65 FR 18292, April 7, 2000 A-423-805 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 Expedited Sunset Review of the Antidumping Duty Order on Cut-to-Length Carbon Steel Plate from Belgium; Final Results Summary: We have analyzed the substantive responses of interested parties in the expedited sunset review of the antidumping duty order on cut-to- length carbon steel plate from Belgium. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum for these final results of review. Below is the complete list of the issues in this expedited 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 Duty absorption History of the Order: On August 19, 1993, the Department published an antidumping duty order on cut-to-length carbon steel plate from Belgium and an amendment to the final determination (58 FR 44164, August 19, 1993). The Department assigned S.A. Forges de Clabecq ("Clabecq") a margin of 6.78, Fabrique de Fer de Charleroi ("FAFER") a margin of 13.31 percent, and 6.85 percent for "all others" (58 FR 44164, August 19, 1993). There has been one completed administrative review of this order. The review covered the period from August 1, 1995, through July 31, 1996, and the Department assigned FAFER a margin of 13.75 percent (63 FR 2959, January 20, 1998). Additionally, the Department determined that FAFER had absorbed antidumping duties on 100 percent of its sales during this period (63 FR 2959, 2964). There have been no scope inquiries or changed circumstances reviews in this proceeding. Background: On September 1, 1999, the Department initiated a sunset review of the antidumping duty order on cut-to-length carbon steel plate from Belgium (64 FR 47767), pursuant to section 751(c) of the Tariff Act of 1930, as amended ("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 ("domestic interested parties"), within the applicable deadline (September 15, 1999) specified in section 351.218(d)(1)(i) of the Sunset Regulations. Domestic interested parties claimed interested-party status under section 771(9)(C) of the Act, as U.S. producers of a domestic like product. On September 20, 1999, we received a request for an extension to file rebuttal comments from domestic interested parties.(1) Pursuant to 19 CFR 351.302(b)(1999), the Department extended the deadline for all participants eligible to file rebuttal comments until October 15, 1999.(2) 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). We also received a submission from Duferco La Lovière ("Duferco"), in which it claimed to be the successor of Usines Gustave Boël and a producer of only hot-rolled coils (see October 1, 1999, Response of Duferco to the Department's Notice of Initiation of a Five-Year Review). In addition, FAFER submitted an incomplete response (see October 1, 1999, Response of FAFER to the Department's Notice of Initiation of a Five-Year Review). Domestic interested parties assert that at least one of them has been involved in this proceeding since the petition was filed, and has participated in each subsequent segment of the case (see October 1, 1999, Substantive Response of domestic interested parties at 3). On October 15, 1999, the domestic interested parties submitted a letter to the Department requesting that the Department undertake an expedited review in this case, on the basis that FAFER's October 1, 1999, letter to the Department is wholly inadequate as it fails to meet necessary procedural and substantive requirements of a response to a notice of initiation (see October 15, 1999, Letter from domestic interested parties at 2). Further, domestic interested parties urge the Department to deem FAFER's failure to file a complete response as a waiver of participation in this review. Id. Duferco's and FAFER's responses were incomplete because they did not provide the Department the information required of respondent interested parties in a sunset review. As such, the Department could not determine whether the respondents' five year average percentage of exports to the U.S. vis-a-vis the total exports of the subject merchandise, during the relevant period, was above or below the normal 50 percent threshold requirement for conduct of a full sunset review. Therefore, On October 21, 1999, pursuant to 19 CFR 351.218(e)(1)(ii)(A), the Department determined to conduct an expedited (120-day) sunset review of this order.(3) 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)(ii) of the Act. Accordingly, on December 22, 1999, the Department determined that the sunset review of cut-to- length carbon steel flat plate from Belgium is extraordinarily complicated, and extended the time limit for completion of the final results of this review until not later than March 29, 2000, in accordance with section 751(c)(5)(B) of the Act.