65 FR 66708 November 7, 2000 A-357-809 A-351-826 A-428-820 A-475-814 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 Seamless Pipe from Argentina, Brazil, Germany, and Italy; Final Results Summary: We have analyzed the comments of interested parties in the expedited sunset reviews of the antidumping duty orders on certain small diameter circular seamless carbon and alloy steel standard, line, and pressure pipe ("seamless pipe") from Argentina, Brazil, Germany, and Italy. 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 this full sunset review for which we received comments by parties: 1. Adequacy of Substantive Response 2. Likelihood of continuation or recurrence of dumping A. Weighted-average dumping margin B. Volume of imports 3. Magnitude of the margin likely to prevail Margins from the investigation History of the Orders: Argentina The Department issued its final determination of sales at less than fair value ("LTFV") with respect to seamless pipe from Argentina on June 19, 1995 (60 FR 31953). In this investigation, the Department published one company-specific weighted-average dumping margin of 108.13 percent ad valorem for Siderca S.A.I.C. ("Siderca"). In addition, the Department published an "all others" rate of 108.13 percent. On August 3, 1995, the Department issued its antidumping duty order on seamless pipe from Argentina (60 FR 39708). The Department has not conducted an administrative review of seamless pipe from Argentina since the issuance of the order. The order remains in effect for all producers and exporters of the subject merchandise. The Department has not conducted any duty-absorption investigations in this proceeding. Brazil The Department issued its final determination of sales at LTFV with respect to seamless pipe from Brazil on June 19, 1995 (60 FR 31960). In this investigation, the Department published one company-specific weighted- average dumping margin of 125.00 percent ad valorem for Mannesmann S.A. ("MSA"). In addition, the Department published an "all others" rate of 125.00 percent. In order to correct ministerial errors made in the final determination, on August 3, 1995 the Department issued an amendment to the LTFV determination, as well as its antidumping duty order (60 FR 39707). In this amended determination and order, the revised dumping margins for MSA and "all others" were 124.94 percent. The Department has not completed an administrative review of seamless pipe from Brazil since the issuance of the order. There has been one changed circumstances review in this proceeding. The Department determined that the affirmative statement of no interest by petitioners in glass- lined seamless pressure pipe from Brazil constituted changed circumstances sufficient to warrant partial revocation of this order. Therefore, the Department partially revoked the order on seamless pipe from Brazil with respect to glass-lined seamless pressure pipe (63 FR 37338 (July 10, 1998)). There have been no duty absorption findings in this proceeding. The order remains in effect for all manufacturers and exporters of subject merchandise from Brazil. Germany The Department issued its final determination of sales at LTFV with respect to seamless pipe from Germany on June 19, 1995 (60 FR 31974). In this investigation, the Department published one company-specific weighted- average dumping margin of 58.23 percent ad valorem for Mannesmannrohren- Werke AG ("MRW"). In addition, the Department published an "all others" rate of 58.23 percent. In order to correct ministerial errors made in the final determination, on August 3, 1995 the Department issued an amendment to the LTFV determination, as well as its antidumping duty order (60 FR 39704). In this amended determination and order, the revised dumping margins for MRW and "all others" were 57.72 percent. Since the issuance of the order, there have been two requests for administrative reviews, covering the period January 27, 1995, through July 31, 1996, ("first administrative review") and August 1, 1996, through July 31, 1997 ("second administrative review"). In the first administrative review, the Department determined a dumping margin of 22.12 percent ad valorem for MRW and Mannesmann Pipe & Steel Corporation ("MPS") (collectively "Mannesmann") (63 FR 13217 (March 18, 1998)). In order to correct ministerial errors made in the final results, on April 27, 1998 the Department issued an amendment to the final results (63 FR 20579). In the amended final results, the revised dumping margin for Mannesmann was 21.94 percent. The second administrative review was initiated, but was terminated due to Mannesmann's withdrawal of its request for an administrative review (62 FR 60688 (November 12, 1997)). There have been no duty absorption findings in this proceeding. The order remains in effect for all manufacturers and exporters of subject merchandise from Germany. Italy The Department issued its final determination of sales at LTFV with respect to seamless pipe from Italy on June 19, 1995 (60 FR 31981). In this investigation, the Department published one company-specific weighted- average dumping margin of 1.84 percent ad valorem for Dalmine S.p.A ("Dalmine"). In addition, the Department published an "all others" rate of 1.84 percent. On August 3, 1995, the Department issued its antidumping duty order on seamless pipe from Italy (60 FR 39705). In response to a remand by the Court of International Trade, on June 10, 1998, the Department issued an amendment to the order and the LTFV determination (63 FR 31735). In the amended order and final determination, the revised dumping margins for Dalmine and "all others" were 1.27 percent. Since the issuance of the order, one administrative review has been initiated for the period covering January 27, 1995, through July 31, 1996, but was terminated due to the petitioner's withdrawal of its request for an administrative review (61 FR 66260 (December 17, 1996)). There have been no duty absorption findings in this proceeding. The order remains in effect for all manufacturers and exporters of subject merchandise from Italy. Background: