65 FR 66701 November 7, 2000 A-357-810 A-475-816 A-588-835 A-580-825 Sunset Reviews Public Document MEMORANDUM TO: Troy H. Cribb Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memorandum for the Expedited Sunset Reviews of the Antidumping Duty Orders on Oil Country Tubular Goods from Argentina, Italy, Japan, and Korea; Final Results Summary: We have analyzed the comments of interested parties in the expedited sunset reviews of the antidumping duty orders on oil country tubular goods ("OCTG") from Argentina, Italy, Japan, and Korea. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum for these final results. Below is the complete list of the issues in this expedited sunset review for which we received comments by parties: 1. Likelihood of continuation or recurrence of dumping A. Weighted-average dumping margins B. Volume of imports 2. Magnitude of the margin likely to prevail A. Margins from the investigation B. Extraordinary Circumstances History of the Orders: Argentina The Department issued its final determination of sales at less than fair value ("LTFV") with respect to OCTG from Argentina on June 28, 1995 (60 FR 33539). In this investigation, the Department published a company-specific dumping margin of 1.36 percent ad valorem for Siderca S.A.I.C. ("Siderca"). In addition, the Department published an "all others" rate of 1.36 percent. On August 11, 1995, the Department issued its antidumping duty order on OCTG from Argentina (60 FR 41055). The Department has not conducted an administrative review of OCTG from Argentina since the issuance of the order. The Department has not conducted any duty-absorption investigations in this proceeding. The order remains in effect for all producers and exporters of subject merchandise from Argentina. Italy The Department issued its final determination of sales at LTFV with respect to OCTG from Italy on June 28, 1995 (60 FR 33558). In this investigation, the Department published dumping margins of 49.78 percent ad valorem for Dalmine S.p.A. ("Dalmine"), Acciaierie Tubificio Arvedi S.p.A., and General Sider Europa S.p.A. In addition, the Department published an "all others" rate of 49.78 percent. On August 11, 1995, the Department issued its antidumping duty order on OCTG from Italy (60 FR 41057). The Department has not completed an administrative review of OCTG from Italy since the issuance of the order. The Department has not conducted any duty absorption investigations in this proceeding. The order remains in effect for all manufacturers and exporters of subject merchandise from Italy. Japan The Department issued its final determination of sales at LTFV with respect to OCTG from Japan on June 28, 1995 (60 FR 33560). In this investigation, the Department published dumping margins of 44.20 percent for Nippon Steel Corporation and Sumitomo Metal Industries, Ltd. ("Sumitomo"). In addition, the Department published an "all others" rate of 44.20 percent. On August 11, 1995, the Department issued its antidumping duty order on OCTG from Japan (60 FR 41058). Since the issuance of the order, there have been two administrative reviews, covering the period August 11, 1995, through July 31, 1996, ("first administrative review") and August 1, 1997, through July 31, 1998 ("second administrative review"). In the first administrative review, the Department determined a dumping margin of 44.20 percent ad valorem for NKK Corporation of Japan (62 FR 48594 (September 16, 1997)). In the second administrative review, as amended, the Department determined a dumping margin of 0.00 percent ad valorem for Sumitomo (65 FR 24916 (April 28, 2000)). There have been no duty absorption findings in this proceeding. The order remains in effect for all manufacturers and exporters of subject merchandise from Japan. Korea The Department issued its final determination of sales at LTFV with respect to OCTG from Korea on June 28, 1995 (60 FR 33561). In this investigation, the Department published dumping margins of 12.17 percent ad valorem for Union Steel Manufacturing Company, and 0.00 percent ad valorem for Hyundai Steel Pipe Company, Ltd., which was excluded from the order. In addition, the Department published an "all others" rate of 12.17 percent. On August 11, 1995, the Department issued its antidumping duty order on OCTG from Korea (60 FR 41057). Since the issuance of the order, there have been two administrative reviews, covering the periods August 1, 1996, through July 31, 1997, ("first administrative review") and August 1, 1997, through July 31, 1998 ("second administrative review"). In the first administrative review, the Department determined a dumping margin of 2.93 percent ad valorem for SeAH Steel Corporation ("SeAH") (64 FR 13169 (March 17, 1999)). In the second administrative review, the Department determined a dumping margin of 15.02 percent ad valorem for SeAH (65 FR 13364 (March 13, 2000)). There have been no duty absorption findings in this proceeding. The order remains in effect for all manufacturers and exporters of subject merchandise from Korea. Background: On July 3, 2000, the Department initiated sunset reviews of the antidumping orders on OCTG from Argentina, Italy, Japan, and Korea (65 FR 41053), pursuant to section 751(c) of the Act. The Department received a Notice of Intent to Participate on behalf of domestic interested parties for all four countries within the