[Federal Register Volume 63, Number 29 (Thursday, February 12, 1998)]
[Notices]
[Pages 7122-7125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3486]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-429-601]


Solid Urea From the Former German Democratic Republic; Final 
Results of Changed Circumstances Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of final results of changed circumstances review.

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SUMMARY: On May 1, 1995, the Department of Commerce published the 
preliminary results of its changed circumstances review to examine the 
effect, if any, that the reunification of Germany had on the 
antidumping duty order covering solid urea from the five German states 
(Brandenburg, Mecklenburg-Vorpommern, Saxony, Saxony-Anhalt, and 
Thuringia (plus any other territory; hereinafter the ``Five States'') 
that formerly constituted the German Democratic Republic (GDR) (60 FR 
21067). We have now completed this review and have not changed our 
determination from the preliminary results.

EFFECTIVE DATE: February 12, 1998.

FOR FURTHER INFORMATION CONTACT:
Steven D. Presing and Nithya Nagarajan at (202) 482-3793, Office of AD/
CVD Enforcement, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th and Constitution 
Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION: 

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994.

Background

    On May 1, 1995, the Department of Commerce published the 
preliminary results of this review.
    On November 17, 1997, the Department of Commerce published the 
final results of an administrative review of the order on solid urea 
from the Five States pursuant to section 751(a) of the Tariff Act of 
1930, as amended (the Act). The review covered one manufacturer/
exporter, SKW Stickstoffwerke Piesteritz GmbH (SKWP), and the period 
July 1, 1995 through June 30, 1996. As a result of that review, the 
Department instructed Customs to establish a new cash deposit rate for 
SKWP of 0.00 percent. Also as a result of that review, the Department 
instructed Customs to terminate suspension of liquidation for shipments 
of solid urea produced by firms located outside the Five States.
    We have now completed the instant changed circumstances review and 
have not changed our determination from the preliminary results.

Scope of the Review

    Importers covered by this review are those of solid urea. At the 
time of the publication of the antidumping duty order, such merchandise 
was classifiable under item number 480.30 of the Tariff Schedules of 
the United States Annotated (TSUSA). This merchandise is currently 
classified under the Harmonized Tariff Schedule of the United States 
(HTS) item number 3102.10.00. These TSUSA and HTS item numbers are 
provided for convenience and Customs purposes only. The Department's 
written description remains dispositive.

Analysis of Comments Received

    We received comments from the German Government, the Ad Hoc 
Committee of Domestic Nitrogen Producers (the ``Petitioner''), and SKW 
(on behalf of SKW Trostberg AG, SKWP, and SKW Chemicals, Inc.). We 
received rebuttal comments from the Petitioner, SKW, and Hydro Agri 
Brunsbuttel GmbH (``Hydro Agri''). We conducted a hearing attended by 
all parties on June 14, 1995.
    Comment 1: The German Government believes that the Department 
should immediately revoke the antidumping duty order on urea, arguing 
that the Department's preliminary determination ignores the de jure and 
de facto integration of the Five States into the unified FRG and the 
integration of companies located in the Five States into the unified 
FRG's market economy. The German Government states that it is 
unacceptable that privatized German companies are still being judged by 
the behavior of their predecessors.
    SKW agrees with the German Government and argues that the 
``fundamental and irreversible'' changes which have taken place as a 
result of reunification constitute changed circumstances which justify 
revocation of the order pursuant to the Department's regulations and 
section 751(c) of Act (19 U.S.C. 1675(c)(1988)).
    Petitioner objects to revocation of the order on this basis 
contending that 1) that there is no evidence on the record of this 
proceeding which establishes when, if ever, the Five States ceased to 
operate as a non-market economy within the meaning of section 771(18) 
of the Act (19 U.S.C. Sec. 1677(18)(1988)); 2) a change in economic 
status does not provide a basis for revoking the order; 3) revocation 
of the order based upon the change in political borders would deprive 
if of the relief from unfairly traded imports that it sought and 
obtained, a principle, petitioner asserts, upheld by the Court of 
International Trade in Techsnabexport, Ltd. v. United States, 802 F. 
Supp. 469, 472 (CIT 1992) and 4) this changed circumstances review was 
initiated only to examine the applicability of the order to post-
unification shipments of the subject merchandise from producers located 
outside the Five States--not whether the order should be revoked.
    Department's Position: As in the Federal Register on May 1, 1995, 
the Department determined that ``as of October 3, 1990, producers 
located in