On July 3, 2000, the Department initiated sunset reviews of the antidumping orders on seamless pipe from Argentina, Brazil, Germany, and Italy (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 19, 2000) specified in section 351.218(d)(1)(i) of the Sunset Regulations. As the petitioners in the original investigations and a participant in each of the respective administrative reviews, 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, Mannesmann, the sole respondent company in the German case, filed a statement of waiver of participation. We received a complete substantive response on behalf of Dalmine S.p.A. ("Dalmine") on August 2, 2000. Dalmine claims interested-party status in the Italian case under sections 771(9)(A) and 771(9)(F) of the Act as a producer and exporter of the subject merchandise. Although the Department received a substantive response on behalf of Dalmine, the Department explained in its August 22, 2000 adequacy determination that, because during the period 1995 to 1999, the average annual share of Dalmine's exports of the subject merchandise vis-á-vis the total Italian 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 Dalmine's substantive response to be inadequate. Without a substantive response from respondent interested parties in the cases of Argentina, Brazil, and Germany, and an inadequate response in the case of Italy, 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 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 seamless pipe from Argentina, Brazil, Germany, and Italy 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 at levels above de minimis. With respect to imports of the subject merchandise from Argentina, Brazil, Germany, and Italy, the domestic interested parties comment that, subsequent to the issuance of the orders, import volumes from Argentina, Brazil, Germany, and Italy decreased significantly. 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) 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 since the imposition of the orders. Dalmine argues that revocation of the order would not result in antidumping margins above de minimis. The company states that its margin is less than the WTO's standard for de minimis and, therefore, there is no basis to conclude that dumping is likely to recur. In addition, Dalmine argues that, because the HTS subheadings from the scope of the order include significant non-subject merchandise, these total import volumes do not accurately reflect Dalmine's percentage of total subject exports. In their rebuttal comments to Dalmine's substantive response, 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. 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 domestic interested parties' 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 adequate response from any respondent interested party for the Argentinian, Brazilian, and Italian cases. Pursuant to section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. In addition, the Department received a waiver of participation from Mannesmann in the German case, pursuant to section 351.218(d)(2). 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. Consistent with section 752(c) of the Act, the Department also considered the volume of imports from each country 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 from each country decreased in 1995 and, since 1996, are significantly lower than 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 from 1995 through 1999 continued at levels far below pre-order levels, and respondent interested parties waived their right to participate in this review or failed to submit an adequate substantive response, we determine that dumping is likely to continue if the orders were revoked. In response to Dalmine's comments, 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 this case, there has been no decline in dumping margins nor 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 order and is likely to continue if the order were revoked. 2. Magnitude of the Margin Likely to Prevail: In their substantive response, domestic interested parties cite to the Act and the Sunset Policy Bulletin, asserting that the Department should report to the Commission the following margins: 108.13 percent for Siderca and 108.13 percent for all other Argentinian producers and exporters; 124.94 percent for all Brazilian producers and exporters; 57.72 percent for Mannesmann and all other German producers and exporters; and 1.27 percent for all Italian producers and exporters. According to domestic interested parties, these margins are appropriate because they were calculated in the original investigation (and on remand from the CIT in the case of Italy) and, as such, reflect the behavior of the exporters without the discipline of the orders in place. 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. According to the IM145 reports, average imports from Argentina, Brazil, Germany, and Italy are significantly lower than their pre-order levels. We note that, in the case of Germany, there was a decline in the dumping margin calculated in the amended final results of the first administrative review and a corresponding increase in the volume of imports. However, because the volume of imports from Germany is less than half the volume that was imported prior to the issuance of the order, the Department has determined that it is appropriate to report the margin that was determined in the original investigation for Germany, which is 57.72 percent. In addition, since there were no corresponding decreases in the margin of dumping and increases in the volume of imports in the Argentinian, Brazilian, and Italian cases, we will report to the Commission the original rates of 108.13 percent for Argentina; 124.94 percent for Brazil; and 1.27 percent for Italy, 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 Memorandum. Final Results of Review 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 seamless pipe from Argentina, Brazil, Germany, and Italy 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 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)