applicable deadline (July 18, 2000) specified in section 351.218(d)(1)(i) of the Sunset Regulations. The domestic interested parties claimed interested-party status under section 771(9)(C) of the Act as U.S. producers of the domestic like product. Subsequently, we received the domestic interested parties' complete substantive responses to the notice of initiation on August 2, 2000, within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). On August 2, 2000, we also received a complete substantive response, in the Argentine case, on behalf of Siderca SAIC ("Siderca"). Siderca claims interested-party status under sections 771(9)(A) of the Act as a producer and exporter of the subject merchandise. Although the Department received a substantive response on behalf of Siderca, the Department explained in its August 22, 2000 adequacy determination that because, during the period 1995 to 1999, the average annual share of Siderca's exports of the subject merchandise vis-á-vis the total Argentine exports of the subject merchandise during the same period was significantly below the fifty- percent threshold provided for in section 351.218(e)(1)(ii)(A) of the Sunset Regulations, the Department determined Siderca's substantive response to be inadequate.(1) Without a substantive response from respondent interested parties in the cases of Italy, Japan, and Korea, and an inadequate response in the case of Argentina, the Department, pursuant to 19 CFR 351.218(e)(1)(ii)(C), determined to conduct expedited, 120-day reviews of these orders. Domestic interested parties submitted their rebuttal comments in the Argentine case on August 7, 2000. Discussion of the Issues: In accordance with section 751(c)(1) of the Act, the Department conducted these reviews to determine whether revocation of the antidumping duty orders 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 orders. 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 margins of dumping likely to prevail if the orders are revoked. Below, we address the substantive responses and rebuttal comments of the interested parties. Likelihood of Continuation or Recurrence of Dumping: Domestic interested parties argue that dumping of OCTG from Argentina, Italy, Japan, and Korea would be likely to continue or recur if the orders under review were revoked. The domestic interested parties assert that dumping has continued throughout the life of the orders, other than the order covering Japan, at levels above de minimis. With respect to import volumes of the subject merchandise from Argentina, Italy, Japan, and Korea, the domestic interested parties comment that, subsequent to the issuance of the orders, import volumes have dropped precipitously. In summary, the domestic interested parties argue that the Department should determine that there is a likelihood that dumping would continue were the orders revoked because: 1) other than the order covering Japan, dumping margins at levels above de minimis have been in place since the imposition of the orders; and 2) imports of the subject merchandise have declined significantly for all orders since the imposition of the orders. With respect to the Argentine order, Siderca argues that revocation of the order would not result in antidumping margins above de minimis. It states that Siderca's margin is less than the WTO's standard for de minimis in the antidumping agreement at Article 5.8, and, therefore, there is no basis to conclude that dumping is likely to recur under the standard in Article 11. In their rebuttal comments, the domestic interested parties argue that for purposes of determining the likelihood of continuation or recurrence of dumping in a sunset review, the statute states that "the administering authority shall apply the de minimis standards applicable to reviews conducted under subsections (a) and (b) of section 751" for which the Department has established a de minimis standard of 0.5 percent for administrative reviews. Domestic interested parties also argue that the legislative history supports the application of the 0.5 percent standard for de minimis in sunset reviews. They state that the Department, in Malleable Cast Iron Pipe Fittings from Thailand: Final Results of Full Sunset Review, 64 FR 66884 (November 30, 1999), held that "both the statute and regulations clearly provide that in reviews of orders, the Department will treat as de minimis any weighted average dumping margin that is less than 0.5 percent ad valorem." Finally, they argue that a WTO dispute settlement panel has held that the United States does not violate Article 5.8 by applying a 0.5 percent de minimis standard in the context of administrative reviews. See U.S. Steel Group's August 7, 2000, rebuttal comments at 3-5. Department's Position: 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.2). 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 order and import volumes for the subject merchandise declined significantly. See section II.A.3. In addition to consideration of the guidance on likelihood cited above, 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 reviews, the Department did not receive an adequate response from respondent interested parties. Pursuant to section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. 