(4) Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted 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 contend that revocation of the subject order is likely to lead to continuation or recurrence of dumping. They state that the record of this proceeding demonstrates that respondent interested parties have continued to dump in the U.S. market while, apart from an aberration in 1996, drastically reducing their U.S. sales of the subject merchandise (see October 1, 1999, Substantive Response of domestic interested parties at 9). Domestic interested parties note that in the only administrative review (1995/96), the Department imposed an antidumping duty margin against FAFER of 13.75 percent and stated that the rate against "all others" would remain unchanged from the original investigation at 6.45 percent. Id. at 10. Therefore, domestic interested parties assert that, during a period three years after the initial antidumping duty order was issued, dumping was continuing and, in the case of FAFER, was continuing at a substantially higher margin than three years earlier. Id. Thus, the continuing existence of dumping margins and the increase in the margin, demonstrates the likelihood of the continuation or recurrence of sales at less-than-fair value ("LTFV"). Id. Domestic interested parties also assert that, coupled with the dumping margins, the significant decline in import volumes of subject merchandise from Belgium after the issuance of the order underscores the conclusion that selling of the subject merchandise at LTFV would continue and recur if the order were revoked. Id. They contend that imports declined to a mere 66 short tons in 1997, climbed to 8,051 tons in 1998, and were 2,190 short tons for the first six months of 1999, never coming close to pre-1994 volumes. Id. at 11. Thus, domestic interested parties assert that drastically reduced import volumes accompanied by the continued existence of dumping margins after the issuance of the order, clearly show that producers/exporters could not sell cut-to-length carbon steel plate from Belgium in the U.S. market without dumping if the order were revoked. Id. Domestic interested parties contend that the Department should consider in its analysis other factors indicative of the likelihood that revocation of the order will lead to sales at LTFV in the United States. First, they note that the Department, in the sole administrative review, determined that FAFER had absorbed antidumping duties on 100 percent of its sales during the period of review. They assert that FAFER's willingness to absorb antidumping duties on 100 percent of its sales during the period of review indicates a willingness to sell a product at LTFV to achieve their goals and, thus, establishes a likelihood that sales at LTFV would continue or recur if the antidumping duty order were revoked. Id. at 12. Second, domestic interested parties assert that the history of sales at below cost of production in the investigation and administrative review is probative of the likelihood that FAFER will continue to sell its products in the U.S. market at LTFV. Third, domestic interested parties contend that, due to the Asian financial crises, Europe's steel exports to Asia decreased 56 percent in 1998. Id. at 13. Accordingly, European producers including Belgium, have diverted exports to the United States, with U.S. imports from Belgium increasing 12,098.48 percent from 1997 to 1998. Id. at 14. Further, imports from Belgium to the United States for the first six months of 1999 increased 652 percent from the same period in 1998. Id. Domestic interested parties add that key Asian markets continue to remain in recession and, therefore, Belgium, as a large European exporter, has an incentive to export steel to the United States and would continue to, or once again begin to, sell subject merchandise at LTFV in the U.S. market if the order were revoked. Id. Finally, domestic interested parties note that the French steel company, Usinor, purchased a controlling interest in FAFER and may have made significant investments, the apparent purpose of which was increasing production capacity at the company. Id. at 15. Domestic interested parties assert that increasing production capacity when the Asian market is declining and imports from Asia into Belgium are increasing, leads to increased pressures to dump the subject merchandise and indicated a likelihood of selling at LTFV. In sum, domestic interested parties assert that with decreased imports, existing dumping margins, duty absorption, sales at below cost, increased capacity, and the world economic situation, revocation of the antidumping duty order is likely to lead to continuation or recurrence of dumping and the Department, therefore, should determine not to revoke the order in this case. 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 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 review, the Department did not receive an adequate response from any respondent interested party. Pursuant to section 351.21 8(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. 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 throughout the history of the order and that these margins continue to exist. Consistent with section 752(c) of the Act, the Department also considered the volume of imports before and after issuance of the order. According to the import statistics provided by domestic interested parties, as confirmed by Census IM146 reports statistics, average imports of subject merchandise have significantly decreased from their 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. Therefore, given that dumping continued after the issuance of the order, imports continued at levels below pre-order levels from 1995 through 1999, and respondent interested parties waived their right to participate in this review, we determine that dumping is likely to continue if the order were revoked. Because we based our likelihood determination on the continuation of dumping and the decrease in imports over the life of the order, we have not considered domestic interested parties' arguments related to factors other than previously calculated margins and import volumes. 