[[Page 7123]]

the five German states that formerly constituted the GDR have been 
operating in a market-oriented economy.'' See Initiation of Changed 
Circumstances Antidumping Duty Administrative Review, 83 Fed. Reg. 
21067, 21068 (1995), citing Final Affirmative Countervailing Duty 
Determinations; Certain Steel Products from Germany, 58 FR 37315, 37324 
(1993). However, it is settled Department practice that a change in 
economic structure does not, by itself, justify revocation of an 
antidumping order. See, e.g., Antidumping Duty Order and Initiation of 
Changed Circumstances Antidumping Duty Administrative Review; Certain 
Cut-to-Length Carbon Steel Plate From Poland, 58 Fed. Reg. 44166, 44166 
(Aug. 19, 1993). As the court in the Techsnabexport case held, such 
matters are properly the subject of an administrative review under 
section 751 of the Act. 802F. Supp. at 472. This position renders moot 
Petitioner's argument that there is no evidence on the record of this 
proceeding which demonstrates the conversion from non-market to market 
economy.
    Second, U.S. antidumping law does not require revocation of an 
order where the country covered by the order undergoes a change in geo-
political boundaries. The focus of the law is on merchandise. See 
Postponement of Preliminary Antidumping Duty Determination: Uranium 
from the Former Union of Soviet Socialist Republics (USSR), 57 Fed. 
Reg. 11064 (1992) (incorporating by reference, memorandum from F. 
Sailer to A. Dunn dated March 24, 1992). See also Jia Farm 
Manufacturing Co., Ltd. v. United States, 817 F. Supp. 969, 973 (CIT 
1993). The governing principle in cases involving changes in the 
political borders of respondent countries is that such changes do not 
affect the geographic scope of an antidumping measure. This principle 
comports with the holding in Techsnabexport, where the Department 
determined that the breakup of the Soviet Union did not justify the 
termination of the then-pending investigation of uranium. In that case, 
the Department determined that the correct approach in situations where 
countries under an antidumping duty order or investigation undergo 
changes in geo-political boundaries is to preserve, notwithstanding the 
change, the original geographic scope of the order or investigation.
    Comment 2: SKW argues that the order must be revoked pursuant to 
section 353.25(d)(4)9iii) of the Department's regulations because the 
Petitioner did not file a formal objection to revocation of the order 
after five years had passed without a request for an administrative 
review, citing Kemira Fibres Oy v. United States, 861 F. Supp. 144 (CIT 
1994)
    Petitioner disagrees, contending that the Kemira Fibers case, which 
involved an extremely inactive domestic industry, is at the very least 
distinguishable from this case because in this case petitioners have 
filed numerous submissions with the Department over the relevant five 
year period expressing either support for the order or opposition to 
its revocation. Petitioner also maintains that Kemira Fibers was 
wrongly decided arguing that an essential prerequisite to revocation 
under section 353.25(d)(4) is notice and comment. Petitioner asserts 
that no such notification was ever provided in this case and that as a 
result the Department lacks the authority to revoke. Petitioner 
concludes by noting that the Department has appealed the holding in 
Kemira Fibers, and it is the Department's usual practice not to follow 
adverse decisions that may be reversed on appeal.
    Department's Position: The Court of Appeals for the Federal Circuit 
has overturned the decision in Kemira Fibers. Kemira Fibres Oy v. 
United States, 61 F.3d 866, 875 (Fed. Cir. 1995) (``Revocation must be 
