(65 FR 11981, March 7, 2000) A-557-805 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 Sunset Review of Extruded Rubber Thread from Malaysia; Final Results Summary We have analyzed the comments of interested parties in the expedited sunset review of the antidumping duty order covering extruded rubber thread from Malaysia. 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 expedited sunset review for which we received substantive 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 investigation Use of a more recent margin Duty absorption History of Order: On August 25, 1992, the Department published in the Federal Register the final affirmative determination of sales at less than fair value ("LTFV") on extruded rubber thread from Malaysia (57 FR 38465). In the LTFV determination, the Department established weighted-average dumping margins of 10.68 percent for Heveafil/Filmax Sdn. Bhd., 22.00 percent for Rubberflex Snd. Bhd., and 15.16 percent for "all others." In the antidumping duty order, the Department amended the final determination of LTFV and adjusted the original rate to 20.36 percent for Rubberflex.(1) Since the issuance of the antidumping duty order the Department has completed six administrative reviews.(2) On March 16, 1998, the Department published in the Federal Register the final results of the October 1, 1995 through September 30, 1996 administrative review (63 FR 12752). In this review the Department found that duty absorption occurred by four companies: Filati Lastex Elastofibre (Malaysia), Heveafil/Filmax - 100 percent, Filati - 100 percent, Rubberflex - 57.35 percent, and Rubfil Sdn. Bhd.- 100 percent. The antidumping duty order remains in effect for all producers and exporters of extruded rubber thread from Malaysia. Background: On August 2, 1999, the Department published the notice of initiation of sunset review of the antidumping duty order on extruded rubber thread ("ERT") from Malaysia pursuant to section 751(c) of the Tariff Act of 1930, as amended ("the Act"). We invited parties to comment. On August 17, 1999, we received a Notice of Intent to Participate on behalf of North American Rubber Thread Company ("North American") within the deadline specified in section 351.218(d)(1)(i) of the Sunset Regulations. We received a complete substantive response from North American on September 1, 1999, within the deadline specified in section 351.218(d)(3)(i) of the Sunset Regulations. North American claimed interested party status under section 771(9)(C) of the Act as the U.S. producer of the domestic like product. North American states that it was the petitioner in the original investigation and an active participant in annual administrative reviews conducted by the Department. We did not receive any response from respondent interested parties in this review. As a result, in accordance with our regulations (19 CFR § 351.218(e)(1)(ii)(C)(2)) we determined to conduct an expedited sunset review of this antidumping duty order. 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. Therefore, on December 3, 1999, the Department determined that the sunset review of the antidumping duty order on ERTs from Malaysia is extraordinarily complicated and extended the time limit for completion of the final results of this review until not later than February 28, 2000, in accordance with section 751(c)(5)(B) of the Act (see 64 FR 67847). Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted this sunset 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 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 interested parties. 1. Likelihood of continuation or recurrence of dumping Interested Party Comments: In its substantive response, North American argues that revocation of the antidumping duty order would likely lead to continuation or recurrence of dumping in massive quantities. With respect to dumping margins, North America asserts that dumping margins continued over the life of this order. Specifically, in the 1994-1995, and 1996-1997, administrative reviews, dumping margins ranged between 29.83 percent and 52.89 percent for four of Malaysia's major producers and exporters of ERTs. With respect to imports, North American argues that since the imposition of the antidumping duty order of ERTs from Malaysia, imports into the United States substantially declined (3) (see North American Substantive Response at 3). Specifically in 1992, the year the order was issued, imports accounted for 10,355 thousand kilograms. In 1993, the year following the issuance of the order, import volume declined to 3,191 thousand kilograms. Id. North American argues that although, after the issuance of the order, respondents made attempts to increase shipments by increasing dumping, import volumes remain below pre-order level. North American states that producers and exporters of ERTs from Malaysia need to dump at higher levels than those found during the 1993-1996 time period to achieve pre-order level. North American concludes that, on the basis of continuation of dumping margins, and decline of import volumes over the history of this antidumping duty order, the Department should determine that there is likelihood that dumping would continue if the order is revoked. 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 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). Additionally, the Department normally 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 of the Sunset Policy Bulletin). 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 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 a 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 discussed in section II.A.3 of the Sunset Policy Bulletin, the SAA at 890, and the House Report at 63-64, the existence of dumping margins after the order is issued is highly probative of the likelihood of continuation or recurrence of dumping. If companies continue to dump with the discipline of an order in place, the Department may reasonably infer that dumping would continue if the discipline of the order were revoked. In this case, dumping margins above de minimis continue to exist for shipments of the subject merchandise. Based on our analysis, the Department finds that, in the instance case, 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 de minimis levels continue in effect for producers/exporters of ERTs from Malaysia. Therefore, given that dumping above de minimis continued over the life of the order, respondent interested parties waived their right to participate in the instant review, and absent argument and evidence to the contrary, the Department determines that dumping would likely continue or recur if the order on ERTs from Malaysia were revoked. 