65 FR 16171, March 27, 2000 A-485-803 Sunset Review Public Document MEMORANDUM TO: Robert S. LaRussa Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memo for the Full Sunset Review of Cut-to-Length Carbon Steel Plate from Romania; Preliminary Results Summary: We have analyzed the comments of interested parties in the full sunset review of the antidumping duty order on cut-to-length carbon steel plate from Romania. 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. Likelihood of continuation or recurrence of dumping Weighted-average dumping margin Volume of imports Other factors 2. Magnitude of the margin likely to prevail Margins from the investigation Use of a more recent margin History of the Order: On August 19, 1993, the Department published in the Federal Register an antidumping duty order on cut-to-length carbon steel plate from Romania, and assigned a weighted-average antidumping duty margin of 75.04 percent for Metalexportimport, S.A ("MEI").(1) On September 7, 1999, the Department issued the preliminary results of an administrative review of the subject order covering the period August 1, 1997 through July 31, 1998.(2) The Department preliminarily determined a margin of 20.62 percent for respondents Windmill International PTE Ltd. of Singapore, Windmill International Romania Branch, and Windmill International Ltd. (USA) (collectively, "Windmill"). Windmill's supplier during the period of review was the unaffiliated Romanian producer C.S. Sidex S.A. ("Sidex)." On January 12, 2000, the Department issued the final results of review and determined a weighted-average dumping margin of 21.07 percent for Windmill.(3) There have been no scope clarifications, circumvention determinations, changed circumstances determinations, or duty absorption investigations to date. Background: On September 1, 1999, the Department initiated a sunset review of the antidumping duty order on cut-to-length carbon steel plate from Romania (64 FR 47767), pursuant to section 751(c) of the Act. The Department received a notice of intent to participate on behalf of the Bethlehem Steel Corporation and U.S. Steel Corporation, a unit of USX Corporation (collectively, "domestic interested parties"), within the applicable deadline (September 15, 1999) specified in section 351.218(d)(1)(i) of the Sunset Regulations. On October 1, 1999, Sidex, a respondent interested party, notified the Department that it intended to participate in this review. Domestic interested parties claimed interested-party status under section 771(9)(C) of the Act, as U.S. producers of a domestic like product; Sidex is an interested party pursuant to section 771(9)(A) of the Act as a foreign producer and exporter of subject merchandise. Domestic interested parties claim that they have been involved in this proceeding since its inception, and have actively participated throughout the investigation, in every subsequent administrative review and in all appeals arising from the investigation and the administrative reviews (see October 1, 1999, Substantive Response of domestic interested parties at 4). Sidex claims that, although it has not directly participated as a respondent since the initial investigation, it did request an administrative review for the 1998/99 review period (see October 1, 1999, Substantive Response of Sidex at 2). On September 24, 1999, we received a request for an extension to file rebuttal comments from domestic interested parties.(4) Pursuant to 19 CFR 351.302(b), the Department extended the deadline for all participants eligible to file rebuttal comments until October 21, 1999.(5) On October 1, 1999, we received a complete substantive response from domestic interested parties, within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i), and a complete substantive response from Sidex. We received rebuttal comments from domestic interested parties on October 15, 1999. On October 21, 1999, pursuant to 19 CFR 351.218 (e)(2)(i), the Department determined to conduct a full (240-day) sunset review of this order.(6) 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). This review concerns a transition order within the meaning of section 751(c)(6)(C)(ii) of the Act. Accordingly, on December 22, 1999, the Department determined that the sunset review of cut-to- length steel plate from Romania is extraordinarily complicated, and extended the time limit for completion of the preliminary results of this review until not later than March 20, 2000, in accordance with section 751(c)(5)(B) of the Act.(7) Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department is conducting this 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 order. In addition, section 752(c)(3) of the Act provides that the Department shall provide to the Commission the magnitude of the margin of dumping likely to prevail if the order is revoked. Below we address the comments and rebuttals of the interested parties. 