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. We note that there have been above de minimis margins for the investigated companies throughout the history of the orders, except for one company covered by the order on Japan. Consistent with section 752(c) of the Act, the Department also considered the volume of imports before and after issuance of the order. According to the import statistics provided by domestic interested parties and, as confirmed by Census IM145 reports statistics, imports of subject merchandise decreased in 1995 and, since 1996, have significantly decreased from their pre-order levels. Based on this analysis, the Department finds that the existence of dumping margins after the issuance of the orders is highly probative of the likelihood of continuation or recurrence of dumping. Therefore, given that dumping continued after the issuance of the orders, average imports continued at levels far below pre-order levels from 1995 through 1999, and respondent interested parties waived their right to participate in these reviews or failed to submit adequate substantive responses, we determine that dumping is likely to continue if the orders were revoked. In response to Siderca's comments in the Argentine case, the SAA and Sunset Policy Bulletin provide that declining or no dumping margins accompanied by steady or increasing imports may indicate that a company does not have to dump in order to maintain market share. In the Argentine case, there has been no decline in dumping margins coupled with an increase in imports. Rather, absent an administrative review, the dumping margin from the original investigation is the only indicator available to the Department with respect to the level of dumping. Because 1.27 percent is above the 0.5 percent de minimis standard applied in sunset reviews, we find that dumping has continued over the life of the Argentine order and is likely to continue if the order were revoked. 2. Magnitude of the Margin Likely to Prevail: In their substantive responses, domestic interested parties cite to the Act and the Sunset Policy Bulletin and assert that the Department should report to the Commission the following margins: 49.78 percent for all Italian producers and exporters; 44.20 percent for NSC, SMI and all other Japanese producers and exporters; and 12.17 percent for Union, SeAH, and all other Korean producer and exporters, other than Hyundai which received a 0.00 margin in the original investigation and thus was excluded from the order, because these margins were calculated in the original investigations and, therefore, reflect the behavior of the exporters without the discipline of the orders in place. In the case of Siderca, in the Argentine review, domestic interested parties assert that "extraordinary circumstances" exist that warrant the Department reporting to the ITC a margin other than the 1.36 percent margin calculated in the investigation. According to the domestic interested parties, the SAA and the Department's Sunset Regulations authorize the Department to report dumping margins other than those calculated and published in prior determinations in extraordinary circumstances. See SAA at 891 and Section 351.218(e)(2)(i) of the Department's regulations. The domestic interested parties assert that such "extraordinary circumstances" exist in this case. They argue that, in the investigation, the Department determined Siderca's margin of 1.36 percent by comparing U.S. price to sales to a third country, the People's Republic of China ("PRC"), because the Department determined that the Argentine home market was not viable under the pre-URAA law then in effect. Domestic interested parties contend that Siderca's home market of Argentina "unquestionably" would be viable under current U.S. law, which provides that a home market is viable if the respondent's sales in the home market are at least 5 percent of the volume of sales to the United States. See U.S. Steel Group August 2, 2000, Substantive Response at 17. According to domestic interested parties, a dumping margin calculated for Siderca under current U.S. law in any administrative review, based on a viable Argentine home market, "would have been significantly higher than the 1.36% margin calculated in the investigation." Id. at 17-18. To avoid such an occurrence, domestic interested parties allege that Siderca ceased shipping to the United States and no administrative reviews were conducted. Given that the policy of the Department is to prefer a calculated margin from the investigation because that margin is probative as to a respondent's prospective dumping behavior in the absence of an order, domestic interested parties contend that the margin from the petition, 41.60 percent, as opposed to the margin calculated in the investigation, is more probative of Siderca's future behavior and should be reported to the ITC. Domestic interested parties base this conclusion on their contention that the margin calculated in the petition, based on viable home market data prior to the imposition of the order, is a more accurate indication of Siderca's likely dumping behavior, absent the discipline of an order, than the calculated margin from the investigation, based on third country sales data. Department's Position: 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. Absent a corresponding decrease in the margin of dumping and increase in the volume of imports, consistent with the SAA at 890 and the House Report