65 FR 18058, April 6, 2000 A-533-809 A-583-821 Sunset Reviews 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 Sunset Review of the Antidumping Duty Orders on Certain Forged Stainless Steel Flanges from India and Taiwan; Final Results Summary We have analyzed the substantive responses of interested parties in the expedited sunset reviews of the antidumping duty orders covering certain forged stainless steel flanges ("flanges") from India 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 Orders India The Department of Commerce ("the Department") published its final affirmative determination of sales at less than fair value ("LTFV") with respect to imports of flanges from India on December 29, 1993 (58 FR 68853). In this determination, the Department published weighted-average dumping margins for five companies and an "all others" rate. Specifically, the Department assigned the following rates: 210.00 percent for Mukand Ltd, Sunstar Metals Ltd, Bombay Forgings Pvt. Ltd, and Dynaforge; 19.74 percent for Akai Impex Pvt. Ltd; and 162.44 percent for all others. Some of these margins were later amended by the Department.(1) Since the issuance of the order the Department has completed one administrative review(2) and four new shipper reviews with respect to flanges from India.(3) As a result of the administrative review, the Department determined that Akai Impex, Ltd. had a weighted-average margin of 2.56 percent. In the new shipper reviews, the Department found de minimis margins for Viraj, Isibars, and Panchmahal, and a margin of 1.61 percent for Patheja. 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 India. Taiwan On December 29, 1993, the Department published its affirmative final determination of sales at LTFV regarding flanges from Taiwan (58 FR 68859). The Department issued its antidumping duty order on February 9, 1994.(4) In this determination, the Department published weighted- average dumping margins for three companies and an "all others" rate. Specifically, the Department assigned the following rate: 48.00 percent for Enlin Steel Corporation, Ta Chen Stainless Pipe Co., Ltd, Tay Precision Industries Co., Ltd, and "all others." Since the order was issued, the Department has not conducted an administrative review or a new shipper review with respect to flanges from Taiwan. 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 December 1, 1999, the Department published the notice of initiation of sunset reviews of the antidumping duty orders on flanges from India and Taiwan (64 FR 67247). We received a Notice of Intent to Participate, in each of the two sunset reviews, on behalf of Gerlin, Inc. ("Gerlin"), Ideal Forging Corporation ("Ideal"), Maass Flange Corporation ("Maass"), and Westbrook Flange (collectively, the "domestic interested parties"), by December 16, 1999, within the deadline specified in section 351.218(d)(1)(i) of the Sunset Regulations. Pursuant to section 771(9)(C) of the Tariff Act of 1930, as amended ("the Act"), the domestic interested parties claimed interested party status as a U.S. manufacturer of domestic like products. Moreover, Gerlin, Ideal, and Maass claim that they were petitioners in the original investigations. The Department received a complete substantive response from the domestic interested parties, in each of the two sunset reviews, by January 3, 2000, 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 Taiwanese respondent interested party . We did receive substantive responses from Echjay Forgings Limited ("Echjay") and Pushpaman Exports ("Pushpaman") in the sunset review of the Indian order. However, we determined that the responses were inadequate to warrant a full review because respondents did not account for at least 50 percent of the subject merchandise to the U.S. over the last five years, as required by 351.218(e)(1)(ii)(A). See memorandum to Jeffrey A. May from Mark D. Young and Melissa G. Skinner regarding Adequacy of Respondent Interested Party Response to Notice of Initiation, dated January 20, 2000. 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. 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. 1. Likelihood of Continuation or Recurrence of Dumping: Interested Party Comments In their substantive response, the domestic interested parties argue that the substantial decline in the volume of imports of flanges from the subject countries following the issuance of the orders demonstrates the inability of the producers from the subject countries to sell in the United States at any significant volume without dumping. The domestic interested parties argue further that revocation of the antidumping duty orders in these sunset reviews would likely lead to a continuation or recurrence of dumping by Indian and Taiwanese producers/manufacturers. The domestic interested parties support this argument with evidence showing that, since the imposition of the orders, respondents have generally reduced their shipments to the United States. Therefore, the domestic interested parties