2. Magnitude of the margin likely to prevail Interested Party Comments: North American argues that because the Malaysian exporters of ERT attempted to increase exports through increased dumping, the highest margin of dumping found during the late 1993-1996 period is the minimum likely amount of dumping if the order is revoked. In addition, North American argues that, given that duty absorption was found in this case, the Department should add to the highest dumping margin, the amount of duty absorption. North American asserts that on March 16, 1998, the Department published in the Federal Register the final results of the administrative review covering the period October 1, 1995, through September 30, 1996. In this review the Department found that duty absorption by all respondents occurred with respect to the following percent of U.S. sales: Heaveafil -100 percent, Filati - 100 percent, Rubberflex - 57.35 percent, and Rubfil - 100 percent. North American asserts that, in cases where duty absorption is found, the likely amount of dumping if the order is revoked is calculated essentially by multiplying the percentage of sales found to have duty absorption by those dumping margins and adding that to those dumping margins. Department's Position In the Sunset Policy Bulletin, the Department stated that, consistent with the SAA and House Report, the Department will normally provide to the Commission the company-specific margin from the investigation because that is the only calculated rate that reflects the behavior of exporters without the discipline of an order. 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.) We disagree with North American's assertion that a more recently calculated rate is probative of the behavior of Malaysian producers and exporters of ERT. While we agree that the margins of dumping have increased since the original investigation, we do not find that these increased margins have been accompanied by steady or increasing exports. Therefore, consistent with the Sunset Policy Bulletin, we would normally determine that the margins from the original investigation are probative of the behavior of the Malaysian exporters without the discipline of the order. However, the Department agrees with North American's argument concerning duty absorption. Section II.B.3.b of the Sunset Policy Bulletin, the SAA at 885, and the House Report at 60, state that, if the Department has found duty absorption, the Department will normally provide to the Commission the higher of the margin that 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 of duty absorption. The Department explained that it normally will adjust a company's most recent margin to reflect its findings on duty absorption by incorporating the amount of duty absorption to those sales for which the Department found duty absorption. As discussed in this review, the Department normally would provide to the Commission the margins determined in the original investigation. However, consistent with the Sunset Policy Bulletin, we have considered the Department's recent duty absorption findings. Specifically, we adjusted the most recent margins to account for duty absorption findings in the final results of administrative review (63 FR 12752 (May 16, 1998))(see also, Duty absorption calculations memorandum to file dated February 28, 2000), and compared the adjusted margins to the margins determined in the original investigation. With the exception of Rubberflex Sdn. Bhd., because the rates as adjusted to reflect duty absorption are higher than the margins from the original investigation, including for two companies that would otherwise receive the "all others" rate (Filati Lastex Elastofiber (Malaysia) and Rubfil Sdn., Bhd.) and absent any argument or evidence to the contrary, we see no reason to deviate from our stated policy, and we will report to the Commission the margins adjusted to reflect duty absorption. With respect to Rubberflex, because the margin from the original investigation is higher than the margin adjusted for duty absorption, we will report the margin from the original investigation. The margins likely to prevail were the order to be revoked are contained in the Final Results of Review Section of the accompanying Federal Register notice. 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____ ____________________________ Joseph A. Spetrini Acting Assistant Secretary for Import Administration ____________________________ (Date) 1. See Antidumping Duty Order and Amendment of Final Determination of Sales at Less Than Fair Value: Extruded Rubber Thread From Malaysia, 57 FR 46150 (October 7, 1992). 2. See Final Results of Antidumping Duty Administrative Review: Extruded Rubber Thread From Malaysia, 61 FR 54767 (October 22, 1996); Final Results of Antidumping Duty Administrative Review: Extruded Rubber Thread From Malaysia, 62 FR 33588 (June 20, 1997); Final Results of Antidumping Duty Administrative Review: Extruded Rubber Thread From Malaysia, 62 FR 62547 (November 24, 1997); Final Results of Antidumping Duty Administrative Review: Extruded Rubber Thread From Malaysia, 63 FR 12752 (March 16, 1998); Final Results of Antidumping Duty Administrative Review: Extruded Rubber Thread From Malaysia, 64 FR 12967 (March 16, 1999); and Final Results of Antidumping Duty Administrative Review: Extruded Rubber Thread From Malaysia, 65 FR 6140 (February 8, 2000). 3. North American states that although the HTS category identified in this order includes cord, most all imports in this HTS category are believed to be ERT.