[Federal Register Volume 76, Number 191 (Monday, October 3, 2011)]
[Rules and Regulations]
[Pages 61042-61046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24666]
[[Page 61042]]
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 110420253-1577-02]
RIN 0625-AA88
Modification of Regulations Regarding the Practice of Accepting
Bonds During the Provisional Measures Period in Antidumping and
Countervailing Duty Investigations
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Final rule.
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SUMMARY: The Department of Commerce (the Department) is amending its
regulations governing the effect of an affirmative preliminary
determination in antidumping or countervailing duty proceedings to
establish that the provisional measures will normally take the form of
a cash deposit. Requiring that provisional measures will normally take
the form of a cash deposit will help to strengthen the administration
of the nation's antidumping (AD) and countervailing duty (CVD) laws by
making importers directly responsible for the payment of AD and CVD
duties.
DATES: This Final Rule is effective November 2, 2011. This rule will
apply to all investigations initiated on the basis of petitions filed
on or after this effective date.
FOR FURTHER INFORMATION CONTACT: Thomas Futtner at (202) 482-3814, Mark
Ross at (202) 482-4794, or Joanna Theiss at (202) 482-5052.
SUPPLEMENTARY INFORMATION:
Background
On April 26, 2011, the Department published a proposed modification
to its regulations regarding the practice of accepting bonds during the
provisional measures period in AD and CVD investigations. See
Modification of Regulations Regarding the Practice of Accepting Bonds
During the Provisional Measures Period in Antidumping and
Countervailing Duty Investigations, 76 FR 23225 (April 26, 2011)
(Proposed Rule). The Proposed Rule explained the Department's proposal
to modify its regulations to establish that the provisional measures
during an AD or CVD investigation will normally take the form of a cash
deposit. The Department received numerous comments on the Proposed Rule
and has addressed these comments below. The Proposed Rule, comments
received, and this Final Rule can be accessed using the Federal
eRulemaking Portal at http://www.Regulations.gov under Docket Number
ITA-2011-0005. After analyzing and carefully considering all of the
comments that the Department received in response to the Proposed Rule,
the Department has adopted the modification and amended its regulations
to establish that the provisional measures during an AD or CVD
investigation will normally take the form of a cash deposit.
Explanation of Regulatory Provision
Our regulations describe the preliminary determination in AD and
CVD investigations as the first point at which the Department may
provide a remedy if we preliminarily find that dumping or
countervailable subsidization has occurred. The regulations at 19 CFR
351.205(a) stated that, ``[t]he remedy (sometimes referred to as
`provisional measures') usually takes the form of a bonding requirement
to ensure payment if antidumping or countervailing duties ultimately
are imposed.'' Section 351.205(d) of the Department's regulations
states that, ``[i]f the preliminary determination is affirmative, the
Secretary will take the actions described in section 703(d) or section
733(d) (whichever is applicable).''
The provisional measures period is the period between the
publication of the Department's preliminary affirmative determination
and the earlier of (1) The expiration of the applicable time period set
forth in sections 703(d) and 733(d) of the Tariff Act of 1930, as
amended (the Act), or (2) the publication of the International Trade
Commission (Commission)'s final affirmative injury determination.\1\
During this time the Department is instructed by the Act to order ``the
posting of a cash deposit, bond, or other security, as the
administering authority deems appropriate.'' See Sections 703(d)(1)(B)
and 733(d)(1)(B) of the Act.
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\1\ Also, pursuant to sections 703(e)(2) and 733(e)(2) of the
Act, if the Department makes an affirmative determination of
critical circumstances, then provisional measures shall apply on or
after the later of (A) The date which is 90 days before the date on
which the suspension of liquidation was first ordered, or (B) the
date on which notice of the determination to initiate the
investigation is published in the Federal Register.
