66 FR 51015, October 5 ,2001 A-475-818 A-489-805 Sunset Reviews Public Document MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memo for the Expedited Sunset Reviews of the Antidumping Duty Orders on Certain Pasta from Italy and Turkey; Final Results Summary: We have analyzed the substantive responses of domestic interested parties in the expedited sunset reviews of the antidumping duty orders on certain pasta ("pasta') from Italy and Turkey. We received no substantive response from any respondent interested party. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum for this final results of reviews. Below is the complete list of the issues in this expedited sunset review for which we received comments from interested parties: 1. Likelihood of Continuation or Recurrence of Dumping A. Weighted-average dumping margin B. Volume of imports C. Other factors 2. Magnitude of the Margin Likely to Prevail A. Margins from investigations History of the Orders: Italy (A-475-818) On July 14, 1996, the Department published in the Federal Register the final determination of sales at less than fair value ("LTFV") in the antidumping duty investigation on pasta from Italy (61 FR 30326). On August 14, 1996, the Department published the antidumping duty order and amended final determination of sales at LTFV (61 FR 42231). In the antidumping duty order, the Department established weighted-average dumping margins ranging from zero to 46.67 percent (61 FR 42231). Since the issuance of this order the Department has completed three administrative reviews. (1) On September 6, 2000, the Department published a notice of initiation of the fourth administrative review of this order (64 FR 53980). On December 13, 2000, the Department revoked the antidumping duty order for De Cecco (65 FR 77852). On June 28, 2001, the Department published the preliminary results of the fourth review (66 FR 34414). The final results are scheduled to be completed by October 26, 2001. The Department has published several scope rulings on this order. On October 13, 1998, the Department published the Affirmative Final Determination of Circumvention of the Antidumping Duty Order, 63 FR 54672. The order remains in effect for all manufacturers, producers, and exporters of pasta from Italy, with the exception of De Cecco. Turkey (A-489-805) On July 14, 1996, the Department published in the Federal Register the final determination of sales at less than fair value ("LTFV") in the antidumping duty investigation on pasta from Turkey (61 FR 30309). On July 24, 1996, the Department published the antidumping duty order and amended final determination of sales at LTFV (61 FR 38545). In the antidumping duty order and amended final determination of sales at LTFV the Department established weighted-average dumping margins of 63.29 percent for Filiz Gida Sanayi ve Ticaret A.S. ("Filiz"), 60.87 percent for Maktas Makarnicilik ve Ticaret T.A.S. ("Maktas"), and 60.87 percent for "all other" Turkish manufacturers, producers, and exporters of pasta, and revised the deposit rate to 63.29 percent for Feliz, 48.26 percent for Maktas, and 51.49 percent for "all others" (61 FR 38545). Since the issuance of this order the Department has completed three administrative reviews. (2) On July 7, 2000, the Department published the only scope ruling on this order (65 FR 41957). On September 6, 2000, the Department published a notice of initiation of the fourth administrative review of this order (65 FR 53980). On June 28, 2001, the Department published the preliminary results of this review (66 FR 34410). The final results are scheduled to be completed by October 26, 2001. The antidumping duty order remains in effect for all manufacturers, producers, and exporters of pasta from Turkey. Background: On June 1, 2001, the Department initiated sunset reviews of the antidumping duty orders on pasta from Italy and Turkey (66 FR 29771), pursuant to section 751(c) of the Tariff Act of 1930, as amended, ("the Act"). The Department received notices of intent to participate in these sunset reviews on behalf of the New World Pasta Company, Dakota Growers Pasta Company, Borden Foods Corporation, and American Italian Pasta Company (collectively "the domestic interested parties"), within the applicable deadline (June 15, 2001) specified in section 351.218(d)(1)(i) of the Sunset Regulations. The domestic parties claimed interested party status under section 771(9)(C) of the Act, as domestic producers of certain pasta. On July 16, 2001, we received a complete substantive response from the domestic interested parties, within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). The domestic interested parties assert that most of the domestic parties participated in the original investigation and the scope clarification proceedings. (3) We did not receive substantive responses from any respondent interested party. (4) As a result, on July 23, 2001, we determined to conduct an expedited (120-day) sunset review of these orders, pursuant to 19 CFR 351.218 (e)(1)(ii)(A) of the Sunset Policy Bulletin. (5) Discussion of the Issues: In accordance with section 751(c)(1) of the Act, the Department conducted these reviews to determine whether termination 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 administrative reviews, and the volume of the subject merchandise for the period before and the period after the issuance of the antidumping order. In addition, pursuant to section 752(b)(3) of the Act, the Department shall provide to the International Trade Commission ("the Commission") the magnitude of the margins of dumping likely to prevail if the orders are revoked. Below we address comments we received from the domestic interested parties. 