65 FR 53701, September 5, 2000 A-570-835 A-549-812 Sunset Review Public Document MEMORANDUM TO: Troy H. Cribb Acting Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memo for the Sunset Review of Antidumping Duty Orders on Furfuryl Alcohol from the People's Republic of China and Thailand; Final Results Summary: We have analyzed the substantive responses of interested parties in the expedited sunset reviews of the antidumping duty orders covering furfuryl alcohol from the People's Republic of China ("PRC") and Thailand. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum. Below is the complete list of the issues in these expedited sunset reviews for which we received comments by parties: 1. Adequacy 2. Likelihood of continuation or recurrence of dumping A. Weighted-average dumping margin B. Volume of imports C. Other factors 3. Magnitude of the margin likely to prevail A. Margins from the investigation B. Use of a more recent margin C. Other factors History of Orders: PRC On June 21, 1995, the Department of Commerce ("the Department") published in the Federal Register the antidumping duty order on furfuryl alcohol from the PRC.(1) In the order the Department assigned weighted-average dumping margins of: 50.43 percent for Quingdao Chemicals & Medicines Import and Export Corporation ("Quingdao"); 43.54 percent for Sinochem Shandong Import and Export Group Corporation ("Sinochem Shandong"); and 45.27 percent for "all other" manufacturers, producers, and exporters of the subject merchandise (60 FR 32302). Since the issuance of the antidumping duty order, the Department has not conducted any administrative reviews. The order on furfuryl alcohol from the PRC remains in effect for all manufacturers, producers, and exporters. Thailand On May 8, 1995, the Department published in the Federal Register the final determination in the antidumping duty investigation on furfuryl alcohol from Thailand.(2) In the antidumping duty order the Department assigned a weighted-average dumping margin of: 5.94 percent for Indo-Rama Chemicals (Thailand) Ltd. ("IRCT") and all other manufacturers, producers, and exporters of the subject merchandise (60 FR 22557). On July 25, 1995, the Department published in the Federal Register the amended final antidumping duty determination and order on furfuryl alcohol from Thailand.(3) The final dumping margin for IRCT and "all others" was amended from 5.94 percent to 7.82 percent. Since the issuance of this order, the Department has not conducted any administrative reviews. The order on furfuryl alcohol from Thailand remains in effect for all manufacturers, producers, and exporters from Thailand. Background: On May 1, 2000, the Department initiated sunset reviews of the antidumping duty orders on furfuryl alcohol from the PRC and Thailand (65 FR 25309 ), pursuant to section 751(c) of the Tariff Act of 1930, as amended ("the Act"). On May 16, 2000, the Department received Notices of Intent to Participate, in each sunset review of these orders, on behalf of Penn Specialty Chemicals, Inc. ("Penn"), within the deadline specified date in 19 CFR 351.218(d)(1)(i). On May 31, 2000, the Department received substantive responses in each sunset review of these orders, within the 30- day deadline specified in the Sunset Regulations under section 351.218(d) (3)(i), on behalf of Penn. Penn claimed in its substantive response to these sunset reviews that it is a manufacturer of the domestic like product and that therefore it is an interested party pursuant to section 771(9)(C) of the Act. Further, in its response to the notice of initiation on furfuryl alcohol from the PRC, Penn stated that it purchased the furfuryl operation of QO Chemical, Inc., the petitioner in the original investigation. See Penn's, May 31, 2000, Substantive Response at 3. On June 7, 2000, the Department received a substantive response to the notice of initiation from respondent interested parties from the PRC: Sinochem International Furan Chemicals Co., Ltd., Shangong Zhucheng Chemical Co., Ltd., Shandong Baofeng Chemicals Group Corp., Linzi Organic Chemical Inc., Jilin Sanchun Chemical Plant Co. Ltd., Sinochem Hebei Fuheng Co., Ltd., Shanxi Province Gaoping Chemical Industry Co., Ltd., Qingdao Import and Export Corp., Tieling North and the China Chamber of Commerce of Metals, Minerals, and Chemicals (collectively, "respondent interested parties").(4) On May 19, 2000, the Department received notice of waiver of participation in the sunset review on furfuryl alcohol from Thailand, on behalf of Indo-Rama Chemicals (Thailand) Ltd., pursuant to 351.218(d)(2)(i) of the Department's regulations. With respect to the antidumping duty order on furfuryl alcohol from the PRC, the respondent interested parties note that, of the eight companies participating in this review, only two companies, Shandong Zhucheng and Linzi Organiz participated in the original antidumping duty investigation. The respondent interested parties note that Qingdao Import & Export is a different company from the Quingdao participated in the investigation, and that Qingdao's furfuryl alcohol division is an independent operation called Qingdao on Billion International. Further, they note that Sinochem Furan was formed two years ago, and includes the assets of the Sinochem Shandong, a company that participated in the original investigation.