[Federal Register Volume 63, Number 199 (Thursday, October 15, 1998)]
[Notices]
[Pages 55361-55364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27729]


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DEPARTMENT OF COMMERCE

International Trade Administration


Antidumping and Countervailing Duty Proceedings: Assessment of 
Antidumping Duties

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

ACTION: Notice and request for comment on policy concerning assessment 
of antidumping duties and request for comment.

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SUMMARY: The Department of Commerce (the Department) has observed that 
there is confusion among parties importing merchandise into the United 
States subject to an antidumping duty order about the application of 
the Department's regulation on automatic liquidation where a reseller 
has been involved in the chain of commerce for merchandise. This notice 
clarifies the Department's interpretation of its automatic-liquidation 
regulation and requests public comment before it adopts a final 
interpretation.

FOR FURTHER INFORMATION CONTACT: Joan L. MacKenzie, Senior Attorney, 
Office of the Chief Counsel for Import Administration, (202) 482-1310, 
or Laurie Parkhill, Director, Office 3, Import Administration, (202) 
482-4733.

SUPPLEMENTARY INFORMATION: This notice proposes to clarify the 
Department's regulation on automatic liquidation at 19 CFR 351.212(c). 
At issue is whether a producer's company-specific cash deposit rate can 
serve as

[[Page 55362]]

the basis for automatic liquidation under section 351.212(c) where an 
intermediary (e.g., a reseller, a trading company, an exporter) exports 
the merchandise and where the entries are suspended at the producer's 
cash-deposit rate. This notice uses the term ``reseller'' to apply to 
any intermediary that could be an interested party as defined in 
section 771(9)(A) of the Tariff Act of 1930, as amended (the Act).

Summary of Proposed Clarification

    As discussed in detail below, the Department's position is that 
automatic liquidation at the cash deposit rate required at the time of 
entry can only apply to a reseller if no administrative review has been 
requested, either of the reseller or of any producer of the merchandise 
the reseller exported to the United States, and the reseller does not 
have its own cash deposit rate. If the Department conducts a review of 
a producer of the reseller's merchandise where entries of the 
merchandise were suspended at the producer's rate, automatic 
liquidation will not apply to the reseller's sales. If, in the course 
of an administrative review, the Department determines that the 
producer knew that the merchandise it sold to the reseller was destined 
for the United States, the reseller's merchandise will be liquidated at 
the producer's assessment rate which the Department calculates for the 
producer in the review. If, on the other hand, the Department 
determines in the administrative review that the producer did not know 
that the merchandise it sold to the reseller was destined for the 
United States, the reseller's merchandise will not be liquidated at the 
assessment rate the Department determines for the producer or 
automatically at the rate required as a deposit at the time of entry. 
In that situation, the entries of merchandise from the reseller during 
the period of review will be liquidated at the all-others rate if there 
was no company-specific review of the reseller for that review period.

Effective Date

    The Department proposes that this clarification apply to all 
entries for which the anniversary date for requesting an administrative 
review is on or after the date of publication of a final notice on this 
issue.