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Requiring that provisional measures will normally take the form of
a cash deposit will help to strengthen the administration of the
nation's AD and CVD laws by making importers directly responsible for
the payment of AD and CVD duties. This change will help to ensure that
the U.S. Government collects the full amount of the duties owed should
an investigation result in the imposition of an AD or CVD order and,
further, it will reduce some of the burdens that U.S. Customs and
Border Protection (CBP) faces when trying to collect AD and CVD duties.
Certain parties commented on the explanation the Department provided
for this change in the Proposed Rule, and the Department has addressed
those comments in the section entitled ``Response to Comments on the
Proposed Rule''.
Explanation of Final Modification to 19 CFR 351.205
Prior to this modification to the regulations, the second sentence
of 19 CFR 351.205(a) stated that ``[t]he remedy (sometimes referred to
as `provisional measures') usually takes the form of a bonding
requirement to ensure payment if antidumping or countervailing duties
ultimately are imposed.'' The Department deleted most of the sentence
to no longer permit under normal circumstances, U.S. importers to post
bonds during the provisional measures period. However, the Department
retained the phrase ``(sometimes referred to as `provisional
measures')'' but moved it to the first sentence of 19 CFR 351.205(a).
We view this phrase as a useful link between this part of our
regulations and the terminology under Article 7 of the WTO Agreement on
Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994 (``ADA'') and Article 17 of the Agreement on Subsidies and
Countervailing Measures (``ASCM'').
Further, to clarify that provisional measures will take the form of
cash deposits, the Department added a sentence to 19 CFR 351.205(d)
that states, ``With respect to section 703(d)(1)(B) and 733(d)(1)(B) of
the Act, the Secretary will normally order the posting of cash deposits
to ensure payment if antidumping or countervailing duties ultimately
are imposed.'' This change, in our view, places the requirement for
cash deposits in the appropriate part of 19 CFR part 351 (i.e., in the
part that explains the effects of an affirmative preliminary
determination). This amendment reflects the Department's change in
practice to now normally require cash deposits rather than bonds during
the provisional measures period. This modification is also in line with
19 CFR 351.205(d), which provides that ``if the preliminary
determination is affirmative, the Secretary will take the actions
described in section 703(d) or section 733(d) of the Act (whichever is
applicable)'' because these sections of the Act provide that the
Department
[[Page 61043]]
shall order the posting of cash deposits or bonds, as the Department
deems appropriate.
Response to Comments on the Proposed Rule
The Department received numerous comments on its Proposed Rule. As
indicated in the ``Background'' section, these comments can be accessed
using the Federal eRulemaking Portal at http://www.Regulations.gov
under Docket Number ITA-2011-0005. The Department has analyzed and
carefully considered all of the comments received. Below is a summary
of the comments, grouped by issue category, and followed by the
Department's response.
Issue 1--U.S. Law, the WTO Agreements, and Cash Deposits During the
Provisional Measures Period
Several commenters assert that section 703(d)(l)(B) and
733(d)(1)(B) of the Act provide the Department discretion to collect
cash deposits as provisional measures. Some of the same parties also
note that Article 7 of the ADA and Article 17 of the ASCM indicate that
WTO members may require importers to post cash deposits as provisional
measures. Another commenter asserts that Article 7 of the ADA and
Article 17 of the ASCM indicate no hierarchy between cash and bond
requirements for provisional measures, and that allowing the importer
to choose the kind of guarantee that is suitable for them reduces the
chance of default. Another commented that the ADA and ASCM clearly
provide for the acceptance of bonds as one of the options for the
purpose of covering provisional duties.
Response: It is within the Department's discretion to require that
provisional measures will normally take the form of a cash deposit. The
Act does not specify a preference for cash deposits or bonds, nor does
it provide the importer with the option of selecting which method the
importer prefers. For the provisional measures period in AD and CVD
investigations, the Act provides for ``the posting of a cash deposit,
bond, or other security, as the administering authority deems
appropriate.'' See sections 703(d)(1)(B) and 733(d)(1)(B) of the Act.