1. Likelihood of Continuation or Recurrence of Dumping: Interested Party Comments Italy The domestic interested parties assert that revocation of the antidumping duty order on pasta from Italy is likely to lead to continuation or recurrence of dumping by the foreign producers and exporters, in addition to material injury to the U.S. industry. (6) They claim that, over the history of this order, the order has been revoked for only one Italian pasta producer/exporter; most respondents are unable to consistently sell the subject product in the United States at fair value; and most respondents continue to sell at LTFV. (7) According to the domestic parties, in 1995 (the year prior to the order) import volumes of all dry pasta totaled 327 million pounds. (8) Although import volumes of the subject merchandise increased between 1997-2000, they declined to below pre-order levels by year end 2000. (9) The domestic parties further contend that (1) dumping margins continue to be found by the Department, i.e., in the preliminary results of the fourth administrative review, (2) Barilla, the largest Italian exporter of pasta, was found to be circumventing the order, exporting bulk pasta in the post- order years, and (3) hundreds of Italian producers of pasta continue to ship to the United States under the "all others" rate. (10) Finally, the domestic parties argue that because the Department has found in the completed administrative reviews of the order sales at less than fair value, it should find that producers and exporters of pasta cannot sell in the United States without dumping. Therefore, domestic interested parties maintain that revocation of the order will lead to continued and increased levels of dumping. (11) Turkey The domestic interested parties argue that revocation of this order would likely lead to continuation or recurrence of dumping, and material injury to the domestic producers of pasta. (12) The domestic interested parties point out that over the course of this proceeding the Department has not revoked the order for any Turkish producer or exporter. (13) They maintain that of the three companies reviewed, the Department found affirmative dumping margins ranging from 3.59 percent to 63.29 percent for Filiz, and 1.90 percent for Pastavilla Kartal. (14) With respect to Maktas they note that the Department found a de minimis margin in the second review, a decline from 48.26 percent established in the investigation. The domestic parties note also that in the fourth administrative review, the Department preliminarily established margins of 3.59 percent for Filiz, and 1.90 percent for Pastavilla Kartal. (15) With respect to import volumes from Turkey, the domestic parties claim that imports of all dry pasta from Turkey in 1995, the year prior to the order, were nearly 62 million pounds. In 1997, the year immediately following the order, pasta imports declined to less than three million pounds, and have never reached pre-order levels. (16) The domestic interested parties point to the Department's Sunset Policy Bulletin and the SAA's guidelines when determining whether the revocation of an order is likely to lead to further dumping. (17) They maintain that in this case, there is the inability to sell at fair value, and severely declining sales in the post-order years. (18) Given that Turkish producers/exporters are unable to sell at fair value in commercial quantities, the domestic parties assert that the Department should find that revocation of this order would lead to continuation of dumping. The 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. The Department clarified that determinations of likelihood will be made on an order-wide basis (see section III.A.2 of the Sunset Policy Bulletin). Additionally, the Department normally will determine that revocation of an antidumping duty order is likely to lead to continuation or recurrence of dumping when (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 (see section III.A.3.a of the Sunset Policy Bulletin). In addition to considering the guidance 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 these instant reviews, the Department did not receive any response from respondent interested party with respect to the order on pasta from Turkey. Pursuant to section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. In conducting its sunset