1. Likelihood of Continuation or Recurrence of Dumping Interested Party Comments In their substantive response of October 1, 1999, domestic interested parties assert that revocation of the subject order is likely to lead to continuation or recurrence of dumping. They contend that the record in this proceeding demonstrates that, following the imposition of the order, cut-to-length carbon steel plate from Romania has continued to be sold in the United States at less-than-fair-value ("LTFV"), and import statistics show that import volumes have declined significantly since the entry of the order (see October 1, 1999, Substantive Response of domestic interested parties at 4). Domestic interested parties note that the Department normally will find dumping likely to continue or recur where dumping has continued at any level above de minimis after the issuance of the order, and that Windmill had a margin of 20.62 percent in the preliminary results of the 1997/98 review. Id. at 9. Thus, domestic interested parties contend that the record shows that dumping has continued at above de minimis levels after the imposition of the order and, therefore, the Department should find that Windmill is likely to continue to engage in dumping without the discipline of the order. Id. at 9. Domestic interested parties also assert that annual Romanian shipments of cut-to-length carbon steel plate have declined since the imposition of the order and ceased entirely for a four year period. Id. at 10. Domestic interested parties contend that during the 1998/99 period, import volumes were less than 5.0 percent of the volumes that came into the United States from Romania during the years immediately prior to the order. Id. at 10-11. Furthermore, domestic interested parties assert that the Romanian producers' share of U.S. domestic consumption of subject merchandise also shows a dramatic decline following the issuance of the order. Id. at 11. Given this dramatic decline in import volumes and market shares, domestic interested parties argue that the Department should find likelihood of continuation or recurrence of dumping were the order revoked. Id. In its substantive response of October 1, 1999, Sidex asserts that the revocation of the antidumping duty order on subject merchandise from Romania will result in no significant changes in Romanian steel plate export volumes and prices (Sidex's prices would be international prices), and no adverse impact on U.S. steel plate manufacturers because Sidex has always had a small market share (see October 1, 1999, Substantive Response of Sidex at 3). Sidex makes the above conclusion on the basis of: (1) its reduced capacity since 1992; (2) the fact that it is undergoing privatization; (3) it still has strong markets in other parts of the world; (4) U.S. prices declined because of lower raw material costs, not imports; (5) Sidex is not the price leader; (6) the U.S. industry experienced record shipments and production volumes in 1996 through 1998; and (7) Sidex complies with protective measures, such as antidumping laws, in all its markets. Id. In their rebuttal of October 15, 1999, domestic interested parties assert that Sidex's substantive response is incomplete because it did not supply the necessary information, such as its 1991 U.S. import data (see October 15, 1999, Rebuttal of domestic interested parties at 2). Therefore, the Department should not consider the response, and instead, should consider it as a waiver of participation. Id. at 3. Domestic interested parties argue that, even if the Department does consider Sidex's substantive response, all of Sidex's claims should be rejected. Id. Domestic interested parties reassert that the margin from the investigation-75.04 percent-continued as the only final margin determined by the Department for over six years, and the only different margin determined since the order was issued was a preliminary margin of 20.62 percent. Id. at 3-4. Moreover, the imports of subject merchandise from Romania ceased entirely for four years after the order and subsequently resumed at a drastically reduced level. Id. at 4. Domestic interested parties argue that, under the Department's policy guidelines, these factors demonstrate that dumping is likely to continue if the order is revoked. Id. Domestic interested parties assert that Sidex's arguments-that revocation will not have an "adverse impact" on the U.S. market because there will be no significant changes in Romanian steel plate volumes and prices and no changes in Sidex's market share-are unsubstantiated and, even if they were, do not warrant revocation of the order. Id. at 5. Domestic interested parties assert that, contrary to Sidex's contention, the Department does not determine revocation issues by evaluating assertions that import levels, prices, and/or market share will change or remain steady after the order is revoked. Id. at 5. Rather, the Department looks to conduct before and after the order is issued to determine the likely