(65 FR 11762, March 6, 2000) A-570-808 A-583-810 Sunset Reviews Public Document MEMORANDUM TO: Joseph A. Spetrini Acting Assistant Secretary for Import Administration FROM: Jeffery A. May Director Office of Policy SUBJECT: Issues and Decision Memo for the Sunset Review of Chrome-Plated Lug Nuts from The People's Republic of China and Taiwan; Final Results Summary We have analyzed the substantive responses of interested parties in the sunset reviews of the antidumping duty orders covering chrome-plated lug nuts ("lug nuts") from the People's Republic of China ("China") and Taiwan. 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 substantive responses by 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 Use of a more recent margin History of the Orders China The Department published its final affirmative determination of sales at less than fair value ("LTFV") with respect to imports of lug nuts from China on September 10, 1991 (56 FR 46153).(1) In this determination, the Department published one weighted-average dumping margin and an "all others" rate. On September 20, 1991, the Department published its antidumping duty order on lug nuts from China (56 FR 46153).(2) Since the issuance of the order, the Department has conducted five administrative reviews.(3) Dumping margins for China National Machinery & Equipment Import & Export Corp., Nantong Branch ("China National") have remained constant in each of the three periods it has been reviewed. In the second, third, and fourth administrative review periods, China National's dumping margin remained at 44.99 percent. Jiangsu Rudong Grease Gun Factory's dumping margin has decreased in each period it has been reviewed. The dumping margin decreased from 5.93 percent in the third, to 2.70 in the fourth, and 1.23 percent in the fifth administrative review. We note that, to date, the Department has not issued any duty absorption findings in this case. The order remains in effect for all manufacturers and exporters of the subject merchandise from China. Taiwan The Department published its final affirmative determination of sales at LTFV with respect to imports of lug nuts from Taiwan on July 31,1991 (56 FR 36130).(4) In this determination, the Department published two weighted-average dumping margins and an "all others" rate. On September 20, 1991, the Department published its antidumping duty order on lug nuts from Taiwan (56 FR 47737). Since the issuance of the order the Department has completed five administrative reviews.(5) The dumping margins of the companies reviewed in the five administrative reviews have either fluctuated between 6.93 and 10.67 percent, or have remained constant at these levels. We note that, to date, the Department has not issued any duty absorption findings in this case. The order remains in effect for all manufacturers and exporters of the subject merchandise from Taiwan. Background On August 2, 1999, the Department of Commerce ("the Department") published the notice of initiation of sunset reviews of the antidumping duty orders on lug nuts from China and Taiwan (64 FR 41915). The Department received Notices of Intent to Participate on behalf of Consolidated International Automotive, Inc. ("Consolidated") on August 17, 1999, within the deadline specified in section 351.218(d)(1)(i) of the Sunset Regulations. Consolidated claimed interested party status under section 771(9)(C) of the Tariff Act of 1930, as amended ("the Act"), as U.S. manufacturers of lug nuts. In its substantive responses, Consolidated stated that it was the petitioner in the original investigations of lug nuts from China and Taiwan. Consolidated stated that it had participated in all phases of the investigation and administrative reviews, and in the scope proceedings of lug nuts from China and Taiwan. Consolidated notes that it has submitted written comments and briefs in the prior proceedings, and has appeared through counsel at the Department's hearings. Furthermore, Consolidated asserts that they have litigated with the Department over the original orders in the United States Court of International Trade, and currently are an intervener before the Court urging affirmance of the Department's most recent administrative review determination in Certain Chrome- Plated Lug Nuts from Taiwan. We received a complete substantive response, in both the Chinese and Taiwanese reviews, from Consolidated on September 1, 1999, within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). We did not receive a substantive response from any respondent interested party to these proceedings. As a result, pursuant to 19 CFR 351.218(e)(1)(ii)(C), the Department determined to conduct expedited, 120-day, reviews of these orders. 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). The reviews at issue concern transition orders within the meaning of section 751(c)(6)(C)(ii) of the Act. Therefore, the Department determined that the sunset reviews of the antidumping duty orders on lug nuts from China and Taiwan are extraordinarily complicated and extended the time limit for completion of the final results of these reviews until not later than February 28, 2000, in accordance with section 751(c)(5)(B) of the Act.(6) 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 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 comments of the interested parties. Likelihood of Continuation or Recurrence of Dumping: Interested Party Comments In its substantive responses, Consolidated argues that revocation of the antidumping duty orders would likely lead to continuation or recurrence of dumping by Chinese and Taiwanese manufacturers and exporters of the subject merchandise. Consolidated asserts that dumping has continued throughout the life of the orders at above de minimis levels. Furthermore, Consolidated notes that both China and Taiwan were leading foreign suppliers of the subject merchandise to the United States, between the years 1988 and 1990. It adds, that between 1988 and 1990, Chinese imports increased 92.8 percent and Taiwanese imports increased 360.2 percent. However, Consolidated attests that import volumes have declined significantly since the issuance of the orders. Specifically, Consolidated examines imports of lug nuts from China in the years prior to the imposition of the order. Consolidated notes that these imports amounted to as much as 6.2 million units, but have since almost completely ceased. Furthermore, Consolidated