65 FR 36405, June 8, 2000 A-570-836 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 Glycine from the People's Republic of China; Final Results Summary We have analyzed the substantive response of the only interested parties participating in the expedited sunset review of the antidumping duty order covering glycine from the People's Republic of China ("PRC"). We recommend that, for our expedited final results, 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 expedited sunset review for which we received a substantive response from domestic interested parties: 1. Likelihood of continuation or recurrence of dumping: Weighted-average dumping margin Volume of imports 2. Magnitude of the margin likely to prevail Margins from investigation History of Order: The antidumping duty order on glycine from the PRC was published in the Federal Register on March 29, 1995 (60 FR 16116). (1) In the order, the Department assigned the weighted-average dumping margin of 155.89 percent ad valorem to all Chinese manufacturers/exporters of the subject merchandise. The Department has not completed any administrative reviews since that time. (2) The order remains in effect for all manufacturers and exporters of the subject merchandise. We note that the Department has not conducted any duty-absorption investigations in this proceeding. Background: On February 3, 2000, the Department initiated a sunset review of the antidumping duty order on glycine from the PRC (65 FR 5308) pursuant to section 751(c)(6)(A)(i) of the Tariff Act of 1930, as amended ("the Act"). On February 18, 2000, we received a Notice of Intent to Participate on behalf of Hampshire Chemicals Corp. ("Hampshire") and Chattem Chemicals, Inc. ("Chattem"), collectively referred to as the "domestic interested parties," manufacturers of the domestic like product, within the deadline specified in 19 CFR 351.218(d)(1)(i) (1999) ("Sunset Regulations"). (3) We received a complete substantive response on behalf of the domestic interested parties on March 3, 2000, within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). The domestic interested parties claim interested party status under section 771(9)(C) of the Act, as manufacturers of a domestic like product. The domestic interested parties note that they are willing to participate in the instant review and that they have been involved in this proceeding since its inception. We did not receive a substantive response from any respondent interested party to this proceeding. Consequently, pursuant to section 351.218(e)(1)(ii)(C) of the Sunset Regulations, the Department determined to conduct an expedited, 120-day, sunset review of this order. Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted this sunset review to determine whether revocation of the antidumping duty 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 duty order. 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 order is revoked. Below we address the substantive response of the domestic interested parties. 1. Likelihood of Continuation or Recurrence of Dumping Interested Parties' Substantive Response: The domestic interested parties argue that dumping of the subject merchandise will continue or recur should the Department revoke the order. In support of their argument, the domestic interested parties contend that Chinese manufacturers/exporters have continued to dump the subject merchandise in the United States at levels above de minimis since the issuance of the order. The domestic interested parties also claim that import volumes of the subject merchandise declined dramatically after the issuance of the order. (See March 3, 2000, Substantive Response of the domestic interested parties at 3 - 6.) With respect to import volumes, the domestic interested parties note that, in the year the order was imposed, 1995, imports of glycine from the PRC completely stopped. Since then imports of the subject merchandise fluctuated between a low of 499 kilograms to a high of 18,270 kilograms. The domestic interested parties argue that a comparison of post-order import volumes of the subject merchandise to the pre-order import volume (718,635 kilograms in 1994) indicates that Chinese manufacturers/exporters of glycine cannot export to the United States without dumping. Id. As to their argument regarding continued dumping of the subject merchandise, the domestic interested parties claim that dumping margins have continued to exist since the issuance of the order. Inasmuch as the Department has not conducted any administrative reviews, the domestic interested parties contend that the margins from the investigation, 155.89 percent ad valorem is the prevailing margin. Moreover, the domestic interested parties argue that the reason the Department has not completed an administrative review (4) subsequent to the issuance of the order is because Chinese manufacturers/exporters cannot refute the existing dumping margin and they continue to dump glycine into the U.S. market. Id. The domestic interested parties also claim that the glycine market is intensely competitive, and is stable with only relatively small number of users; i.e., the demand for glycine is highly elastic. As a result, the domestic interested parties argue, the fact that Chinese manufacturers/exporters of glycine continue to export to the United States with such a high duty deposit rate, 155.89 percent, indicates that they are shipping at prices well below normal value. Id. In conclusion, the domestic interested parties contend the Department should not revoke the order because import volumes of Chinese glycine significantly declined and dumping of the subject merchandise continued at levels above de minimis after the issuance of the order. Id. 