predicated on a lack of domestic industry interest and such interest 
must be ascertained through notification of an intent to revoke.'') 
Therefore, the fact that the Department never indicated an intent to 
revoke pursuant to section 353.25(d)(4) of its regulations, precludes 
revocation on the grounds advanced by SKW.
    Comment 3: SKW argues that under the Act and its legislative 
history the Department is without authority to maintain an order on any 
geo-political entity other than a country. SKW argues that the 
maintenance of a province- or region-specific order would be an 
unjustifiable departure from the Department's practice. It further 
argues that additional support for its position is found in Article VI 
of the 1947 GATT which defines dumping as the introduction of products 
from ``one country'' into the commerce of ``another country'' at less 
than their normal value. Finally, SKW argues that the Techsnabexport 
case does not support the Department's preliminary determination to 
maintain the antidumping duty order on imports from the Five States 
because Techsnabexport involved the dissolution of a country (the 
Soviet Union) and whether a pending antidumping investigation could 
proceed against the twelve countries that succeeded it. Here, SKW 
submits, the question is whether changed circumstances warrant the 
revocation of an antidumping order covering a non-market country that 
has ceased to exist due to its complete unification with and 
assimilation into a market economy country. Furthermore, SKW argues, 
Techsnabexport did not embrace province- or region-specific orders but 
rather expressly stated that antidumping orders must address 
merchandise from particular countries.
    Citing section 771(3) of the Act, Petitioner argues that neither 
the 1947 GATT nor U.S. law preclude the maintenance of an antidumping 
duty order on less than a country-wide basis. Petitioner also cites 
Certain Softwood Lumber from Canada as an example of at least one 
proceeding under Title VII which did not apply to merchandise on a 
country-wide basis. 57 FR 22570, 22623 (1992). Petitioner further 
contends that a province- or region-specific order is supported by the 
holding and rationale of the Techsnabexport case. 802 F. Supp. 469. The 
principal issue in both cases, petitioner argues, is what effect, if 
any, political changes in a geographic region subject to an antidumping 
proceeding have upon that proceeding. The holding of the court in the 
Techsnabexport case is that antidumping proceedings need not be 
extinguished as a result of shifting geo-political borders or changes 
in governments. Petitioner also argues that SKW is mistaken when it 
claims that the Techsnabexport decision supports the proposition that 
an antidumping order must always apply to merchandise from a particular 
country. According to Petitioner, the definition of ``country'' under 
the statute was never at issue in the Techsnabexport case.
    Hydro Agri agrees that the Department has the legal authority to 
maintain the subject order on the Five States.
    Department's Position: The issue in this case is whether the 
Department, once having issued a country-wide order, must revoke that 
order if the country covered by the order undergoes a change in geo-
political boundaries or whether the Department may maintain the order 
on the same merchandise from the same geographic region as before the 
change occurred.
    As state above, in response to Comment No. 1, nothing in U.S. 
antidumping law requires revocation of an order where the country 
covered by the order undergoes a change in geo-political boundaries. 
Rather, the correct approach in such situations is to preserve, 
notwithstanding the change in