(5) Shandong, Hebei, Sanchun, Shanxi, and Linzi are producers and exporters of furfuryl alcohol from the PRC to the United States, and Sinochem Furan, Qingdao, and Teiling are exporters of furfuryl alcohol from the PRC. See Respondent Interested Parties, Supplement to Response, June 16, 2000, at 3. Therefore, the respondent interested parties assert that all these companies qualify as interested parties under section 771(9)(A) of the Act. On June 21, 2000, the Department notified the Commission that the respondent interested parties did not provide an adequate response in these sunset reviews, pursuant to section 751(c)(3)(B) of the Tariff Act of 1930, as amended, and 19 CFR 351.218(e)(1)(ii)(C)(2). Therefore, because we did not receive adequate responses from respondent interested parties in each of the two cases, we determined to conduct expedited sunset reviews and to issue the final results not later than August 29, 2000, (120 days after the date of publication in the Federal Register of the notice of initiation). We have addressed the interested parties' comments below. Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted these sunset reviews to determine whether revocation of the antidumping duty orders would likely lead to continuation or recurrence of dumping. Section 752(c) of the Act provides that, in making these determinations, 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 duty order or suspension agreement. In addition, section 752(c)(3) of the Act provides that the Department shall provide to the International Trade Commission ("the Commission") the magnitude of the margin of dumping likely to prevail if the orders are revoked. Likelihood of Continuation or Recurrence of Dumping Adequacy: With respect to furfuryl alcohol from the PRC, Penn asserts that the Department was correct to determine that it did not receive an adequate response to the notice of initiation: therefore, pursuant to 351.218(e) (1)(ii)(C), an expedited sunset sunset review is warranted. Penn points out that, under section 351.218(e)(1)(ii)(A) of the Department's regulations, the Secretary normally will conclude that respondent interested parties have provided adequate responses where it receives complete substantive responses from respondent interested parties accounting on average for more than 50 percent of the total exports of subject merchandise to the United States over the five calendar years preceding the year of publication of the notice of initiation. In this case all participant producers/exporters in this review have stated that they had no shipments to the United States of the subject merchandise over the past five years. For this reason, Penn asserts that the respondent interested parties did not meet the Department's criterion for an adequate response. With respect to furfuryl alcohol from Thailand, the Department received no comments on the adequacy of responses. Department's Position: With respect to the antidumping duty order on furfuryl alcohol from the PRC, we agree with Penn that respondent interest parties did not provide an adequate response to the notice of initiation. Section 351.218(d)(3)(iii) of the Department's Regulations indicates that additional information required by respondent interested parties in a sunset review include historical margin or rate information and export volume and value data. Specifically, respondent interested parties are required to report their percentage of total exports of subject merchandise to the United States because this information is necessary to the Department's determination as to whether respondent interested parties provided adequate response to a notice of initiation under section 751(c)(3)(B) of the Act. As noted by Penn and confirmed by the respondent interested parties, there were no exports of furfuryl alcohol over the past five years. Given that respondent interested parties have not made shipments of the subject merchandise into the United States over the past five years, we determine that respondent interested parties response to this notice of initiation is inadequate. Therefore, we agree with Penn that these respondent interested parties did not meet the criterion for adequacy of response under 19 CFR 351.218((e)(1)(ii)(A).