[Federal Register Volume 64, Number 66 (Wednesday, April 7, 1999)]
[Notices]
[Pages 16907-16910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8624]



[[Page 16907]]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-001]


Final Results of Expedited Sunset Review: Potassium Permanganate 
from the People's Republic of China

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

ACTION: Notice of Final Results of Expedited Sunset Review: Potassium 
Permanganate from the People's Republic of China.

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SUMMARY: On November 2, 1998, the Department of Commerce (``the 
Department'') initiated a sunset review of the antidumping order on 
potassium permanganate from the People's Republic of China (63 FR 
58709) pursuant to section 751(c) of the Tariff Act of 1930, as amended 
(``the Act''). On the basis of a notice of intent to participate and 
substantive comments filed on behalf of the domestic industry and 
inadequate response (in this case, no response) from respondent 
interested parties, the Department determined to conduct an expedited 
review. As a result of this review, the Department finds that 
revocation of the antidumping order would be likely to lead to 
continuation or recurrence of dumping at the levels indicated in the 
Final Results of Review section of this notice.

For Further Information Contact: Scott E. Smith or Melissa G. Skinner, 
Office of Policy for Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-
6397 or (202) 482-1560, respectively.

Effective Date: April 7, 1999.

Statute and Regulations

    This review was conducted pursuant to sections 751(c) and 752 of 
the Act. The Department's procedures for the conduct of sunset reviews 
are set forth in Procedures for Conducting Five-year (``Sunset'') 
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 
(March 20, 1998) (``Sunset Regulations''). Guidance on methodological 
or analytical issues relevant to the Department's conduct of sunset 
reviews is set forth in the Department's Policy Bulletin 98:3--Policies 
Regarding the Conduct of Five-year (``Sunset'') Reviews of Antidumping 
and Countervailing Duty Orders; Policy Bulletin, 63 FR 18871 (April 16, 
1998) (``Sunset Policy Bulletin'').

Scope

    The merchandise subject to this antidumping order is potassium 
permanganate from the People's Republic of China (``PRC''), an 
inorganic chemical produced in free-flowing, technical, and 
pharmaceutical grades.1 Potassium permanganate is 
classifiable under item 2841.61.0000 of the Harmonized Tariff Schedule 
of the United States (HTSUS). The HTSUS item number is provided for 
convenience and U.S. Customs purposes. The written description remains 
dispositive.
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    \1\  On May 19, 1995, the Department determined that plastic 
ignitor spheres containing potassium permanganate are not within the 
scope of the order (60 FR 26871).
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    This review covers imports from all manufacturers and exporters of 
potassium permanganate from the PRC.

Background

    On November 2, 1998, the Department initiated a sunset review of 
the antidumping order on potassium permanganate from the People's 
Republic of China (63 FR 58709), pursuant to section 751(c) of the Act. 
The Department received a Notice of Intent to Participate on behalf of 
Carus Chemical Company (``Carus'') on November 16, 1998, within the 
deadline specified in section 351.218(d)(1)(i) of the Sunset 
Regulations. Carus claimed interested party status under 19 U.S.C. 
1677(9)(C) as a U.S. producer of potassium permanganate. In addition, 
Carus indicated that it was the original petitioner in this proceeding 
and that it has regularly participated in all administrative reviews. 
We received a complete substantive response from Carus on December 3, 
1998, within the 30-day deadline specified in the Sunset Regulations 
under section 351.218(d)(3)(i). We did not receive a substantive 
response from any respondent interested party to this proceeding. As a 
result, pursuant to section 751(c)(3)(B) of the Act and 19 CFR 
351.218(e)(1)(ii)(C), the Department determined to conduct an 
expedited, 120-day review of this order.
    The Department determined that the sunset review of the antidumping 
duty order on potassium permanganate from the People's Republic of 
China is extraordinarily complicated. In accordance with section 
751(c)(5)(C)(v) of the Act, the Department may treat a review as 
extraordinarily complicated if it is a review of a transition order 
(i.e., an order in effect on January 1, 1995). (See section 
751(c)(6)(C) of the Act.) Therefore, on March 2, 1999, the Department 
extended the time limit for completion of the final results of this 
review until not later than June 1, 1999, in accordance with section 
751(c)(5)(B) of the Act.2
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    \2\ See Potassium Permanganate from Spain and the People's 
Republic of China: Extension of Time Limit for Final Results of 
Five-Year Review, 64 FR 10991 (March 8, 1999).
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Determination