assert, were the antidumping duty orders revoked, it is likely that Indian and Taiwanese producers would need to dump in order to sell flanges in any significant quantities in the United States. India: With respect to subject merchandise from India, the domestic interested parties maintain that in the years preceding the order, India was a major foreign supplier of the subject merchandise to the U.S. market. Following the issuance of the order, the domestic interested parties assert that imports from India have dramatically decreased. In sum, the domestic interested parties argue that, a decline in imports following the imposition of the order and high dumping margins,(5) provides clear evidence that the Indian producers are incapable of selling at fair value in the U.S. market.(6) Echjay and Pushpaman argue that there will not be any adverse impact on the prices of flanges in the United States if the order is revoked. They indicate that many Indian companies have zero antidumping duty margins. They add further that Indian companies would not dump flanges into the U.S. market because the volume of imports would not be very high and that the prices of flanges are dependent upon the international price of stainless steel and conversion costs of all manufacturers are approximately the same. Taiwan: The domestic interested parties argue that the imposition of the antidumping duty order had a dramatic effect on subject import volumes from Taiwan. The domestic interested parties indicate that in the years following the order, imports of the subject merchandise from Taiwan have remained roughly 70 percent below pre-order level. Furthermore, the domestic interested parties mention that dumping margins for Taiwanese manufacturers remain above de minimis levels. This decline in imports, the domestic interested parties add, and above de minimis dumping margins demonstrates that Taiwanese manufacturers cannot maintain a presence in the U.S. market without dumping.(7) 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"), 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 basis for likelihood determinations. See Policies Regarding the Conduct of Five- Year ("Sunset") Reviews of Antidumping and Countervailing Duty Orders: Policy Bulletin, 63 FR 18871 (April 16, 1998) ("Sunset Policy Bulletin"). 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 the Taiwanese review, 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 one administrative review of the Indian order finding dumping margins above de minimis for each producer/exporter reviewed. While Viraj, Isibars, and Panchmahal have de minimis margins based on new shippers reviews, Patheja's margin is above de minimis. Therefore, we agree with Echjay and Pushpaman's assertion that three Indian exporters are subject to zero margins. However, above de minimis dumping margins still exist for the majority of the Indian producers/exporters of flanges. The Department has not conducted an administrative review of the order on Taiwan and, therefore, above de minimis margins remain in effect for all Taiwanese exporters. As outlined in each respective section above, the domestic interested parties argue that the significant decline in the volume of imports of the subject merchandise from India and Taiwan, since the imposition of the orders, provides further evidence that dumping would continue or recur if the orders were revoked. In their substantive responses, the domestic interested parties provided statistics demonstrating the decline in import volumes of flanges from India and Taiwan. The Department agrees with the domestic interested parties' assertions that Indian and Taiwanese imports of the subject merchandise fell sharply after the order was imposed and never regained pre-order volumes. As noted above, in conducting its sunset reviews, the Department considers the weighted-average dumping margins and volume of imports when determining whether revocation of an antidumping duty order would lead to the continuation or recurrence of dumping. Based on this analysis, the Department finds that the existence of dumping margins above de minimis levels and reductions in export volumes after the issuance of the orders are highly probative of the likelihood of continuation or recurrence of dumping. A deposit rate above a de minimis level continues in effect for exports of the subject merchandise by all known Taiwanese manufacturers/exporters. With respect to the Indian order, a deposit rate above a de minimis level continues in effect for exports of flanges for all but three Indian manufacturers/exporters.