(6) With respect to furfuryl alcohol from Thailand, on May 19, 2000, the Department received a notice of waiver of participation in this sunset review from Indo-Rama Chemicals (Thailand) Ltd. ("IRCT"). IRCT is a foreign producer and exporter of the subject merchandise. This was the only communication we received with respect to this review. Consequently we find the responses to be inadequate. Likelihood PRC In this case, Penn argues that revocation of the antidumping duty order would likely lead to continuation or recurrence of dumping by manufacturers and exporters of furfuryl alcohol from the PRC. Penn bases its assertion on the continuation of dumping at levels above de minimis and a significant decline of subject imports after the issuance of the antidumping duty order. See Penn's, May 31, 2000, Substantive Response at 3. Penn notes that in the Department's final determination of its investigation, weight-average dumping margins found for Quingdao and Sinochem exceeded de minimis levels. Moreover, there have been no requests for administrative reviews of this order. With respect to import volumes, the import statistics on the subject merchandise cited by Penn and those examined by the Department (U.S. Census Bureau IM145 reports), demonstrate that the level of imports declined significantly after the issuance of the order, and to date, import volume has not reached pre-order levels. See Penn's, May 31, 2000, Substantive Response at 6. In their substantive comments, the respondent interested parties assert that the facts in this case demonstrate a strong likelihood that dumping will not continue or recur if the antidumping duty order on furfuryl alcohol from the PRC were revoked. See Respondent Substantive Response, June 7, 2000, at 5. They argue that an analysis of the likely effects of the removal of the antidumping duty order based on the original investigation is meaningless given the absence of exports of the subject merchandise from China over the past five years. Id. In their substantive response, the respondent interested parties assert that the antidumping duty order on furfuryl alcohol should be revoked for the following reasons: (1) the absence of exports to the United States of subject merchandise over the past five years; (2) the PRC furfuryl alcohol industry has become market-oriented; a number of these companies have purchased raw materials from market economy countries; long-term contracts with third country customers(7) (3) the domestic demand of the subject merchandise is strong; and (4) their capacity is limited, and the costs of a theoretical expansion of capacity are impracticable.(8) In sum, they state that these companies have no substantial incentives to attempt to reenter the U.S. market in a significant way. Id. at 7. Thailand Penn asserts that revocation of the order on furfuryl alcohol from Thailand will likely lead to continuation of dumping. It argues that the history of this order demonstrates that exporters cannot sell the subject merchandise to the United States at prices at or above normal value given that the weighted-average dumping margin determined in the investigation remains unchallenged by exporters of the subject merchandise. See Penn's, May 31, 2000, Substantive Response at 3. Therefore, because dumping has continued over the life of this order, Penn maintains that this satisfies the Department's guidelines and demonstrates that the order should not be revoked. In addition, Penn argues that the only respondent to participate in the investigation, IRCT, waived participation in this review and under section 751(c)(4)(B) of the Act, such a waiver mandates that the Department conclude that revocation of the order would likely to lead to continuation or recurrence of dumping by this interested party. As a result, Penn argues that the Department should conclude that revocation of this order would likely lead to continuation or recurrence of dumping. Department's Position: As discussed in section II.A.3 of the Department's Sunset Policy Bulletin, the SAA at 890, and the House Report at 63-64, if companies continue dumping with the discipline of an antidumping duty order in place, the Department may reasonably infer that dumping would continue if the discipline were removed. With respect to the subject merchandise from the PRC, not only did import volumes decline significantly after the issuance of the antidumping duty order, deposit rates continue to exist for Quingdao: 50.43 percent; Sinochem Shandong 43.54 percent; and 45.27 percent for all other manufacturers, producers and exporters of the subject merchandise. Similarly, with respect to the subject merchandise from Thailand, dumping margins continue to exist for IRCT: 7.82 percent; and 7.82 percent for all other manufacturers, producers and exporters of the subject merchandise. Consistent with section 752(c) of the act, the Department also considers the volume of imports before and after the issuance of the order. As mentioned above, imports of furfuryl alcohol from the PRC declined significantly following the issuance of the antidumping duty orders and dumping margins continue to exist. Therefore, given that imports declined after the issuance of the orders and dumping margins continue to exist at levels above de minimis for