    In accordance with section 751(c)(1) of the Act, the Department 
conducted this review to determine whether revocation of the 
antidumping order would be likely to lead to continuation or recurrence 
of dumping. Section 752(c) of the Act provides that, in making this 
determination, the Department shall consider the weighted-average 
dumping margins determined in the investigation and subsequent reviews 
and the volume of imports of the subject merchandise for the period 
before and the period after the issuance of the antidumping order, and 
shall provide to the International Trade Commission (``the 
Commission'') the magnitude of the margin of dumping likely to prevail 
if the order is revoked.
    The Department's determinations concerning continuation or 
recurrence of dumping and the magnitude of the margin are discussed 
below. In addition, Carus' comments with respect to continuation or 
recurrence of dumping and the magnitude of the margin are addressed 
within the respective sections below.

Continuation or Recurrence of Dumping

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreements Act (``URAA''), specifically 
the Statement of Administrative Action (``the SAA''), H.R. Doc. No. 
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1 
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the 
Department issued its Sunset Policy Bulletin providing guidance on 
methodological and analytical issues, including the bases for 
likelihood determinations. In its Sunset Policy Bulletin, the 
Department indicated that determinations of likelihood will be made on 
an order-wide basis (see section II.A.3). In addition, the Department 
indicated that normally it will determine that revocation of an 
antidumping order is likely to lead to continuation or recurrence of 
dumping where (a) dumping continued at any level above de minimis after 
the issuance of the order, (b) imports of the subject merchandise 
ceased after the issuance of the order, or (c) dumping was eliminated 
after the issuance of the

[[Page 16908]]