(8) Therefore, given that Indian manufacturers/exports continue to dump and import volumes declined significantly after the imposition of the order, the Department determines that dumping is likely to continue or recur if the Indian order were revoked. With respect to the Taiwanese order, given that dumping has continued, import volumes declined significantly after the imposition of the order, and respondent interested parties waived participation in the sunset review, the Department determines that dumping is likely to continue or recur if the order were revoked. Magnitude of the Margin Likely to Prevail: Interested Party Comments In their substantive responses, the domestic interested parties recommend that the Department adhere to its general practice of selecting dumping margins from the original investigation. Regarding companies not reviewed in the instant original investigations, the domestic interested parties suggest that the Department report to the Commission the "all others" rate published in the original investigations. Furthermore, the domestic interested parties argue that in light of the artificial nature of the rates for the Indian "new shippers," due to the limited quantity of shipments made to the United States, the "all others" rate is the rate that best reflects the behavior of the Indian "new shippers" absent the restraint of the antidumping order. 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 the domestic interested parties. Since the Department has not conducted an administrative review of flanges from Taiwan, and imports of Indian and Taiwanese flanges to the United States have decreased dramatically since the issuance of the order, the Department has decided that it would not be appropriate to use a more recently calculated rate. The Department finds that the margins calculated in the original investigation are probative of the behavior of Indian and Taiwanese manufacturers/exporters if the orders were revoked, as they are the only margins which reflect their actions absent the discipline of the orders. Therefore, the Department will report to the Commission the company-specific and "all others" rates from the original investigation as contained in the Final Results of Reviews section of this decision memo. Final Results of Reviews We determine that revocation of the antidumping duty orders on flanges from India and Taiwan would be likely to lead to continuation or recurrence of dumping at the following percentage weighted-average margins: India Manufacturer/Exporter Margin (percent) ______________________________________________________________ Mukand, Ltd. 210.00 Sunstar Metals Ltd. 210.00 Bombay Forgings Pvt. Ltd. 210.00 Dynafore 210.00 Akai Impex Pvt. Ltd. 18.56 All Others 162.14 ______________________________________________________________ Taiwan Manufacturer/Exporter Margin (percent) ______________________________________________________________ Enlin Steel Corporation 48.00 Ta Chen Stainless Pipe Co. 48.00 Tay Precision Industries Co. 48.00 All Others 48.00 ______________________________________________________________ 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) ______________________________________________________________ footnotes: 1. See Amended Final Determination and Antidumping Duty Order; Certain Forged Stainless Steel Flanges from India, 59 FR 5994 (February 9, 1994). The weighted-average dumping duty margin for Akai Impex Pvt. Ltd was recalculated at 18.56 percent and the "all others" rate was recalculated at 162.14 percent. 2. See Certain Forged Stainless Steel Flanges from India: Final Results of Administrative Review, 61 FR 51263 (October 1, 1996). See also Certain Forged Stainless Steel Flanges from India: Notice of Termination of Antidumping Duty Administrative Review, 61 FR 55786 (October 29, 1996) (95-96 period of review ("POR")); 62 FR 31072 (June 6, 1997) (96-97 POR); and Certain Forged Stainless Steel Flanges from India: Rescission of Antidumping Duty Administrative Review, 64 FR 53998 (October 5, 1999) (98-99 POR). 3. See Certain Forged Stainless Steel Flanges from India: Final Results of Antidumping Duty New Shipper Review, 62 FR 1317 (January 9, 1997) (Viraj Forgings, Ltd. ("Viraj")); 62 FR 9735 (March 4, 1997) (Isibars, Ltd. ("Isibars") and Patheja Forgings and Auto Parts Ltd. ("Patheja")); 63 FR 25824 (May 11, 1998) (Panchmahal Steel, Ltd. ("Panchmahal")). The Department has initiated another new shipper review for Bhansali Ferromet Pvt. Ltd., 65 FR 8120 (February 17, 2000). 4. See Antidumping Duty Order: Certain Forged Stainless Steel Flanges from Taiwan, 59 FR 5995 (February 9, 1994). 5. The domestic interest parties recognize that there currently are de minimis margins for three producers/exporters from India. However, the domestic interested parties note that these three producers/exporters were "new shippers," and had not made a single shipment of the subject merchandise to the United States at the time of their request for review. It was not until after the new shipper reviews were initiated that the sole shipment from each producer/exporter entered the U.S. market. 6. See December 30, 1999, Substantive Response of the domestic interested parties, regarding flanges from India at 9. 7. See December 30, 1999, Substantive Response of the domestic interested parties, regarding flanges from Taiwan at 9. 8. Three "new shippers" currently have de minimis margins, supra at footnote 5.