provided data which indicates that there was no U.S. imports of lug nuts imported under the HTSUS subheading 7318.16.0010 from China after 1993. As for Chinese imports of lug nuts falling under the HTSUS subheading 7318.16.0015, Consolidated contends that there were no importations of the subject merchandise until 1996. With respect to the Taiwanese order, Consolidated argues that imports of lug nuts from Taiwan were more than 14 million units in 1990, but have declined since the issuance of the order. In fact, Consolidated stated that there were no shipments of the subject merchandise imported under the HTSUS subheading 7318.16.0010 in 1992, the first year the order was in place; nor were there any shipments in years the 1994 through 1998. In summary, Consolidated argues that the Department should determine that there is a likelihood that dumping would continue were the orders revoked because (1) dumping margins above de minimis levels 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. 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 ("SAA"), 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 basis for likelihood determinations. The Department clarified that determinations of likelihood will be made on an order- wide basis (see section II.A.2 of the Sunset Policy Bulletin). In addition, the Department indicated that it will normally 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 the order would be likely to lead to continuation or recurrence of dumping where a respondent interested party waives its participation in the sunset review. In these instant reviews, the Department did not receive a substantive response from any respondent interested party. Pursuant to section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. As noted above, the Department has conducted administrative reviews of these orders finding dumping margins above de minimis for every producer/exporter reviewed in each of the reviews. The Department, utilizing U.S. Customs import statistics, disagrees with Consolidated's assertion that imports of the subject merchandise decreased sharply following the imposition of the orders. Consolidated's statement that imports decreased after the issuance of the order was based on a 10-digit HTSUS subheading, rather than the 8-digit HTSUS subheading identified in the original investigations and subsequent reviews. Statistics related to the 8-digit HTSUS subheading, indicate that imports have been increasing since the issuance of the orders. See memo to file dated February 28, 2000. As set forth in the Sunset Policy Bulletin (section II.A.3), and consistent with the SAA at 889-90, 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. In the instant cases, dumping margins above de minimis levels have continued to exist for shipments of the subject merchandise throughout the life of the orders. Based on our analysis of the records in these proceedings, 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. Dumping margins above de minimis levels continue in effect for exports of lug nuts by all Chinese and Taiwanese manufacturers and/or exporters subject to the orders. Therefore, given that dumping has continued over the life of the orders and respondent interested parties have waived their right to participate in these reviews before the Department, and absent argument and evidence to the contrary, the Department determines that dumping is likely to continue if the orders were revoked. Magnitude of the Margin Likely to Prevail: Interested Party Comments In its substantive responses, Consolidated recommends that, consistent with the Sunset Policy Bulletin, the Department provide to the Commission the company-specific margins from the original investigations. Moreover, regarding companies not reviewed in the original investigations, the domestic interested parties suggested that the Department report the "all others" rates included in the original investigations. However, Consolidated asserts that the Department, may, at its own discretion, report a more recently calculated margin for producers/manufacturers/exporters of lug nuts from Taiwan that were not reviewed in the original investigation. 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 Consolidated, in part. We determine that the margins from the Department's original investigations, as amended, are probative of the behavior of Chinese and Taiwanese manufacturers and exporters of lug nuts if the orders were revoked because they are the only calculated rates which reflect the behavior of exporters without the discipline of the orders in place. While we agree with Consolidated that we have the discretion to report a more recently calculated rate for producers not subject to the original investigation, we do not agree it is appropriate in this review on Taiwan. Absent argument and company-specific data indicating that Taiwanese companies not included in the original investigation choose to increase dumping in order to maintain or increase market share, the Department will provide the Commission with the all others rate calculated in the original investigation. 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 reviews in the Federal Register. AGREE ____ DISAGREE____ Joseph A. Spetrini Acting Assistant Secretary for Import Administration (Date) 1. The sales at LTFV determination was subsequently amended. See Amendment to Final Determination of Sales at Less Than Fair Value and Amendment to Antidumping Duty Order: Chrome-Plated Lug Nuts From the People's Republic of China, 57 FR 15052 (April 24, 1992). 2. The antidumping duty order was subsequently amended. Id. 3. See Chrome-Plated Lug Nuts from the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 60 FR 48687 (September 20, 1995) (the first and second administrative reviews were jointly published); 61 FR 58514 (November 15, 1996); 61 FR 58519 (November 15, 1996); 63 FR 66119 (December 1, 1998) (as amended). 4. The final determination of sales at LTFV was subsequently amended. See Antidumping Duty Order and Amendment to Final Determination of Sales at Less Than Fair Value: Chrome-Plated Lug Nuts From Taiwan, 56 FR 47737 (September 20, 1991). 5. See Chrome-Plated Lug Nuts from Taiwan; Final Results of Antidumping Duty Administrative Review, 64 FR 17314 (April 9, 1999); 61 FR 58372 (November 14, 1996); 60 FR 55361 (October 31, 1995); 60 FR 44835 (August 29, 1995) (Termination in Part); 59 FR 56461 (November 14, 1994). 6.