[[Page 7124]]

government and political borders, the geographic region (and by 
extension the producers) subject to the order. We believe this position 
in consistent with U.S. antidumping law and our international 
obligations and note again that this principle has been upheld by the 
Courts in Techsnabexport, 802 F. Supp. at 472.
    Comment 4: Petitioner argues that the order should be applied to 
urea produced throughout Germany, contending that extension of the 
order is consistent with the 1947 GATT, which does not require an 
injury determination to be based upon an examination of all exports 
from an exporting country, and is consistent with U.S. law. Petitioner 
notes that the Department normally analyzes only 60 percent of all 
sales in a LTFV investigation. Petitioner further contends that in Pure 
and Alloy Magnesium from Canada, the Department made an affirmative 
LTFV determination with respect to exports from the province of Quebec, 
but applied the order to all of Canada. 57 FR 30939 (1992). Lastly, 
Petitioner claims that extending the order to all urea producers in 
Germany is necessary, as a practical matter, in order to preserve the 
integrity of the order and prevent the potential transshipment of urea.
    SKW opposes extension of the order to all urea produced in Germany, 
arguing that under U.S. law such action would violate the due process 
rights of producers located outside the Five States since neither the 
Department nor the International Trade Commission (ITC) has 
investigated these producers. SKW also argues that this action would 
violate the 1947 GATT, which states that an investigation must be 
conducted before levying duties. SKW asserts that applying the results 
of an investigation covering part of an industry to an entire industry 
in a country, does not justify extending an order on one country to 
another country. Finally, SKW argues that Petitioner's discussion of 
circumvention is unfounded.
    Hydro Agri also objects to extension of the order, arguing that 
extension would deprive Hydro Agri of its due process rights. According 
to Hydro Agri, Petitioner's concerns about circumvention are baseless.
    Department Position: It would be contrary to the 1947 GATT and U.S. 
law for the Department to expand the geographic scope of the order on 
urea to include shipments from all of Germany. First, this result would 
be inconsistent with the principle, affirmed in the Techsnabexport 
case, that changes in the political borders of respondent countries do 
not affect the geographic scope of antidumping measures. 802 F. Supp. 
at 472. Second, both the 1947 GATT and U.S. law prohibit the assessment 
of antidumping duties in the absence of injury and LTFV determinations. 
Jackson, World Trade And The Law of GATT, 412-24 (1969); see also 19 
U.S.C. 1673 (1988). Neither the Department nor the ITC has ever 
investigated imports of solid urea from the pre-unification territory 
of the FRG. See SCM Corp. v. United States, 473 F. Supp. 791, 793 
(Cust. Ct. 1979) (antidumping duties may not be imposed or an order 
maintained without affirmative injury and LTFV determinations).
    Third, since the original investigation was limited to urea from 
the Five States, producers outside the Five States did not satisfy the 
definition of ``interested parties'' eligible to participate in the 
investigations at the Department and the ITC. See 19 U.S.C. 1677(9) 
(1988); 19 CFR 353.2(k). Given that they were not (and could not have 
been) parties to the original investigation, they received no formal 
notice or opportunity to comment, either during the LTFV or injury 
investigation. They also lacked standing to appeal the final results of 
these proceedings. See 19 U.S.C. 1516a(d) (1988). These procedural 
safeguards are an essential aspect of every antidumping order. See, 
e.g., Smith Corona Corp. v. United States, 796 F. Supp. 1532, 1535 (CIT 
1992) (``[v]arious procedural safeguards such as opportunity to respond 
and to be heard are built into the unfair trade laws'').
    Comment 5: Petitioner argues that the administration of a 
bifurcated order will require additional measures (i.e., monitoring and 
special Customs requirements) to ensure adequate consideration of 
administrative and enforcement issues.
    SKW argues that the Department should disregard Petitioner's 
discussion of circumvention as irrelevant and unsupported.
    Hydro Agri argues that special Customs requirements are 
unnecessary, unduly burdensome and arbitrary, and that until there is 
real evidence that circumvention is even being contemplated, additional 
administrative burdens are unreasonable.
    Department's Position: The record of this proceeding lacks adequate 
grounds upon which to require special administrative procedures in 
connection with this order.
    Comment 6: SKW argues that if the Department does not revoke this 
order, it should reduce the cash deposit rate to zero percent, citing 
as precedent Color Televisions from Korea. See Color Television 
Receivers from Korea, 49 FR 18336 (1984); Gold Star Co., Ltd. v. United 
States, 692 F. Supp. 1382, 1382 (CIT 1988).
    Petitioner argues that reducing the cash deposit to zero would be 
contrary to law and claims that SKW's reliance on Television from Korea 
is misplaced.
    Department's Position: This comment is moot. As noted in the 
``Background'' section of this notice, as a result of the final results 
of a recent administrative review, SKWP's cash deposit rate was lowered 
to 0.00 percent.
    Comment 7: Petitioner argues that before conducting a market-
economy analysis the Department must first determine which post-
unification shipments are eligible for such analysis.
    SKW argues that the Department should use a market-economy analysis 
for all post-reunification shipments.
    Department Position: These issues are not relevant to this 
proceeding. These final results concern the order's applicability to 
post-unification shipments of subject merchandise, not the appropriate 
economic analysis to be applied to such shipments.

Final Results

    The Department determines to maintain the order on solid urea from 
the Five States and to allow entry of shipments from producers located 
outside the Five States without regard to antidumping duties.

Suspension of Liquidation

    The following deposit requirements will be effective for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of these 
final results of changed circumstances review, as provided for by 
section 751(b) of the Act. A cash deposit of estimated antidumping 
duties shall be required on shipments of the subject merchandise as 
follows: (1) The existing 0.00 percent cash deposit rate will remain in 
effect, pending further instructions, for shipments of solid urea 
produced by SKWP; (2) the existing 44.80 percent cash deposit rate will 
remain in effect, pending further instructions, for shipments of solid 
urea produced by all other firms located in the Five States; and (3) no 
cash deposit will be required for shipments of solid urea produced by 
firms located outside the Five States.
    This changed circumstances review and notice are in accordance with 
section 752(b) of the Act (19 U.S.C. Sec. 1675(b) (1988)) and 19 CFR 
353.22(f).


[[Page 7125]]


    Dated: January 23, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-3486 Filed 2-11-98; 8:45 am]
BILLING CODE 3510-DS-M