order and import volumes for the subject merchandise declined 
significantly (see section II.A.3).
    In addition to guidance on likelihood provided in the Sunset Policy 
Bulletin and legislative history, section 751(c)(4)(B) of the Act 
provides that the Department shall determine that revocation of an 
order is likely to lead to continuation or recurrence of dumping where 
a respondent interested party waives its participation in the sunset 
review. In the instant review, the Department did not receive a 
substantive response from any respondent interested party. Pursuant to 
section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes 
a waiver of participation.
    The antidumping duty order on potassium permanganate from the PRC 
was published in the Federal Register on January 31, 1984 (49 FR 3897). 
Since that time, the Department has conducted two administrative 
reviews.3 The order remains in effect for all manufacturers 
and exporters of the subject merchandise.
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    \3\ See Final Results of Antidumping Duty Administrative Review: 
Potassium Permanganate from The People's Republic of China, 56 FR 
19640, April 29, 1991 (1989 POR) and Potassium Permanganate from The 
People's Republic of China; Final Results of Antidumping Duty 
Administrative Review, 59 FR 26625, May 23, 1994 (1990 POR). Prior 
to the imposition of the order, the Department published Final 
Determination of Sales at Less Than Fair Value; Potassium 
Permanganate from The People's Republic of China, 48 FR 57347, 
December 29, 1983.
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    In its substantive response, Carus argues that it is highly likely 
that dumping would continue if the antidumping order in this case were 
to be revoked. (See December 3, 1998, Substantive Response of Carus at 
2.) With respect to whether dumping continued at any level above de 
minimis after the issuance of the order, Carus argued that high dumping 
margins have been continuously in place for the almost 15 years since 
the date of the order. Carus further argues that the uninterrupted 
existence of high margins over the life of the order, and the continued 
failure of any PRC producer or exporter to successfully complete an 
annual review, provides compelling evidence that PRC exporters would 
engage in dumping at very high rates in the absence of the order. 
According to Carus, even with the severe discipline of the order in 
place, PRC exporters have continued to dump. (See December 3, 1998, 
Substantive Response of Carus at 7.)
    With respect to whether imports of the subject merchandise ceased 
after the issuance of the order, Carus, citing its own shipment data 
and official U.S. Census Bureau import statistics, argued that reported 
imports of potassium permanganate from the PRC effectively ceased after 
May 1994, when the Department issued the final results of the 1990 
administrative review. (See December 3, 1998, Substantive Response of 
Carus at 7.) Carus argues that PRC producers/exporters were attempting 
to circumvent the order by shipping subject merchandise through a 
number of Hong Kong resellers who had not been subject to increased 
margin rates assigned to PRC producers and certain Hong Kong resellers 
in the final results of the 1989 administrative review (56 FR 
19640).4 Carus further argues that while imports of Chinese 
potassium permanganate were subject to the 39.64 percent deposit rate 
(1984-1990), annual imports surged by almost 580%--from 432,000 lbs. in 
1984 to over 2.1 million lbs. in 1989 to over 2.5 million lbs. in 1990. 
(See December 3, 1998, Substantive Response of Carus at 22.) According 
to Carus, imports of the subject merchandise ceased after the deposit 
rate increased to reflect the actual level of dumping and purported 
absorption and, thus, the ``loophole'' associated with sales through 
Hong Kong resellers was eliminated.
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    \4\ On April 29, 1991, the Department published Final Results of 
Antidumping Duty Administrative Review: Potassium Permanganate from 
The People's Republic of China (56 FR 19640) in which all subject 
merchandise produced and exported directly to the U.S. by Chinese 
manufacturers became subject to a deposit rate of 128.94 percent. In 
addition to all PRC producers, a rate of 128.94 percent was 
established for four of the seven known Hong Kong resellers of the 
subject merchandise in the 1991 Final Results. In those Final 
Results, other resellers retained the original 39.63 percent rate 
established for ``all other'' producers/exporters in the antidumping 
duty order (see Antidumping Duty Order; Potassium Permanganate from 
The People's Republic of China, 49 FR 3897, January 31, 1984).
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    In addition, Carus states that there are other factors which 
support the likelihood of dumping if the order were revoked. Carus 
argues that the attractiveness of the U.S. market would promote 
increased imports of Chinese potassium permanganate because U.S. prices 
of this product are at a premium while prices elsewhere in the world 
are well below U.S. levels. Carus also argues that Chinese producers 
have an oversupply of subject merchandise. In this respect, Carus makes 
four arguments. First, Carus states that the high antidumping duties 
established by the European Union and India on potassium permanganate 
from China have effectively shut Chinese exporters of this product out 
of those markets, increasing their inventories and forcing them to look 
elsewhere for export markets. Second, Carus argues that advances in 
Chinese potassium permanganate production technology have resulted in 
increased efficiency and enable producers to offer lower prices. These 
technological advances have resulted in increased production capacities 
and inventories and, coupled with a lower price, will spur increased 
exportation. Third, because potassium permanganate has applications in 
the production of cocaine and China has recently demonstrated greater 
vigilance in controlling exports of potassium permanganate in 
situations where it may be used in the production of narcotics, Carus 
argues that this increased control may result in an additional surplus 
of Chinese potassium permanganate. According to Carus, this will 
promote the search for additional export markets which, in turn, may 
prompt future dumping. Fourth, Carus asserts that the Asian financial 
crisis has reduced the need for Chinese potassium permanganate in Asia. 
Carus argues that cash-strapped Asian governments are not likely to 
begin using large volumes of potassium permanganate in the type of 
applications for which it is used in the United States--for the 
treatment of municipal waste and drinking water. According to Carus, 
these factors may force Chinese producers to look elsewhere to sell 
their product.
    In conclusion, Carus argued that the Department should determine 
that there is a likelihood that dumping would continue were the order 
revoked because (1) dumping margins have existed throughout the life of 
the order, (2) shipments of subject merchandise continued throughout 
the life of the order and have ceased only recently as the effective 
margin rate has increased to reflect the actual level of dumping, (3) 
premium prices for potassium permanganate in the U.S. will promote 
continued, if not increased, dumping by Chinese producers, (4) Chinese 
producers have an oversupply of the subject merchandise, for a variety 
of reasons, and need markets in which to sell and (5) the Asian 
economic crisis is limiting the number of markets in which Chinese 
producers of potassium permanganate can sell.
    As discussed in Section II.A.3 of the Sunset Policy Bulletin, the 
SAA at 890, and the House Report at 63-64, if companies continue 
dumping with the discipline of an order in place, the Department may 
reasonably infer that dumping would continue if the discipline were 
removed. A dumping margin above de minimis continues to exist for 
shipments of the subject