Discussion

    The longstanding principle behind the Department's assessment 
policy is that company-specific assessment rates must be based on the 
sales information of the first company in the commercial chain that 
knew, at the time the merchandise was sold, that the merchandise was 
destined for the United States. See, e.g., Stainless Steel Sheet and 
Strip Products from the Federal Republic of Germany, 48 FR 20459, 20460 
(1983); Small Business Telephone Systems and Subassemblies from Korea, 
54 FR 53141, 53147-48 (1989); Oil County Tubular Goods from Canada, 55 
FR 50739, 50740 (1990); Chrome-Plated Lug Nuts from Taiwan, 56 FR 36130 
(1991); Antifriction Bearings (Except Tapered Roller Bearings) and 
Parts Thereof from Japan, 56 FR 31754, 31756 (1991); Television 
Receivers from Japan, 58 FR 11211, 11216 (1993). If dumping is 
occurring, the company that sets the price of the merchandise sold in 
the United States is responsible for the dumping, and any company-
specific assessment rate must reflect that company's sales prices to 
the United States.
    The existence of dumping is initially determined in a less-than-
fair-value investigation. The Department investigates all producers, 
where practicable (19 CFR 351.204(c)). It also investigates other 
foreign interested parties, if there are resources to do so, although 
it is seldom possible to investigate resellers in an antidumping 
investigation (19 CFR 351.204(d)). If the Department makes a 
preliminary affirmative determination that dumping is occurring, it 
calculates company-specific weighted-average dumping margins for 
investigated companies (19 CFR 351.204(c)). These dumping margins are 
estimates of dumping activity. The Department also calculates an ``all-
others'' dumping margin, which is the simple average of the calculated 
company-specific margins. This rate applies to entries of merchandise 
from producers and exporters for which the Department has not 
established a company-specific rate.
    The Department publishes a notice in the Federal Register of its 
preliminary determination and orders the U.S. Customs Service to 
collect a bond or cash deposit at the time the merchandise subject to 
the investigation enters the United States (19 CFR 351.205(d)). The 
bond/cash deposits serve as security for the final amount of dumping 
liability. The estimated dumping margins the Department determines in 
the investigation set the bond/cash deposit rate; in other words, the 
producer's company-specific dumping margin which the Department 
determines is the bond/cash deposit rate for merchandise produced by 
that producer and imported into the United States.
    After notice and opportunity for comment, the Department calculates 
final dumping margins. If the International Trade Commission makes a 
final affirmative determination that the dumping is causing injury to 
the U.S. industry, the Department publishes an antidumping duty order 
and instructs the Customs Service to continue to collect a cash deposit 
at the time the merchandise subject to the order enters the United 
States; bonds are no longer an option for importers to post as security 
(19 CFR 351.211).
    The Department instructs Customs to apply any reseller's company-
specific cash deposit rate to entries of merchandise sold by that 
reseller. If there is no company-specific reseller cash deposit rate 
and the importer identifies the producer, the Department instructs 
Customs to apply the producer's cash deposit rate to the entry. This 
logic stems from the fact that, when subject merchandise enters the 
United States through a reseller, the Department does not know who set 
the price of the subject merchandise to the United States. The 
Department instructs Customs to apply the producer's cash deposit rate 
where the producer of the merchandise is identified on the assumption 
that the producer knew that the merchandise was destined for the United 
States. This assumption is more often true than not. Subject 
merchandise sold through a reseller and imported where there is no 
company-specific reseller rate or where the importer did not identify 
the producer of the merchandise is subject to the all-others cash 
deposit rate.
    After the passage of a year from the month the antidumping duty 
order was published (called the anniversary month) and annually 
thereafter, interested parties must decide whether to ask the 
Department to conduct an administrative review of sales for the past 
year under section 751(a)(1) of the Act. Reasons for such requests will 
vary; generally, a party will request a review of a producer or of an 
exporter with its own rate because the party believes the actual 
dumping liability is higher or lower than the cash deposit. Parties may 
decide to request a review of a reseller which does not have its own 
rate because they believe the actual dumping liability is higher or 
lower than the cash deposit or, if the producer which supplied the 
reseller is reviewed, the all-others rate.
    During the anniversary month, a domestic interested party or an 
interested party described in section 771(9)(B) of the Act may request 
in writing that the Secretary conduct an administrative review of 
specified

[[Page 55363]]