2. Magnitude of the Margin Likely to Prevail: Interested Party Comments: In their substantive response, domestic interested parties cite to the Act and the Sunset Policy Bulletin and assert that the Department should report to the Commission the final margin of 13.75 percent from the administrative review initiated in 1996. Domestic interested parties contend that the use of a more recently calculated rate is appropriate in this review, because, in the review initiated in 1996, the Department found that FAFER had absorbed duties on 100 percent of its sales. They argue that the duty absorption finding coupled with the large increase in the dumping margin after the issuance of an order, indicates that FAFER needs to dump in order to obtain or retain a share of the U.S. market. Therefore, the more recently calculated rate is probative of FAFER's behavior without the discipline of the 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). Absent a corresponding increase in the margin of dumping and 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 SAA at 885, and the House Report at 60, provide that duty absorption is a strong indicator that the current dumping margins calculated by the Department in the reviews may not be indicative of the margins that would exist in the absence of an order. Once an order is revoked, the importer could achieve the same pre-revocation return on its sales by lowering its prices in the United States in the amount of the duty that previously was being absorbed. We note that the Department assigned FAFER a margin of 13.31 percent in the 1993 order and a margin of 13.75 percent in the sole administrative review, covering the 1995/96 period. In addition, the Department found in that review that antidumping duties had been absorbed by FAFER on one hundred percent of its U.S. sales.(5) Consistent with our stated policy of providing the Commission the higher of the margin the Department otherwise would have reported to the Commission or the most recent margin for that company adjusted to account for the Department's findings on duty absorption, because the Department found one hundred percent duty absorption in the administrative review initiated during 1996, we have adjusted the results of that review. The margin of 13.75 percent for FAFER in the 1995/96 review, as adjusted, is 27.5 percent.(6) There has not been a duty absorption finding with respect to Clabecq. As such, the Department will report to the Commission the margins contained in the Final Results of Review section of this decision memo. Final Results of Review We determine that revocation of the antidumping duty order on cut-to-length carbon steel plate from Belgium would be likely to lead to continuation or recurrence of dumping at the following percentage weighted-average margins: ___________________________________________________________ Manufacturer/exporters Margin (percent) ___________________________________________________________ Forges de Clabecq, S.A. 6.78 Fabrique de Fer de Charleroi, S.A. 27.5 All Others 6.75 ___________________________________________________________ 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______ Joseph A. Spetrini Acting Assistant Secretary for Import Administration (Date) ___________________________________________________________ footnotes: 1. See September 20, 1999, Request for an Extension to File Rebuttal Comments in the Sunset Reviews of Antidumping and Countervailing Duty Orders on Certain Steel Products from Belgium, France Germany, Mexico, Spain, South Korea, Taiwan and the United Kingdom: A-583-080, A-423-805, A-427-808, A-428-815, A-428-814, A-428-816, A-580-815, A- 580-816, S-201-809, A-469-803, A-412-814, C-423-806, C-427-810, C-428- 817 (CTL), C-428-817 (CR), C-580-818 (CORE), C-201-810, C-469-804, C- 412-815, from Bradford L. Ward, Dewey Balantine LLP, to Jeffrey A. May, Office of Policy. 2. See September 30, 1999, Letter from Jeffrey A. May, Director, Office of Policy to Michael H. Stein, Dewey Ballantine LLP. 3. See October 21, 1999, Memorandum for Jeffrey A. May, Re: Certain Cut-to-Length Carbon Steel Plate from Belgium: Adequacy of Respondent Interested Party Response to the Notice of Initiation. 4. See Extension of Time Limit for Final Results of Expedited Five- Year Reviews, 64 FR 71726 (December 22, 1999). 5. We note that the Court of International Trade in SKF USA, Inc. v. United States, Court No. 99-08-00473 (March 22, 2000), found that the Department lacks the authority to conduct duty absorption inquiries with respect to certain transition orders; however, the Court's decision is not final and conclusive. 6. See March 20, 2000, Memo to File: Calculation of the Net Antidumping Duties: Cut-to-Length Carbon Steel Plate from Belgium; Final Results.