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 considering 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 review, the Department did not receive a response from any respondent interested party. Pursuant to section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. Consistent with section 752(c) of the Act, the Department considered import volumes of the subject merchandise before and after the issuance of the order. According to the United States Census Bureau (Customs Data) IM146 and the International Trade Commission Data, since the imposition of the order, import volumes of the subject merchandise have declined substantially compared to pre-order levels. (See Memorandum to File - Regarding Imports for Consumption of the Subject Merchandise in the United States, June 2, 2000.) In the year preceding the year in which the antidumping investigation was initiated, 1993, the import volume of the subject merchandise was 410,325 kilograms. In the year immediately following the imposition of the order, 1996, the import volume decreased to 18,270 kilogram - a 96 percent decline. Also, between 1995 and 1999, the annual-average-import volume of the subject merchandise was 6,615 kilogram - less than 2 percent of the 1993 pre-initiation volume. (5) Therefore, we agree with the domestic interested parties that import volumes of the subject merchandise decreased significantly after the issuance of the order. As indicated in section II.A.3 of the Sunset Policy Bulletin, the SAA at 890, and the House Report at 63-64, the Department also considers whether dumping continued at any level above de minimis after the issuance of the order. If companies continue dumping with the discipline of an order in place, the Department may reasonably infer that dumping would continue were the discipline removed. After examining the published findings pertaining to the weighted-average dumping margins in the order and noting that imports of the subject merchandise (although at a substantially reduced level) continued since the imposition of the order, we agree with the domestic interested parties that the weighted-average dumping margins at levels above de minimis have persisted throughout the life of the order. Given that dumping continued throughout the life of the order, that import volumes of the subject merchandise decreased significantly after the issuance of the order, that the respondent interested parties waived their right to participate in the instant sunset review, and absent evidence to the contrary, we agree with the domestic interested parties' contention that dumping is likely to continue or recur if the order is revoked. 2. Magnitude of the Margin Likely to Prevail Interested Parties' Substantive Response: In their substantive response, at 6 - 7, the domestic interested parties argue that, should the Department revoke the order, the likely-to-prevail dumping margin is the margin from the original investigation. The domestic interested parties contend that the Department should choose the margin from the original investigation because the margin from the investigation is the only margin that was ever calculated and because that margin best reflect the behavior of Chinese manufacturers/exporters of glycine without the discipline of an order 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 of 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 results of the original investigation, assigned the weighted-average dumping margin of 155.89 percent ad valorem to all Chinese manufacturers/exporters of the subject merchandise. The Department agrees with the domestic interested parties' contention that the likely-to-prevail margin is the one from the original investigation. Since there has been no administrative review of this order, the margin from the original investigation is the only one available to the Department. Absent argument and evidence to the contrary, the Department sees no reason to change its usual practice of selecting the rate from the original investigation. Therefore, we determine that the margin from the original investigation is probative of the behavior of Chinese manufacturers/exporters of glycine without the discipline of the order. Therefore, we will report to the Commission the rate as contained in the Final Results of Review section of this notice. Final Results of Review Based on the above analysis, the Department finds that revocation of the antidumping duty order would be likely to lead to continuation or recurrence of dumping at the margin listed below: -------------------------------------------------------------------- Manufacturer/Exporter Margin (percent) -------------------------------------------------------------------- PRC-wide 155.89 -------------------------------------------------------------------- Recommendation Based on our analysis of the substantive responses 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____ _______________________ Troy H. Cribb Acting Assistant Secretary for Import Administration __________________ (Date) ____________________________________________________________________ footnotes: 1. See Antidumping Duty Order: Glycine From the People's Republic of China, 60 FR 16116 (March 29, 1995). 2. After the issuance of the order, a Chinese manufacturer/exporter of Glycine requested an administrative review of the order on one occasion. However, the respondent subsequently withdrew its request for the review. (See Glycine from the People's Republic of China; Notice of Recission of Antidumping Duty Administrative Review, 63 FR 56606 (October 22, 1998).) The Department is currently conducting a new shipper review which was initiated on November 15, 1999 (64 FR 61834). 3. With their notice of intent to participate, the domestic interested parties submitted information pertaining to the issues of whether they are related to foreign producers, exporters, and/or domestic importers of the subject merchandise, and whether they are importers of the subject merchandise. Such information was designated as proprietary information. 4. See footnote 2, supra. 5. The annual imports of the subject merchandise for the period 1995 through 1998 are as follows: 1995 - 0, 1996 - 18,270, 1997 - 1,100, 1998 - 499, and 1999 - 13,208 kilograms.