effects of revocation. Id. Domestic interested parties note that no producer or exporter of Romanian cut-to-length carbon steel plate requested an administrative review for the first three review periods, implying that if subject merchandise could have been sold in the United States without resorting to dumping, a review would have been requested. Id. at 6. Accordingly, the 70.04 percent margin from the investigation is highly probative of Sidex's inability to ship without dumping. Id. Domestic interested parties reassert that the IM145 data with respect to subject imports from Romania demonstrates that, following the order, imports ceased entirely for four years and increased only minimally in the third quarter of 1997 and 1998. Therefore, the Department must conclude that dumping is likely to continue or recur without the order. In addition, domestic interested parties argue that the Department should not consider the additional factors on which Sidex relies in its claims. Domestic interested parties assert that Sidex has not demonstrated "good cause" for the Department to consider other price, cost, market or economic facts in making its determination. Id. at 9. In addition, even if the Department were to consider such "other factors," none of the claims made by Sidex, either alone or in combination, would warrant revocation of the order. Id. at 10. For instance, Sidex provides no evidence to support its claim that it has reduced capacity since 1992; that it complies with antidumping laws in all markets; and that the U.S. industry experienced record shipments and production volumes in 1996 through 1998. Id. at 10-11. 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). 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. The Department notes that the original dumping margin remained in effect throughout the history of the order until the 1997/98 administrative review, at which time the Department determined that a weighted-average dumping margin of 21.07 percent exists for Windmill. 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 domestic interested parties on imports of subject merchandise from 1991 to 1999, and those examined by the Department (U.S. Census Bureau IM146 reports) demonstrate that imports of the subject merchandise from Romania ceased from 1994 through 1996. Furthermore, Romania resumed exports in 1997 and 1998, at an average volume of less than five percent of pre-order levels. 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 Romanian producers and exporters. Therefore, given that dumping continued after the issuance of the order, and that imports during 1997 and 1998 were at volumes far below pre-order levels, we preliminarily determine that dumping is likely to continue if the order were revoked. Because we have based these preliminary results on the continuation of dumping, we have not considered the interested parties' arguments related to other factors. 2. Magnitude of the Margin Likely to Prevail: Interested Party Comments: In their substantive response, domestic interested parties assert that the Department should report to the Commission the final margin of 75.04 percent from the investigation for MEI and "all others," because that is the only calculated rate that reflects the behavior of the exporters without the discipline of the order in place (see October 1, 1999, Substantive Response of domestic interested parties at 12). In its substantive response, Sidex asserts that the Department should report to the Commission the preliminary dumping margin of 20.62 percent for Windmill. Sidex argues that the original margins calculated in the Department's investigation are not probative of the behavior of Sidex were the order revoked (see October 4, 1999, Substantive Response of Sidex at 5). Sidex contends that for the Department to select the dumping rate determined in the original investigation would be improper because (1) it is the single highest dumping margin throughout the entire antidumping duty review process; and (2) it is not characteristic of the behavior of Sidex because the original margin was a "facts available" rate. Sidex notes that respondent MEI received "facts available" because the Department claimed it missed a section A filing deadline, and the Department then refused to accept Section C and Section D responses. Id. at 4. Thus, Sidex contends that it is not appropriate for the Department to use the dumping margin of the original investigation, but instead, it should select the preliminary rate of 20.62 percent found on September 7, 1999-the only "real" finding by the Department. Id. In their rebuttal, domestic interested parties argue that Sidex's claims with respect to the margin likely to prevail are wrong on all counts. First, domestic interested parties assert that the fact that the "all others" rate from the investigation is the highest dumping margin throughout the proceeding does not disqualify this rate (see October 15, 1999, Rebuttal