The modification to our regulations is also consistent with the ADA
and the ASCM. Article 7.2 of the ADA states that, ``[p]rovisional
measures may take the form of a provisional duty or, preferably, a
security by cash deposit or bond equal to the amount of the antidumping
duty provisionally estimated, being not greater than the provisionally
estimated margin of dumping.'' (emphasis added). Article 17.2 of the
ASCM states that, ``[p]rovisional measures may take the form of
provisional countervailing duties guaranteed by cash deposits or bonds
equal to the amount of the provisionally calculated amount of
subsidization.'' (emphasis added). U.S. law and the WTO Agreements
provide that the Department may require either the posting of cash
deposits or bonds, and do not prohibit the Department from normally
requiring the posting of cash deposits only during the provisional
measures period.
Issue 2--Use of Bonding by Other Countries
Several commenters assert that the practice of most, if not all,
other WTO members is to require cash deposits during the provisional
measures period, and that the proposed modification will bring the
United States in line with the practices of other WTO members. Other
commenters assert that the laws of certain WTO members provide for an
option to post bonds or other security as provisional measures.
Response: The Department has considered the information the
commenters provided on the practice of various countries of permitting
or not permitting importers the option of posting bonds during the
provisional measures period of AD and CVD investigations. As detailed
in the above section entitled ``Issue 1--U.S. Law, the WTO Agreements,
and Cash Deposits During the Provisional Measures Period,'' requiring
cash deposits is permissible under the WTO Agreements and this also
appears to be the practice of many WTO members. While certain WTO
members may provide for an option to post bonds, sections 703(d)(1)(B)
and 733(d)(1)(B) of the Act grant the Department the discretion to
select the form of security that it deems appropriate as a provisional
measure. After considering all the comments received, and for the
reasons outlined in the Proposed Rule and this Final Rule, we have
decided to proceed with the modifications to our regulations specified
in the Proposed Rule. Accordingly, we are modifying our regulations to
normally require cash deposits rather than bonds during the provisional
measures period of AD and CVD duty investigations.
Issue 3--Effective Date of Rule Change
Several commenters urged the Department to make the change
effective immediately. Two of these parties asked that we apply the
change not only in future investigations, but to all pending AD or CVD
proceedings for which a final determination has not yet been issued.
One commenter asserted that implementation of this modification to the
Department's regulations will involve minimal administrative burden in
light of the very limited number of pending proceedings.
Response: As indicated in the DATES section above, this Final Rule
will apply to all investigations initiated on the basis of petitions
filed on or after November 2, 2011. The Department believes that this
is a reasonable approach to the effective date issue for this
particular rule change. Importantly, implementing the Final Rule in
this manner will provide parties (e.g., importers of merchandise that
are subject to an AD or CVD investigation) time to prepare for the new
requirement to normally post cash deposits upon the publication of an
affirmative preliminary determination.
Issue 4--Financial Consequences of Cash Deposits
Several commenters assert that the change would have significant
adverse consequences for importers. They argue that it would be
burdensome for the importers, some of which are small businesses,
because their cash flow would be negatively impacted. Certain
supporters of the change assert that any burden placed on importers by
the cash deposit requirement is mitigated by the fact that provisional
measures are in place for a short period of time.
Response: The Department acknowledges that, in the past, certain
importers may have benefited from the option of posting bonds during
the provisional measures period and that upon implementation of this
Final Rule that option will no longer be readily available to them.
Nonetheless, the Act clearly provides the Department with discretion to
require either cash deposits or bonds should a company choose to import
merchandise that has been preliminarily determined to be dumped or
subsidized and likely to be causing injury to an industry in the United
States. The Department considers the security for provisional measures
to be an important matter for the collection of duties. The requirement
of a cash deposit will better ensure that importers bear full
responsibility for any future AD and CVD duties they may owe, as the
Department and CBP have learned from the agencies' extensive experience
in the administration of the AD and CVD laws.