the PRC, and because IRTC waived participation in the review of the order on furfuryl alcohol from Thailand, the Department determines that dumping is likely to continue if these orders were revoked. Magnitude of the Margin Likely to Prevail Interested Party Comments In its substantive response, Penn asserts that the Department should provide to the Commission the margins from the investigation because they are the only margins available. See Penn's, May 31, 2000, Substantive Response at 6. Department's Position In the Sunset Policy Bulletin, the Department stated that it normally will provide to the Commission the margin that was determined in the final determination in the original investigation. In addition, 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. Exceptions to this policy include the use of a more recently calculated margin, where appropriate, and consideration of duty absorption determinations. See section II.B.2 and 3 of the Sunset Policy Bulletin. We agree with Penn that margins from the original investigation are the margins that best represent the magnitude of the margin likely to prevail if the order on furfuryl alcohol from the PRC and Thailand were revoked. Given that there have been no administrative reviews with respect to both of these antidumping duty orders, the calculated margins from the investigations are the margins that best represent the magnitude of the margin likely to prevail if the orders were revoked. Consistent with section II.B.1 of the Sunset Policy Bulletin and the SAA at 890, we determine that the rates from the original investigations are probative of the behavior of producers and exporters of furfuryl alcohol from the PRC and Thailand without the discipline of the orders, because the margins are the only calculated rates available and therefore the only calculated rates that reflect the behavior of exporters without the discipline of the order. Therefore, we will report to the Commission the company-specific and "all others" rates from the original investigations. Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish the final results of review in the Federal Register. AGREE __________ DISAGREE ____________ LET'S DISCUSS _________ ________________________________________________________________________ footnotes: 1. Notice of Antidumping Duty Order: Furfuryl Alcohol From the People's Republic of China (PRC), 60 FR 32302 (June 21, 1995). 2. Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From Thailand, 60 FR 22557 (May 8, 1995). 3. Amended Final Antidumping Duty Determination and Order; Furfuryl Alcohol From Thailand, 60 FR 38035 (July 25, 1995). 4. On May 30, 2000, the Department received a request for a one-week extension of the deadline for filing substantive comments on behalf of respondent interested parties, China Chamber of Commerce of Metals, Minerals, and Chemicals. The Department granted the extension for all participants eligible to file substantive comments in this sunset review until June 7, 2000. On June 6, 2000, China Chamber of Commerce of Metals, Minerals, and Chemicals, submitted a request to the Department to amend their list of entry of appearance. The new list includes: Sinochem International Furan Chemicals Co., Ltd., Shangong Zhucheng Chemical Co., Ltd., Shandong Baofeng Chemicals Group Corp., Linzi Organic Chemical Inc., Jilin Sanchun Chemical Plant Co. Ltd., Sinochem Hebei Fuheng Co., Ltd., Shanxi Province Gaoping Chemical Industry Co., Ltd., Qingdao Import and Export Corp On June 6, 2000, the Department received a request for a further extension to file additional information in the substantive response on behalf of respondent interested parties: Sinochem International Furan Chemicals Co., Ltd., Shangong Zhucheng Chemical Co., Ltd., Shandong Baofeng Chemicals Group Corp., Linzi Organic Chemical Inc., Jilin Sanchun Chemical Plant Co. Ltd., Sinochem Hebei Fuheng Co., Ltd., Shanxi Province Gaoping Chemical Industry Co., Ltd., Qingdao Import and Export Corp., and the China Chamber of Commerce of Metals, Minerals, and Chemicals. The Department granted the extension to respondent interested parties to file additional information to their June 7, 2000, substantive response of the sunset review on furfuryl alcohol from the PRC until not later than June 16, 2000. See letter to Bruce Aitken, Attorney, Aitken, Irvin, Lewin, Berlin, Vrooman, & Cohn, LLP., from James P. Maeder, Office of Policy, Import Administration. 5. See Respondent Interested Parties, June 16, 2000, Supplement Filing to Response at 11. 6. Pursuant to section 351.218(e)((1)(ii)(A), the Department normally will conclude that respondent interested parties have provided adequate response where respondent interested party responses account for more than 50 percent, by volume, of the total exports of subject merchandise to the United States. 7. See Respondent Interested Parties, June 16, 2000, Supplements to Initial Response at 7 and Exhibit 3. 8. See Id. at 6-7.