of domestic interested parties at 12). They contend that, given that the margin from investigation was the only final margin for more than six years in the case, it is plainly the most representative margin. Id. Moreover, the Sunset Policy Bulletin directs the Department to use the margin from the original investigation because it is the only calculated rate that reflects the behavior of the exporters in the absence of the order. Id. at 12- 13. Second, domestic interested parties assert that while the Sunset Policy Bulletin allows a more recently calculated margin in certain cases, it does not do so on the facts of this case. Sidex ignores the requirement that import volumes must remain steady or increase, and, as previously noted, the IM145 data show that imports of subject merchandise from Romania fell to zero immediately following the order and have recently risen to less than five percent of pre-order levels. Id. at 13. Therefore, Sidex fails to qualify as an exception to the Department's normal policy of using the rate from the original investigation. Id. Finally, domestic interested parties argue that, contrary to Sidex's claims that use of the dumping margin from the investigation is inappropriate because it is based on "fact available," the Sunset Policy Bulletin clearly states that the Department will normally provide the margin from the investigation regardless of whether the margin was calculated using a company's own information or based on best information available or facts available. Id. at 14. 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). The Department agrees with domestic interested parties' argument concerning the choice of the margin to report to the Commission. The SAA at 890-91, and the House Report at 64, state that if dumping margins have declined over the life of the order and imports have remained steady or increased, the Department may conclude that exporters are likely to continue dumping at the lower rates found in a more recent review. However, according to data provided by domestic interested parties and Sidex and as confirmed by the IM146 reports, import volumes declined significantly following the issuance of the order, and continue to remain at significantly lower levels. Given that import volumes have not remained steady or increased, we find no reason to deviate from our normal policy of reporting to the Commission the rate from the original investigation. Furthermore, despite Sidex's argument, we agree with domestic interest parties that we will normally provide the rate from the investigation regardless of whether the margin was calculated using a company's own information or based on best information or facts available. As such, the Department will report to the Commission the original rate from the final determination as the magnitude of the margin likely to prevail if the order were revoked, as contained in the Preliminary Results of Review section of this decision memo. Preliminary Results of Review: We preliminarily determine that revocation of the antidumping duty order on cut-to-length carbon steel plate from Romania would be likely to lead to continuation or recurrence of dumping at the following percentage weighted-average margins: ------------------------------------------------------------------ Manufacturer/exporters Margin (percent) ------------------------------------------------------------------ Metalexportimport, S.A. 75.04 All Others 75.04 ------------------------------------------------------------------ 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____ ___________________________ Richard W. Moreland Acting Assistant Secretary for Import Administration _____________________ (Date) 1. See Antidumping Duty Order: Cut-to-Length Carbon Steel Plate from Romania, 58 FR 44167 (August 19, 1993). 2. See Certain Cut-to-Length Carbon Steel Plate from Romania; Preliminary Results of Antidumping Administrative Review, 64 FR 48581 (September 7, 1999). 3. See Certain Cut-to-Length Carbon Steel Plate from Romania: Final Results of Antidumping Duty Administrative Review, 65 FR 1847 (January 12, 2000). 4. See September 24, 1999, Request for an Extension to File Rebuttal Comments in the Sunset Reviews of Antidumping and Countervailing Duty Orders: A-602-803; A-351-817; C-351-818, A-122-822, A-122-823, A-405- 802, A-588-826, A-421-804, A-455-802, A-485-803, C-401-401, C-401- 804, C-401-805, from Valerie S. Schindler, Skadden, Arps, Slate, Meagher & Flom LLP, to Jeffrey A. May, Office of Policy. 5. See September 30, 1999, Letter from Jeffrey A. May, Director, Office of Policy to Valerie S. Schindler, Skadden, Arps, Slate, Meagher & Flom LLP. 6. See October 21, 1999, Memoranda for Jeffrey A. May, Re: Cut-to- Length Carbon Steel Plate from Romania; Adequacy of Respondent Interested Party Response to the Notice of Initiation. 7. See Extension of Time Limit for Preliminary Results of Full Five- Year Reviews, 64 FR 71726 (December 22, 1999).