[[Page 16909]]

merchandise from all Chinese producers/exporters.5
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    \5\ See Potassium Permanganate from The People's Republic of 
China; Final Results of Antidumping Duty Administrative Review, 59 
FR 26625 (May 23, 1994).
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    Consistent with section 752(c) of the Act, the Department also 
considered the volume of imports before and after issuance of the 
order. The import statistics provided by Carus on imports of the 
subject merchandise between 1980 and 1998, and those examined by the 
Department (U.S. Census Bureau IM146 reports), demonstrate that imports 
of the subject merchandise have continued throughout the life of the 
order.
    Based on this analysis, the Department finds that the existence of 
dumping margins after the issuance of the order is highly probative of 
the likelihood of continuation or recurrence of dumping. Deposit rates 
above a de minimis level continue in effect for exports of the subject 
merchandise by all known Chinese manufacturers/exporters. Therefore, 
given that dumping has continued over the life of the order and 
respondent interested parties have waived their right to participate in 
this review before the Department, and absent argument and evidence to 
the contrary, the Department determines that dumping is likely to 
continue if the order were revoked.
    Because the Department based this determination on the continued 
existence of margins above de minimis and respondent interested 
parties' waiver of participation, it is not necessary to address Carus' 
arguments concerning the attractiveness of the U.S. market, U.S. price 
premiums for potassium permanganate, Chinese overcapacity and export 
orientation, or the effects of the Asian economic crisis.

