Sections B, C, D, E   351.301(c)(2)(iii)  
                               responses.            (At least 30 days  
                                                     after date of      
                                                     receipt of initial 
                                                     questionnaire).    
70 days.....................  Viability arguments.  351.301(d)(1) (40   
                                                     days after date on 
                                                     which initial      
                                                     questionnaire was  
                                                     transmitted).      
87 days.....................  Company-specific      351.301(d)(2)(i)(B).
                               cost allegations.                        
87 days.....................  Major input cost      351.301(d)(3).      
                               allegations.                             
115 days....................  Request for           351.205(e) (25 days 
                               postponement by       or more before     
                               petitioner.           preliminary        
                                                     determination).    
120 days....................  Allegation of         351.206(c)(2)(i) (20
                               critical              days before        
                               circumstances.        preliminary        
                                                     determination).    
140 days (Can be extended)..  Preliminary           351.205(b)(1).      
                               determination.                           
150 days....................  Submission of         351.224(c)(2) (5    
                               ministerial error     days after release 
                               comments.             of disclosure      
                                                     documents).        
155 days....................  Submission of         351.208(f)(1)(A) (15
                               proposed suspension   days after         
                               agreement.            preliminary        
                                                     determination).    
161 days \3\................  Submission of         351.301(b)(1) (7    
                               factual information.  days before date on
                                                     which verification 
                                                     is to commence).   
177 days \4\................  Request for a         351.310(c) (30 days 
                               hearing.              after date of      
                                                     publication of     
                                                     preliminary        
                                                     determination).    
187 days....................  Submission of         351.301(c)(3)(i) (40
                               publicly available    days after date of 
                               information to        publication of     
                               value factors         preliminary        
                               (NME's).              determination).    
194 days....................  Critical              351.206(e) (21 days 
                               circumstance          before final       
                               allegation.           determination).    
197 days (Can be changed)...  Request for closed    351.310(f) (No later
                               hearing sessions.     than the date the  
                                                     case briefs are    
                                                     due).              
197 days (Can be changed)...  Submission of briefs  351.309(c)(1)(i) (50
                                                     days after date of 
                                                     publication of     
                                                     preliminary        
                                                     determination).    
202 days....................  Submission of         351.309(d) (5 days  
                               rebuttal briefs.      after dealine for  
                                                     filing case        
                                                     briefs).           
204 days....................  Hearing.............  351.310(d)(1) (2    
                                                     days after         
                                                     submission of      
                                                     rebuttal briefs).  

[[Page 27419]]

                                                                        
215 days....................  Request for           351.210(e).         
                               postponement of the                      
                               final determination.                     
215 days (Can be extended)..  Final determination.  351.210(b)(1) (75   
                                                     days after         
                                                     preliminary        
                                                     determination).    
225 days....................  Submission            351.224(c)(2) (5    
                               ministerial error     days after release 
                               comments.             of disclosure      
                                                     documents).        
230 days....................  Replies to            351.224(c)(3) (5    
                               ministerial error     days after filing  
                               comments.             of comments).      
267 days....................  Order issued........  351.211(b).         
------------------------------------------------------------------------
\1\ Indicates the number of days from the date of initiation. Most of   
  the deadlines shown here are approximate. The actual deadline in any  
  particular segment of a proceeding may depend on the date of an       
  earlier event or be established by the Secretary.                     
\2\ Assumes that the Department sends out the questionnaire 5 days after
  the ITC vote and allows 7 days for receipt of the questionnaire from  
  the date on which it was transmitted.                                 
\3\ Assumes about 28 days between the preliminary determination and     
  verification.                                                         
\4\ Assumes that the preliminary determination is published 7 days after
  issuance (i.e., signature).                                           