The provisional measures period lasts, at most, six months. The
Department considers this to be a
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relatively short period in the context of an AD or CVD proceeding.
Further, importers will receive the cash deposit back in full if the
imports at issue are not dumped (sold in the United States at less than
the normal value of the merchandise) or not found to benefit from a
countervailable subsidy (or the Commission issues a negative injury
finding). If the margin calculated for the final determination ends up
lower than the margin calculated at the preliminary determination, the
statute requires that the difference be refunded to the importer. See
Sections 707(a)(2) (CVD) and 737(a)(2) (AD) of the Act. However, if the
margin calculated for the final determination is higher than the margin
calculated at the preliminary determination, the difference is
disregarded. See Sections 707(a)(1) (CVD) and 737(a)(1) (AD) of the
Act. In other words, in no circumstance will an importer be required to
post cash deposits which equal more than the margin determined at the
preliminary determination, and in fact will be refunded its cash
deposit to the extent the deposit is higher than the duty that is
determined to be due.
Issue 5--Significance of Change to the Regulation
One commenter stated that the Department's reasoning as to why the
change is not significant is ``subjective and without factual basis,
especially since the Department ignores the market impact of
preliminary determinations on small business industrial users/
consumers.'' Certain supporters of the change argued that the
percentage of U.S. imports subject to AD or CVD orders is extremely
small.
Response: In determining whether this change to its regulations is
significant, the Department first considered the fact that less than
two percent of all entries of merchandise into the United States are
subject to AD or CVD duties. Next, the Department examined the number
of affirmative preliminary determinations which were issued in both AD
and CVD investigations in 2007, 2008 and 2009. For instance, if an
affirmative preliminary determination was published in June 2007,
importers were required to post cash deposits or bonds generally
beginning on the date of publication for a four to six month period.
For each year, we also examined how many AD and CVD proceedings were
ongoing, accounting for orders which had been revoked during a
particular year. We then compared the number of affirmative preliminary
determinations published in a given year to the number of ongoing
proceedings in that year, to find the percentage of ongoing proceedings
in each year where provisional measures were applied. We found that the
average of the results of this comparison for 2007, 2008 and 2009 was
less than ten percent. This analysis was used for the proposed
regulatory change, and it demonstrates that the change is not
significant because the change in the security requirement will impact
less than ten percent of ongoing AD/CVD proceedings.
For the Final Rule, our analysis included data from 2010, which we
did not include in our initial analysis. The 2010 data further supports
our initial analysis: in 2010, there were 15 preliminary affirmative AD
determinations and six preliminary affirmative CVD determinations, in
comparison to 260 ongoing AD proceedings and 46 ongoing CVD
proceedings. For 2010, approximately seven percent of all AD and CVD
proceedings involved the application of provisional measures during the
year. Also, the simple average of the results for each year from 2007
through 2010 is less than ten percent. Thus, we find that the market
impact of altering the provisional measures security requirement is not
significant for purposes of making a regulatory change. Finally, we
disagree with the assertion that the Department is required to make an
analysis of the significance of the change with regard to ``small
business industrial users/consumers.'' The analytical requirements of 5
U.S.C. 605(b), requires that the Department consider the ``economic
impact on a substantial number of small business entities,'' which
requires the Department to analyze the economic impact on all small
business entities, and is not limited to industrial users/consumers.
Issue 6--Requiring Cash Deposits Based on a Preliminary Determination
Several commenters argue that it is unfair to require cash deposits
based on a preliminary determination, when a final order may not be
issued. Some commenters assert that this change will serve as a trade
barrier, and one party commented that the Department's true intention
is to benefit petitioners in response to recent unfavorable WTO and
court decisions. Several supporters of the change assert that importers
are protected by the fact that provisional measures are not imposed
without a preliminary determination of dumping (or countervailable
subsidization) and injury. The parties also assert that the change will
better ensure that the U.S. government can collect the full amount of
duties owed, should the investigation result in the imposition of an AD
or CVD order.
