65 FR 41433, July 5, 2000 A-475-811 A-588-831 Sunset Reviews 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 Expedited Sunset Reviews of Grain-Oriented Electrical Steel from Italy and Japan; Final Results Summary: We have analyzed the comments of interested parties in the expedited sunset reviews of the antidumping duty orders covering grain-oriented electrical steel ("GOES") from Italy and Japan. 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 comments by interested parties: 1. Likelihood of continuation or recurrence of dumping A Weighted-average dumping margins B. Volume of imports 2. Magnitude of the margins likely to prevail Margins from the investigation History of the Orders: On August 12, 1994, and June 10, 1994, the Department issued the antidumping duty orders on GOES from Italy (59 FR 41431) and Japan (59 FR 29984), respectively. In the order on GOES from Italy, the Department determined the ad valorem antidumping duty rates of 60.79 percent for ILVA S.p.A. and Acciai Speciali Terni, S.r.I., and all other Italian manufacturers/exporters of subject merchandise (59 FR 41431, August 12, 1994). In the order on GOES from Japan, the Department determined an ad valorem antidumping duty rate of 31.08 percent for Kawasaki Steel Corporation ("Kawasaki"), Nippon Steel Corporation ("Nippon"), and all other Japanese manufacturers/exporters of subject merchandise (59 FR 29984, June 10, 1994). There has been one completed administrative review of the antidumping duty order on Italian GOES, covering the period from February 9, 1994, through July 31, 1995, in which the Department based its final results on "facts otherwise available," and assigned Acciai Speciali Terni S.p.A. ("AST") the same 60.79 percent margin from the original investigation (62 FR 2655, January 17, 1997). There has been no administrative review of the antidumping duty order on Japanese GOES. There have been no circumvention determinations or changed circumstances reviews in these proceedings. Background: On December 1, 1999, the Department initiated the sunset reviews of the antidumping duty orders on GOES from Italy and Japan (64 FR 67247), pursuant to section 751(c) of the Tariff Act of 1930, as amended, ("the Act"). The Department received a notice of intent to participate in these cases on behalf of Allegheny Ludlum Corporation ("Allegheny Ludlum"), AK Steel Corporation ("AK Steel"), Butler Armco Independent Union, the United Steelworkers of America AFL-CIO/CLC, and the Zanesville Armco Independent Union (collectively, "domestic interested parties"), within the applicable deadline (December 16, 1999) specified in 19 CFR 351.218(d)(1)(i). Additionally, on December 16, 1999, AST submitted an entry of appearance in the Italian review and, pursuant to 19 CFR 351.305(b), an application for access to business proprietary information under administrative protect order. Allegheny Ludlum and AK Steel claimed interested-party status under section 771(9)(C) of the Act, as U.S. producers of a domestic like product. The unions listed above are interested parties, pursuant to 771(9)(D), because they are certified or recognized unions or groups of workers representative of the industry engaged in the manufacture, production, or wholesale in the United States of the domestic like product. Domestic interested parties state that Allegheney Ludlum, Armco Inc. ("Armco"), United Steel Workers of America, Butler Armco Independent Union, and Zanesville Armco Independent Union were the petitioners in the initial investigation of GOES from Italy and participated in the only completed administrative review of the Italian order (see January 3, 2000, substantive response of domestic interested parties at 5). Armco was not a petitioner in the case concerning GOES from Japan because Armco had certain technical relationships with a Japanese producer of GOES at the time that it wanted to preserve. However, the relationship terminated prior to AK Steel's acquisition of Armco, on September 30, 1999, when it assumed control of Armco's production of GOES. Id. Accordingly, AK Steel, as the successor of Armco, has replaced Armco as a domestic interested party for purposes of these sunset reviews and all other administrative reviews. Id. On January 3, 2000, we received a complete substantive response from domestic interested parties, within the 30-day deadline specified in the Sunset Regulations under 19 CFR 351.218(d)(3)(i). Although we received an entry of appearance from AST in the Italian review, AST did not submit a substantive response. Therefore, without a substantive response from respondent interested parties in the Italian and Japanese reviews, the Department, pursuant to section 751(c)(3)(B) of the Act and 19 CFR 351.218(e)(1)(ii)(C)(2), determined to conduct expedited, 120-day reviews of these orders. On February 9, 2000, we received domestic interested parties' comments in support of the Department's decision to conduct expedited reviews of the antidumping duty orders on GOES from Italy and Japan (see February 9, 2000, domestic interested parties' comments on adequacy at 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). These reviews concern transition orders within the meaning of section 751(c)(6)(C)(ii) of the Act. Accordingly, on April 6, 2000, the Department determined that the sunset reviews of GOES from Italy and Japan are extraordinarily complicated, and extended the time limit for completion of the final results of these reviews until not later than June 28, 2000 (65 FR 18058), in accordance with section 751(c)(5)(B) of the Act. Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted these 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 orders. In addition, section 752(c)(3) of the Act provides that the Department shall provide to the Commission the magnitude of the margins of dumping likely to prevail if the orders are revoked. Below, we address the comments of the interested parties. 