reviews, the Department considers weighted- average dumping margins and the volume of imports of the subject merchandise for the period before and the period after the issuance of the antidumping duty order when determining whether revocation of the order would lead to the continuation or recurrence of dumping. Consistent with section 752(c) of the Act, the Department considered whether dumping continued at levels above de minimis after the issuance of the order on pasta from Italy and Turkey. Our evaluations of administrative reviews confirms the domestic interested parties' argument that dumping margins continue to exist in the orders on pasta from Italy and Turkey. In the investigation and in each of the three administrative reviews of these orders, dumping margins were found. With respect to import volumes before and after the issuance of these orders, our census trade statistics report on pasta imports from Italy under the HTSUS category 1902.19.20 indicates that the level of imports although it exceeded pre-order volumes following the issuance on the order, decreased by end of year 2000. With respect to import volumes on pasta from Turkey, import levels declined significantly after the issuance of the order, and have not regained pre-order volumes. The SAA at 889, the House Report at 63, and the Senate Report at 52, state that, declining import volumes accompanied by the continued existence of dumping margins after the issuance of the order may provide a strong indication that, absent an order, dumping would be likely to continue, because the evidence would indicate that the exporter needs to dump to sell at pre-order volumes. In addition, the SAA at 890, and the House Report at 63-64, state that, existence of dumping margins after the order, 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, it is reasonable to assume that dumping would continue if the discipline were removed. Therefore, given the continued existence of dumping margins coupled with the decline of import volumes after the issuance of these orders, and absent argument and evidence to the contrary from Italian and Turkish manufacturers, producers and exporter, the Department determines that dumping would be likely to continue if the orders were revoked. 2. Magnitude of the Margins Likely to Prevail: Interested Party Comments: Citing to the SAA and the Department's Sunset Policy Bulletin, the domestic interested parties maintain that the Department should apply the principles set forth in the SAA and the Sunset Policy Bulletin and report to the Commission the margins from the original investigations as follows: (19) Italy Arrighi - 19.01 percent, Delverde - 1.68 percent, La Molisana - 11.58 percent, Liguori - 11.58 percent, Pagani - 17.47 percent, and "All Others" - 11.26 percent. Turkey Filiz - 63.29 percent, Maktas - 48.26 percent, and "All Others" - 51.19 percent. Department's Position: In the Sunset Policy Bulletin, the Department stated that, consistent with the SAA and House Report, the Department normally will select a rate from the investigation as the dumping margin likely to prevail if the order is revoked, because that is the only calculated rate that reflects the behavior of exporters and foreign governments without the discipline of an order or suspension agreement in place. (20) In addition, the Department normally will provide the company-specific margin from the investigation for each company regardless of whether the margin was calculated using a company's own information or based on best information available or facts available. 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 Sunset Policy Bulletin at section III.B.1). Consistent with the Sunset Policy Bulletin, the Department finds that the margins from the original investigation are probative of the behavior of Italian and Turkish producers and exporters of pasta if the orders were revoked. These margins are the only margins calculated in the investigation that reflect their behavior without the order in place; thus, we will report to the Commission the 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 pasta from Italy and Turkey would be likely to lead to continuation or recurrence of dumping at the following percentage weighted-average margins: Italy _________________________________________________________________________ Manufacturers/Producers/Exporters Margin (percent) (61 FR 42231) August 14, 1996 _________________________________________________________________________ Arrighi/Italpasta ........................... 19.09 De Cecco .................................... Revoked * De Matteis ................................... 0.00 Delverde/Tamma ............................... 1.68 La Molisana ................................. 14.73 Liguori ..................................... 11.58 Pagani ...................................... 17.47 All Others .................................. 