  Annex IV.--Deadlines for Parties in Antidumping Administrative Reviews
------------------------------------------------------------------------
           Day\1\                     Event              Regulation     
------------------------------------------------------------------------
0 days......................  Request for review..  351.213(b) (Last day
                                                     of the anniversary 
                                                     month).            
30 days.....................  Publication of        351.221 (c)(1)(i)   
                               initiation.           (End of month      
                                                     following the      
                                                     anniversary month).
37 days.....................  Application for an    351.305(b)(3).      
                               administrative                           
                               protective order.                        
60 days.....................  Request to examine    351.213(j) (30 days 
                               absorption of         after date of      
                               duties (AD).          publication of     
                                                     initiation).       
66 days \2\.................  Notification of       351.301(c)(2)(iv)   
                               difficulty in         (14 days after date
                               responding to         of receipt of      
                               questionnaire.        initial            
                                                     questionnaire).    
66 days.....................  Section A response..  None.               
85 days.....................  Viability arguments.  351.301(d)(1) (40   
                                                     days after date of 
                                                     transmittal of     
                                                     initial            
                                                     questionnaire).    
90 days\3\..................  Sections B, C, D, E   351.301(c)(2)(iii)  
                               response.             (At least 30 days  
                                                     after date of      
                                                     receipt of initial 
                                                     questionnaire).    
110 days....................  Company-specific      351.301(d)(2)(i)(B) 
                               cost allegations.     (20 days after     
                                                     relevant section is
                                                     filed).            
110 days....................  Major input cost      351.301(d)(3) (20   
                               allegations.          days after relevant
                                                     section is filed). 
120 days....................  Withdrawal of         351.213(d)(1) (90   
                               request for review.   days after date of 
                                                     publication of     
                                                     initiation)        
130 days....................  Request for           351.307(b)(1)(v)    
                               verification.         (100 days after    
                                                     date of publication
                                                     of initiation).    
140 days....................  Submission of         351.301(b)(2).      
                               factual information.                     
245 days (Can be extended)..  Preliminary results   351.213(h)(1).      
                               of review.                               
272 days\4\.................  Submission of         351.301(c)(3)(ii)   
                               publicly available    (20 days after date
                               information to        of publication of  
                               value factors         preliminary        
                               (NME's).              results).          
282 days....................  Request for a         351.310(c);         
                               hearing and/or        351.310(f) (30 days
                               closed hearing        after date of      
                               session.              publication of     
                                                     preliminary        
                                                     results).          
282 days....................  Submission of briefs  351.309(c)(1)(ii)   
                                                     (30 days after date
                                                     of publication of  
                                                     preliminary        
                                                     results).          
287 days....................  Submission of         351.309(d)(1) (5    
                               rebuttal briefs.      days after deadline
                                                     for filing case    
                                                     briefs).           
289 days....................  Hearing; closed       351.310(d)(1) (2    
                               hearing session.      days after         
                                                     submission of      
                                                     rebuttal briefs).  
372 days (Can be extended)..  Final results of      351.213(h)(1) (120  
                               review.               days after date of 
                                                     publication of     
                                                     preliminary        
                                                     results).          
382 days....................  Ministerial error     351.224(c)(2) (5    
                               comments.             days after release 
                                                     of disclosure      
                                                     documents).        
387 days....................  Replies to            351.224(c)(3) (5    
                               ministerial error     days after filing  
                               comments.             of comments).      
------------------------------------------------------------------------
\1\ Indicates the number of days from the end of the anniversary month. 
  Most of the deadlines shown here are approximate. The actual deadline 
  in any particular segment of a proceeding may depend on the date of an
  earlier event or be established by the Secretary.                     
\2\ Assumes that the Department sends out the questionnaire 45 days     
  after the last day of the anniversary month and allows 7 days for     
  receipt of the questionnaire from the date on which it was            
  transmitted.                                                          
\3\ Assumes that the Department sends out the questionnaire on day 45   
  and the response is due 45 days later.                                
\4\ Assumes that the preliminary results are published 7 days after     
  issuance (i.e., signature).                                           


[[Page 27420]]


                                Annex V.--Comparison of Prior and New Regulations                               
----------------------------------------------------------------------------------------------------------------
                  Prior                                       New                            Description        
----------------------------------------------------------------------------------------------------------------
                                          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 & 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.               
1353.22 (a)-(d)..........................  351.213,................................  Administrative reviews     
                                           351.221.................................   under 751(a) of the Act.  
353.22(e)................................  351.212(c)..............................  Automatic assessment of    
                                                                                      duties.                   
353.22(f)................................  351.216,................................  Changed circumstances      
                                           351.221(c)(3)...........................   reviews.                  
353.22(g)................................  351.215,................................  Expedited antidumping      
                                           351.221(c)(2)...........................   review.                   
353.23...................................  351.212(d)..............................  Provisional measures       
                                                                                      deposit cap.              
353.24...................................  351.212(e)..............................  Interest on overpayments   
                                                                                      and under-payments.       
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).............................  351.301(d),.............................  Return of untimely         
                                           351.104(a)(2)...........................   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.................................  Determination 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)..............................  Transaction 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.

[[Page 27421]]

                                                                                                                
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 & 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.................................  Delf-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,................................  Changed circumstances      
                                           351.121(c)(3)...........................   review                    
355.22(i)................................  351.120,................................  Review at the direction of 
                                           351.221(c)(7)...........................   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),.............................  Return of untimely         
                                           351.104(a)(2)...........................   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,................................  Information exempt from    
                                           351.304(a)(2)...........................   disclosure.               
355.34...................................  351.305,................................  Disclosure of information  
                                           351.306.................................   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.     

[[Page 27422]]

                                                                                                                
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.     
----------------------------------------------------------------------------------------------------------------


BILLING CODE 3510-DS-P

[[Page 27423]]

Annex VI--Countervailing Investigations Timeline
[GRAPHIC] [TIFF OMITTED] TR19MY97.000


[[Page 27424]]



Annex VII--Antidumping Investigations Timeline
[GRAPHIC] [TIFF OMITTED] TR19MY97.001

[FR Doc. 97-12201 Filed 5-16-97; 8:45 am]
BILLING CODE 3510-DS-C