Response: We disagree with the assertion that it is unfair to
require cash deposits based on a preliminary determination in an AD or
CVD investigation. Before imposing provisional measures, the Department
must make an affirmative preliminary determination of dumping or
countervailable subsidization and the Commission must also make a
preliminary determination as to whether dumping or subsidization are
likely to be causing material injury. While a preliminary determination
may occur without an order being issued, in such a circumstance any
cash deposits are completely refunded to the importer(s). We also
disagree with the assertion that the change would act as a trade
barrier because AD and CVD measures, when applied consistent with WTO
rules, remedy injury and harm caused by market-distorting unfair trade
practices.
On August 26, 2010, in support of President Obama's National Export
Initiative (NEI), the Department announced a number of proposals to
strengthen the agency's administration of the nation's AD and CVD laws.
One of those proposals is the modification of the regulations regarding
the acceptance of bonds during the provisional measures period in AD
and CVD investigations. Specifically, the Department indicated that it
is ``[c]onsidering whether importers will be required to post cash
deposits rather than bonds for imports that fall within the scope of an
AD/CVD investigation starting with the issuance of the Department's
preliminary determination (rather than following the imposition of an
AD/CVD order).'' See ``NEI Trade Law Enforcement Package Fact Sheet''
at http://ia.ita.doc.gov/tlei/fachsheet-tlei-20101108.pdf. As indicated
in the above section entitled ``Explanation of Final Modification to 19
CR 351.205,'' the posting of cash deposits rather than bonds will make
importers directly responsible for the payment of AD and CVD duties. It
will also help to ensure that the U.S. Government collects the full
amount of the duties owed should an investigation result in the
imposition of an AD or CVD order. Further, the change will reduce some
of the burdens that CBP faces when trying to collect AD and CVD duties.
Issue 7--Whether Bonds Will Be Accepted in Any Circumstance
One commenter argues that the Proposed Rule would still allow
bonding as an option for provisional measures, and suggests that the
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Department should set forth guidelines of circumstances in which
bonding is permitted. Another argues that the Department should
consider other options to address the issues it has experienced with
the use of bonding during the provisional measures period (such as
those used in new shipper reviews).
Response: The change to the regulation provides that ``the
Secretary will normally order the posting of cash deposits to ensure
payment if antidumping or countervailing duties ultimately are
imposed.'' The Department considers that this change appropriately
addresses the concerns identified with the use of bonding during the
provisional measures period of AD and CVD investigations. The use of
the term ``normally'' provides the Department flexibility to address
those rare and unusual circumstances that the Department may find
warrant the acceptance of bonds. The Department intends to make such
exceptional determinations on a case-by-case basis (depending on the
particular facts of each case) as warranted rather than attempting to
articulate a rule that predicts what unusual circumstances may arise in
the future. With regard to the comment about new shipper reviews,
unlike in investigations, bonding in new shipper reviews is required by
the Act.
Issue 8--Administrative Burdens of Permitting Bonding
One commenter asserts that the Department cites a subjective and
unsubstantiated conclusion regarding the burden the bonding requirement
imposes on CBP. Another commenter asserts that by requiring cash
deposits, the administrative burdens and expenses, such as ensuring
adequate bond coverage and handling claims for mitigation or relief
from the bond requirement, will be minimized.
Response: In the Proposed Rule the Department stated that,
``[w]hile most of the duties on entries secured by a bond during the
provisional measures period are ultimately collected, these collections
can be very slow and involve burdensome administrative problems for
(CBP).'' This conclusion was based on the U.S. Government
Accountability Office's (GAO) Report to Congress on Antidumping and
Countervailing Duties (GAO-08-391) (March 2008), in which the GAO
stated that when an importer fails to pay supplemental AD or CVD
duties, CBP frequently faces a lengthy process of trying to collect
from bonding agents. Additionally, CBP reports bonding is more
burdensome than collecting cash deposits because Single Transaction
Bonds (STBs), which are required for the posting of bonds in AD and CVD
investigations, must be reviewed for sufficiency and adequacy. Further,
since bonds are legal documents, CBP must keep paper copies of STBs.