11.26 * On December 13, 2000, the Department revoked the order with respect to DeCecco. See 65 FR 77852. _________________________________________________________________________ Turkey _________________________________________________________________________ Manufacturer/Producer/Exporter Amended Margin (%) Revised Cash (61 FR 38545) Deposit Rate (%) (61 FR 38545) _________________________________________________________________________ Filiz ........................... 63.29 63.29 Maktas .......................... 60.87 48.26 * All Others ...................... 60.87 51.49 * * Article VI of the General Agreement on Tariffs and Trade (1947) prohibits assessing dumping duties on the portion of the margin attributable on an export subsidy. In this case, the product in the investigation was subject to a countervailing duty order (see Final Affirmative Countervailing Duty Determination: Certain Pasta from Turkey 61 FR 30288 (June 14, 1996). Therefore, for all entries of pasta from Turkey, entered or withdrawn from warehouse for consumption made on or after the date on which the order in the companion countervailing duty order investigation was published in the Federal Register, Customs is instructed to deduct the portion of the margin attributable to the export subsidy from the countervailing duty investigation. Therefore, the cash deposit rate for Maktas is 48.26, and 51.49 percent for all other Turkish manufacturers/ producers/exporters. The deposit rate for Filiz is based on total adverse facts available taken from the petition. Because the margin for Filiz was not a calculated margin, the margin remains unchanged. _________________________________________________________________________ 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 _____________ _______________________ Faryar Shirzad Assistant Secretary for Import Administration _______________________ (Date) ________________________________________________________________________ footnotes: 1. Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Pasta From Italy, 64 FR 6615 (February 10, 1999); Final Results of Antidumping Duty Administrative Review: Certain Pasta From Italy, 65 FR 7349 (February 14, 2000); Certain Pasta From Italy: Final Results of Antidumping Duty Administrative Review, 65 FR 77852 (December 13, 2000). 2. Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Pasta From Turkey, 63 FR 68429 (December 11, 1998). Final Results of Antidumping Duty Administrative Review: Certain Pasta From Turkey, 64 FR 69493 (December 13, 1999). Certain Pasta From Turkey: Final Results of Antidumping Duty Administrative Review, 65 FR 77857, (December 13, 2000). 3. The domestic parties note that Hershey Foods Corporation (the predecessor to New World), Borden, Inc., and Gooch Foods, Inc., filed the petitions. 4. On June 29, 2001 and July 2, 2001, we received letters regarding waiver of participation in the sunset review of the antidumping duty order on pasta from Italy, on behalf of Delverde, SpA ("Delverde"), Tamma Industrie Alimentari, SrL ("Tamma"), and Prodotti Alimentari Meridionali S.r.l. ("PAM"). Although, Rienzi & Son, Inc., and N. Puglisi & F. Industria Paste Alimentari S.p.A. entered an appearance in the review of pasta from Italy, they did not submit a response. 5. See July 23, 2001, Letter from Jeffrey A. May, Director of Policy, to Lynn Featherstone, Director of Investigations, International Trade Commission, regarding inadequate response to the notice of initiation from respondent interested parties. 6. See Substantive Response by the Domestic Industry-Sunset Review of the Antidumping Duty Order on Certain Pasta from Italy, July 2, 2001, at 7. 7. Id. at 9. 8. Id. 9. The domestic parties state that although the available data on imports include a larger range of products than is covered by the scope of this review, the data indicate that the order has had a direct effect on the respondents' behavior. See Attachment 1 of the domestic parties' Response (July 2, 2001) covering 1992-2001 import volume and value of the subject merchandise. 10. See Substantive Response by the Domestic Industry-Sunset Review of the Antidumping Duty Order on Certain Pasta from Italy, July 2, 2001 at 9. 11. Id. at 10 12. See Substantive Response by the Domestic Industry-Sunset Review of the Antidumping Duty Order on Certain Pasta from Turkey, July 2, 2001 at 6. 13. Id. 14. Id. at 6-7. 15. See Substantive Response by the Domestic Industry-Sunset Review of the Antidumping Duty Order on Certain Pasta from Turkey, July 2, 2001 at 6. 16. See Substantive Response by the Domestic Industry-Sunset Review of the Antidumping Duty Order on Certain Pasta from Turkey, July 2, 2001 at 8. The domestic parties note also that although the HTSUS 1902.19.20 covers all sales of dry pasta, including egg pasta and bulk pasta greater than five pounds, the available import data shows that the order has had a direct effect on respondents' behavior. 17. Id. at 7-8. 18. Id. at 8. 19. See Substantive Response by the Domestic-Industry-Sunset Review of Antidumping Duty Order on Certain Pasta from Italy and Turkey, July 2, 2001 at 11 and 10, respectively. 20. See section III.B.3 of the Sunset Policy Bulletin.