at 64, the Department normally will select a margin from the investigation, because that is the only calculated rate that reflects the behavior of exporters without the discipline of an order in place. The Department agrees with the arguments of the domestic interested parties, except for their argument in the Argentine case that the Department should use the petition rate instead of the calculated investigation rate. According to the IM145 reports, average imports from Argentina, Italy, Japan, and Korea decreased significantly from 1996 through 1999, the period after the issuance of the orders. Therefore, since there were no corresponding decreases in the margin of dumping, other than for one company in the Japan case, and increases in the volume of imports, we will report to the Commission the original rates of 1.36 percent for Argentina; 49.78 percent for Italy; 44.20 percent for Japan; and 12.17 percent for Korea, because these are the only rates that reflect the behavior of the exporters without the disciplines in place. As such, the Department will report to the Commission the margins contained in the Final Results of Review section of this decision memo. Regarding the domestic interested parties' argument that the Department should deviate from its normal practice, find "extraordinary circumstances" with regard to Siderca, and report the margin from the petition to the ITC, we disagree. The Department's Policy Bulletin, quoting the SAA, states that the Department normally will select a margin "from the investigation, because that is the only calculated rate that reflects the behavior of exporters . . . without the discipline of an order or suspension agreement in place." See Policy Bulletin, 63 FR at 18873 (quoting SAA at 890). According to Section 351.218(e)(2)(i) of the Department's regulations, "Even where the Department conducts a full sunset review, only under the most extraordinary circumstances will the Secretary rely on a countervailing duty rate or a dumping margin other than those it calculated and published in its prior determinations." Despite the clarity of the law and policy on this issue strongly favoring the calculated rate from the investigation, domestic interested parties contend that the nonviability of the Argentine home market during the original investigation under pre-URAA law constitutes "extraordinary circumstances" and warrants the reporting of an unverified petition rate to the ITC. As noted in the Sunset Regulations and Sunset Policy Bulletin, only under the most extraordinary circumstances will the Department rely on dumping margins other than those it calculated and published in its prior determinations. The Sunset Regulations, at section 351.218(e)(2)(i), explain that "extraordinary circumstances" may be considered by the Department in the context of a full sunset review, where the substantive response from both domestic and respondent interested parties are adequate.(2) In the Argentine case, however, the Department determined to conduct an expedited review because of its finding that Siderca did not provide adequate substantive responses. Thus, the instant case does not warrant consideration of "extraordinary circumstances" as requested by the domestic interested parties because it is not a full sunset review. Assuming, arguendo, that the Department had conducted a full review, we are not persuaded that the margin from the petition is appropriate based on the assertions of domestic interested parties that the petition rate is more probative of Siderca's behavior in the absence of an order than the calculated investigation rate. Domestic interested parties' assertions that the Argentine home market would have been viable had an administrative review been conducted, and that Siderca's shipments ceased to avoid administrative reviews and the higher margins that would have resulted, are, at best, conjecture and do not give rise to extraordinary circumstances that would warrant furnishing the ITC with a rate other than the rate from the investigation. Therefore, consistent with the Sunset Policy Bulletin, the Department determines that the margin calculated in the original investigation is probative of the behavior of Siderca if the order were revoked as it is the only rate that reflects the behavior of Siderca without the discipline of the order. As such, the Department will report to the Commission the rate of 1.36 percent from the original investigation for Siderca and all other exporters from Argentina as contained in the Final Results of Review section of this notice. Final Results of Reviews: 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 OCTG from Argentina, Italy, Japan, and Korea without the discipline of the orders. 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 the recommendations are accepted, we will publish the Final Results of Review in the Federal Register. AGREE______ DISAGREE______ ______________________ Troy H. Cribb Assistant Secretary for Import Administration ______________________ (Date) _____________________________________________________________________ footnotes: 1. See August 22, 2000, Memorandum for Jeffrey A. May on Adequacy of Respondent Interest Party Response to the Notice of Initiation. 2. See, e.g., Final Results of Expedited Sunset Review: Tapered Roller Bearings from Romania, 64 FR 60269, 60272 (November 4, 1999).