1. Likelihood of Continuation or Recurrence of Dumping Interested Party Comments In their January 3, 2000, substantive response, domestic interested parties assert that the dumping of GOES from Italy and Japan would be likely to continue or recur if the orders under review were revoked. With respect to the Italian antidumping order, domestic interested parties note that the Department found that, in the only completed administrative review, Italian GOES continued to be dumped in the United States at the 60.79 percent ad valorem dumping margin applied by the Department during the initial investigation. They cite the Sunset Policy Bulletin and SAA at 890, and argue that, because dumping margins continue to exist, and there is no evidence that dumping has stopped, the Department should determine that revocation would likely lead to a continuation of dumping (see January 3, 2000, substantive response of domestic interested parties at 16). In addition, domestic interested parties assert that the substantial margin has had a dramatic negative impact on the volume of Italian GOES imported into the United States. They contend that, in 1995, the first full year following the imposition of antidumping duties, imports of GOES from Italy fell to 24 short tons from 3,060 short tons in 1994. Id. at 16- 17. Further, since the antidumping duty order was issued, imports of Italian GOES have not exceeded 48 short tons in any year, and have averaged just 25.24 short tons per year. Id. This represents a 99.2 percent decrease in imports of GOES from 1994 through 1998. Id. Finally, domestic interested parties assert that import data indicate that entries of GOES from Italy to the United States ceased or virtually ceased in some periods after the issuance of the antidumping duty order. Id. at 18. In 1996, for example, imports totaled only five short tons, and imports during 1995 and 1998 only totaled 24 short tons in each year. Id. Thus, they contend, the absence of imports, or such de minimis import levels, indicated that during some periods, AST essentially was unable to sell GOES in the United States without dumping. Id. Therefore, the Department should find that revocation of the antidumping duty order on GOES from Italy would likely lead to a continuation or recurrence of dumping. Id. With respect to the order on Japanese GOES, domestic interested parties note that the antidumping duty assessments of Japanese GOES and the deposit rate indicate that dumping continues at the original rate of 31.08 percent. Id. at 19. Thus, revocation of the order on GOES from Japan would likely lead to a continuation or recurrence of dumping. Id. In addition, domestic interested parties contend that the order has had a dramatic negative impact on the volume of Japanese GOES imported into the United States. For instance, in 1995, the first full year following the imposition of antidumping duties, imports of GOES from Japan fell to 672 short tons, from 10,740 short tons in 1994. Id. Further, since the antidumping duty order was issued, imports from Japan have never exceeded 1,380 short tons in any year, and have averaged just 684 short tons per year, and this represents a 95.1 percent decrease in imports of Japanese GOES from 1994 through 1998. 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 (63 FR 18871, April 16, 1998), 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 reviews, the Department did not receive a substantive response from any respondent interested party. Pursuant to 19 CFR 351.218(d)(2)(iii), 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. There has been only one administrative review of the Italian order, in which the Department retained the original dumping margin of 60.79 percent; there has been no administrative review of the Japanese order. Thus, dumping margins above de minimis levels continue to exist for all shipments of subject merchandise from GOES producers/exporters from Italy and Japan. Consistent with section 752(c) of the Act, the Department also considered the volume of imports before and after issuance of the orders. According to the import statistics provided by domestic interested parties, as confirmed by Census IM145 reports statistics, average imports of subject merchandise have significantly decreased from their pre-order levels. A dramatic decrease in imports followed the issuance of the 1995 orders on GOES from Italy and Japan; Italian and Japanese imports decreased over 90 percent in 1994, and virtually ceased in some years during the period through 1999. Based on this analysis, the Department finds that the existence of dumping margins above de minimis after the issuance of the orders is highly probative of the likelihood of continuation or recurrence of dumping. Therefore, given that dumping continued after the issuance of the orders, imports continued at levels significantly below pre-order levels from 1995 through 1999 for both Italian and Japanese GOES, and respondent interested parties waived their right to participate in these reviews, we determine that dumping is likely to continue if the orders were revoked. 3. Magnitude of the Margin Likely to Prevail: Interested Party Comments: Domestic interested parties cite the Sunset Policy Bulletin at 18873, the SAA at 890, and the House Report at 64, and assert that, because there has been only one completed administrative review of the Italian antidumping duty order, and that review adopted the same rate as the investigation, the rate of dumping likely to prevail in the Italian case if the order were revoked should be the investigation rate. Id. at 23. With respect to the Japanese order, domestic interested parties contend that, because there have been no administrative reviews of the order, the Department should determined that the rate likely to prevail in the Japanese case should the order be revoked is also the investigation rate. Id. 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 that there has been only one administrative review of the Italian order (in which the Department determined for AST the same rate from the original investigation), and no administrative review of the Japanese order. Therefore, the Department, consistent with the SAA at 890, and the House Report at 64, selected the margins from the investigations, because they are the only calculated rates that reflect the behavior of Italian and Japanese exporters without the discipline of the orders in place. As such, the Department will report to the Commission the margins 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 GOES from Italy and Japan would be likely to lead to continuation or recurrence of dumping at the following percentage weighted-average margins: ---------------------------------------------------------------------- Italy: Manufacturer/exporters Margin (percent) ILVA S.p.A. 60.79 Acciai Speciali Terni, S.r.I. 60.79 All Others 60.79 ---------------------------------------------------------------------- Japan: Manufacturer/exporters Margin (percent) Kawasaki Steel Corporation 31.08 Nippon Steel Corporation 31.08 All Others 31.08 -------------------------------------------------------------------- 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 Reviews in the Federal Register. AGREE____ DISAGREE____