individual exporters or producers covered by an order if the requesting 
person states why the person desires the Secretary to review those 
particular exporters or producers (19 CFR 351.213). During the same 
month, an exporter or producer covered by an order may request that the 
Secretary conduct an administrative review of only that person. Also 
during the anniversary month, an importer of the merchandise may 
request that the Secretary conduct an administrative review of only an 
exporter or producer of the subject merchandise which that importer 
imported into the United States.
    If no interested party requests a review of a producer's sales, 
automatic liquidation applies to entries of merchandise exported by 
that producer (19 CFR 351.212(b)). Because no review has been 
requested, there is no reason to continue to suspend liquidation of the 
entries. The producer's cash deposit rate at the time of entry serves 
as the assessment rate for the entries during that period. Likewise, 
entries of a producer's merchandise sold to the United States by a 
reseller will be liquidated at the producer's cash deposit rate (if 
there is no company-specific rate for the reseller at the time of entry 
and no review of the reseller or the producer has been requested). 
Because no review has been requested for either the producer or the 
reseller, no one is challenging the assumption, which the Department 
made when it assigned the producer's cash deposit rate to the entries 
from the reseller, that the producer set the price of the merchandise 
which the reseller sold to the United States.
    If, however, an interested party requests the Department to conduct 
a review of the producer's sales, the review applies to all sales of 
the producer, including any sales to resellers of the producer's 
merchandise, unless the reseller had its own company-specific rate at 
the time of entry and the producer did not know that the sales to the 
reseller were destined for the United States. In conducting the review 
the Department will determine whether the producer or the reseller set 
the price of the merchandise to the United States, based on evidence 
submitted on the record of the review.
    During the course of any administrative review, the Department 
sends questionnaires to the foreign companies for which reviews have 
been initiated, seeking extensive information on the companies' sales 
to the United States and foreign market sales. A company reports sales 
that it knew at the time of the sale were destined for the United 
States as its U.S. sales. At the conclusion of the review the 
Department instructs Customs to assess antidumping duties at the 
producer's company-specific (or, as applicable, customer-specific) 
assessment rate which the Department determined in conducting the 
review.
    The producer will report sales of the subject merchandise for which 
it did not know the destination of the merchandise as foreign market 
sales. These may include sales to resellers of merchandise that 
ultimately came to the United States without the producer's knowledge 
where the entries of the merchandise were suspended at the producer's 
cash deposit rate. Because the producer did not set the price to the 
United States for these sales, these entries of this merchandise will 
not be assessed final antidumping duties at the producer's rate at the 
conclusion of the review. The rate instead will be based on the 
interested party in the chain of commerce that actually set the price 
to the United States. If the Department did not conduct a review of 
that party, however, there is no company-specific rate applicable to 
these entries. In the absence of a company-specific rate, the 
Department will base the assessment rate on the ``all-others'' rate.
    Confusion has arisen because of the Department's practice of 
assigning the producer's cash deposit rate to resellers' merchandise 
that identifies the producer at the time of entry. Resellers have 
asserted that, if the Department determined during the review that the 
producer did not set the price of the reseller's merchandise to the 
United States, entries of such merchandise are subject to automatic 
liquidation at the rate required at the time of entry because no one 
requested a review of the reseller. This is inconsistent with the 
Department's assessment policy, however, that company-specific 
assessment rates must be based on the sales information of the first 
company in the commercial chain that knew, at the time the merchandise 
was sold, that the merchandise was destined for the United States. 
Since the evidence in the record of the administrative review shows 
that the producer did not set the price of those sales, the assessment 
of duties on merchandise exported by the resellers cannot be based on 
the producer's rate. As no review of the reseller's sales was 
conducted, there is no company-specific data on which to base a 
company-specific reseller rate. Therefore, the only appropriate 
assessment rate is the all-others rate.
    This practice has been upheld by the Court of International Trade 
(CIT). A similar issue arose in litigation involving televisions from 
Japan (ABC International v. United States, 19 C.I.T. 787 (1995)). In 
this case ABC imported televisions from Japan, identifying the 
producers as Sharp, Toshiba, and JVC. The cash deposit rates for 
merchandise produced by these producers were zero at the time of entry. 
Because the importer identified the producer at the time of entry, the 
Department required the importer to deposit estimated antidumping 
duties at the producer's cash deposit rate. The Department then 
conducted an administrative review of the producers. Liquidation of 
ABC's entries was suspended during the conduct of the review, since the 
producers identified at the time of entry were subject to review. The 
review resulted in margins for the producers that ranged from 20 to 40 
percent, and the Department ordered liquidation of all entries of 
merchandise produced by these firms (including ABC's entries) at the 
producers' rates determined in the administrative review. ABC did not 
participate in the review.
    After the entries were liquidated, ABC sued the Department, 
alleging that its entries should have been liquidated automatically at 
the zero cash deposit rate because its entries were not reviewed. The 
Department took the position that, because the review was closed and 
because ABC did not either participate in the review of the producers 
or request a review of the exporter/reseller, it was foreclosed from 
raising the issue in a protest. The CIT upheld the Department, noting 
that automatic liquidation applies only where there was no review of 
the reseller or the producer of the reseller's merchandise.
    The Department recognizes that this policy will increase the need 
of resellers to participate in the Department's proceedings. If a 
reseller believes that the producer is not setting the price to the 
United States, it should participate in the administrative review on 
this issue. The only way that reseller or exporter can have its own 
company-specific rate is to have an administrative review of its own.
    The Department invites comments on this clarification. Written 
comments are due October 30, 1998. Address written comments to Robert 
S. LaRussa, Assistant Secretary for Import Administration, Dockets 
Center, Room 1870, Pennsylvania Avenue and 14th Street , N.W., 
Washington, D.C. 20230. Attention: Laurie Parkhill, Comment on 
Automatic Liquidation.


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    Dated: October 8, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-27729 Filed 10-14-98; 8:45 am]
BILLING CODE 3510-DS-P