Magnitude of the Margin

    In the Sunset Policy Bulletin, the Department stated that it will 
normally provide to the Commission the margin that was determined in 
the final determination in the original investigation. Further, for 
companies not specifically investigated or for companies that did not 
begin shipping until after the order was issued, the Department 
normally will provide a margin based on the ``all others'' rate from 
the investigation. (See section II.B.1 of the Sunset Policy Bulletin.) 
Exceptions to this policy include the use of a more recently calculated 
margin, where appropriate, and consideration of duty absorption 
determinations. (See sections II.B.2 and 3 of the Sunset Policy 
Bulletin.)
    The Department, in its final determination of sales at less than 
fair value, published a weighted-average dumping margin for the China 
National Chemicals Import and Export Corporation (SINOCHEM), the sole 
Chinese producer/exporter in the original investigation, of 39.63 
percent (48 FR 57347, December 29, 1983). The Department also published 
an ``all others'' rate of 39.63 percent in this same Federal Register 
notice. With respect to duty absorption findings, Carus argues that 
duty absorption is likely in this case but, because there have been no 
completed administrative reviews of the order since the 1990 
administrative review, the Department has not had the opportunity to 
address the issue of duty absorption.
    In its substantive response, Carus argues that the Department 
should provide the Commission a more recently calculated margin. Citing 
the Sunset Policy Bulletin, Carus states that ``[a] company may choose 
to increase dumping in order to maintain or increase market share. As a 
result, increasing margins may be more representative of a company's 
behavior in the absence of an order.'' In the original investigation, 
the Department established a deposit rate of 39.63 percent for SINOCHEM 
as well as for ``all other'' producers/exporters of Chinese potassium 
permanganate (48 FR 57347, December 29, 1983). Carus asserts that the 
39.63 percent margin established in the investigation was far too low 
to prevent rapid import growth and continued dumping of PRC-origin 
product, as well as dramatic increases in the Chinese share of the U.S. 
market. According to Carus, Chinese imports of the subject merchandise 
surged by almost 580%--from 432,000 lbs. in 1984 to over 2.1 million 
lbs. in 1989 to over 2.5 million lbs. in 1990.
    In January of 1990, Carus requested an administrative review of 
Chinese exports of potassium permanganate to the United States. In 
response to this request, the Department conducted a review and 
established, on April 29, 1991, a new deposit rate for all PRC 
producers of 128.94 percent. In addition, the Department established a 
new deposit rate for four of the seven known Hong Kong resellers of 
this product. According to Carus' information, imports of the subject 
merchandise then decreased by almost 70 percent, from 2,560,700 lbs. in 
1990 to 861,051 lbs. in 1991.
    Nevertheless, by 1993, imports of Chinese potassium permanganate 
had increased to 2,441,453 lbs. and had recaptured over 9 percent of 
the U.S. market, almost as much of the U.S. market as Chinese 
producers/exporters had held just prior to the imposition of the order. 
Carus claims this resurgence in Chinese imports was attributed to a 
``loophole'' evident in the 1991 Final Results. Specifically, the ``all 
others'' rate of 39.63 percent was still being applied as a deposit 
rate to previously unnamed Hong Kong resellers, not all of whom could 
be identified for review. Carus argues that the retention of the 39.63 
percent rate for Hong Kong resellers subject to the ``all others'' 
rate, coupled with the willingness and ability of Chinese producers/
exporters to dump, allowed substantial amounts of PRC-origin potassium 
permanganate to be transshipped through Hong Kong resellers and sold in 
the U.S. at below fair market value. In the 1991 Final Results, the 
Department clarified that, in cases involving non-market economies, an 
``all others'' cash deposit rate is not appropriate because any non-
market economy country firm must show that it is entitled to a separate 
rate before a rate other than the non-market economy country-wide rate 
can be assigned to it, and any intermediate country reseller is 
properly assigned the rate for its producer unless the reseller 
affirmatively shows that the merchandise has not simply been 
transshipped. 59 FR 26630. 6 Because no third country 
reseller established, during the 1990 administrative review or since, 
that its merchandise was not being transshiped, such that the first 
exporter ``to the United States'' was properly deemed to be the PRC 
exporter, the ``all others'' loophole was eliminated in the May 23, 
1994 final results of the 1990 administrative review, which established 
a 128.94 percent deposit rate for all shipments of Chinese potassium 
permanganate. 59 FR 26625.
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    \6\ See also Yue Pak v. United States, Slip Op. 96-65 (CIT April 
18, 1996), aff'd 111 F. 3rd 142 (Fed. Cir. 1997).
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    Carus submits that the history of this case shows that the margin 
established in the original investigation was insufficient to prevent 
an influx of Chinese potassium permanganate and insufficient to prevent 
Chinese producers/exporters' attempts at increasing market share in the 
United States through dumping. Carus argues that, between 1984 and 
1990, Chinese producers/exporters of potassium permanganate increased 
their share of the U.S. market by 340 percent, from 2.5 percent to 8.5 
percent. December 3, 1998 Substantive Response of Carus. Furthermore, 
Carus argues that the ``loophole'' created by the exclusion of certain 
Hong Kong resellers from the

[[Page 16910]]

128.94 percent margin assigned to Chinese exporters in the 1989 
administrative review again permitted dramatic increases in Chinese 
imports of the subject merchandise and the virtual recapture of the 
Chinese percentage of the U.S. potassium permanganate market.
    Therefore, Carus argues, the margin determined in the original 
investigation does not reflect current Chinese pricing behavior or 
present levels of globally-traded input prices. In addition, Carus 
argues the changes in the methodology used by the Department in the 
calculation of margins renders the margin from the original 
investigation suspect.
    The Department agrees with Carus' argument concerning the choice of 
the margin rate to report to the Commission. An examination of the 
margin history of the order as well as an examination of import 
statistics of the subject merchandise, as provided in U.S. Census 
Bureau IM146 reports, confirms the scenario outlined by Carus. From 
1984, the date the first margins were established for this proceeding 
(49 FR 3897, January 31, 1984), to 1990, import volumes of the subject 
merchandise swelled, increasing by almost 600 percent. During this 
period, a cash deposit rate of 39.64 percent was in effect. In 1991, in 
an administrative review requested by Carus, the Department established 
a new deposit rate of 128.94 percent for producers of the subject 
merchandise from the PRC and for certain named third country resellers 
(56 FR 19640, April 29, 1991). Import volumes fell substantially in 
1991, by almost 70 percent, but then rebounded by 1993, the year 
immediately preceding the final results of the 1990 administrative 
review (59 FR 26625, May 23, 1994). In May of 1994, in the Final 
Results of the 1990 administrative review, the Department established a 
rate of 128.94 percent for all potassium permanganate of Chinese 
origin, whether shipped directly from the PRC or transshipped through a 
third country reseller. Following the establishment of this more 
inclusive margin rate, shipments of potassium permanganate fell 
dramatically, and have not exceeded 50,000 lbs. in any year since 1996.
    The Department believes that the increase in import volumes and 
market share between the imposition of the order and the Final Results 
in the 1989 administrative review (56 FR 19640, April 29, 1991) reflect 
the willingness and ability of Chinese producers/exporters to dump this 
product despite the margin rate established by the Department in the 
original investigation. Furthermore, the continuation of dumping and 
the virtual recapture of market share between the final results in the 
1989 review and those in the 1990 review reflects attempts by Chinese 
producers/exporters to circumvent the order by transshipping the 
subject merchandise through third country resellers with lower deposit 
rates. This is evidenced by the dramatic reduction in import volumes 
following the 1990 administrative review (59 FR 26625, May 23, 1994) in 
which a single rate was established for all potassium permanganate of 
Chinese origin, regardless of the interim shipping location, absent a 
showing that either the Chinese exporter was entitled to a separate 
rate or the third country reseller was not merely engaged in 
transshipment. This more inclusive margin determination has apparently 
reduced the ability of Chinese producers/exporters to circumvent the 
order.
    According to the Sunset Policy Bulletin, ``a company may choose to 
increase dumping in order to maintain or increase market share. As a 
result, increasing margins may be more representative of a company's 
behavior in the absence of an order.'' Therefore, the Department finds 
that this most recent rate is the most probative of the behavior of 
Chinese producers/exporters of potassium permanganate if the order were 
revoked. As a result, the Department is not addressing current Chinese 
pricing behavior or changes in methodologies used by the Department in 
its margin calculations. The Department will report to the Commission 
the country-wide rate from the administrative review for the period 
January 1, 1990 through December 31, 1990 (59 FR 26625, May 23, 1994) 
as contained in the Final Results of Review section of this notice.

Final Results of Review

    As a result of this review, the Department finds that revocation of 
the antidumping order would likely lead to continuation or recurrence 
of dumping at the margins listed below:

------------------------------------------------------------------------
                                                              Margin
                  Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Country-wide rate for the People's Republic of China....          128.94
------------------------------------------------------------------------

    This notice serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305 of the Department's regulations. 
Timely notification of return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and the terms of an APO is a sanctionable 
violation.
    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: April 1, 1999.
Robert S. LaRussa
Assistant Secretary for Import Administration.
[FR Doc. 99-8624 Filed 4-6-99; 8:45 am]
BILLING CODE 3510-DS-P