CBP also has to manually enter an electronic note in its Automated
Commercial System for STBs. Conversely, cash deposits are recorded
electronically in ACS and are usually transmitted to CBP electronically
and, thus, are recorded automatically.
Issue 9--The Use of Bonds in a Retrospective Duty Assessment System
One commenter asserted that bonds are a more appropriate form of
provisional measures for the United States since it has a retrospective
duty collection system, and requests that the Department not modify the
current regulations and practice of accepting bonds during the
provisional measures period.
Response: The Department disagrees with the assertion that bonds
are a more appropriate form of provisional measures, and notes that no
information or argument was provided to support this assertion. The ADA
and ASCM permit the application of provisional measures in the form of
cash or bond, regardless of whether the WTO member is operating a
prospective or retrospective system. In either system, provisional
measures serve the same function--to provide adequate security for the
payment of AD or CVD duties pending the final determination of whether
such duties are owed and in what amount.
Classification
Executive Order 12866
This rule has been determined to be not significant for purposes of
Executive Order 12866.
Regulatory Flexibility Act
The Chief Counsel for Regulation has certified to the Chief Counsel
for Advocacy of the Small Business Administration under the provisions
of the Regulatory Flexibility Act, 5 U.S.C. 605(b), that this rule, if
promulgated, would not have a significant economic impact on a
substantial number of small business entities. The factual basis for
the certification was published in the Proposed Rule. The Department
received a comment regarding the factual basis for this decision, which
appears in Issue 5--Significance of Change to the Regulation. Based
upon the Department's analysis, as discussed above, the factual basis
used in the Proposed Rule to determine that the rule, if promulgated,
would not have a significant economic impact on a substantial number of
small business entities did not change. See Issue 5--Significance of
Change to the Regulation. As a result, a Final Regulatory Flexibility
analysis is not required and has not been prepared.
Paperwork Reduction Act
This rule does not contain a collection of information for purposes
of the Paperwork Reduction Act of 1980, as amended (44 U.S.C. 3501 et
seq.).
List of Subjects in 19 CFR Part 351
Administrative practice and procedure, Antidumping, Business and
industry, Cheese, Confidential business information, Countervailing
duties, Freedom of information, Investigations, Reporting and
recordkeeping requirements.
Dated: September 15, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
For the reasons stated, 19 CFR part 351 is amended as follows:
PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES
0
1. The authority citation for 19 CFR part 351 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303
note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.
Sec. 351.205 [Amended]
0
2. In Sec. 351.205, revise paragraphs (a) and (d) to read as follows:
(a) Introduction. A preliminary determination in an antidumping or
countervailing duty investigation constitutes the first point at which
the Secretary may provide a remedy (sometimes referred to as
``provisional measures'') if the Secretary preliminarily finds that
dumping or countervailable subsidization has occurred. Whether the
Secretary's preliminary determination is affirmative or negative, the
investigation continues. This section contains rules regarding
deadlines for preliminary determinations, postponement of preliminary
determinations, notices of preliminary determinations, and the effects
of affirmative preliminary determinations.
* * * * *
(d) Effect of affirmative preliminary determination. If the
preliminary determination is affirmative, the Secretary will take the
actions described in section 703(d) or section 733(d) of the Act
(whichever is applicable). With
[[Page 61046]]
respect to section 703(d)(1)(B) and 733(d)(1)(B) of the Act, the
Secretary will normally order the posting of cash deposits to ensure
payment if antidumping or countervailing duties ultimately are imposed.
In making information available to the Commission under section
703(d)(3) or section 733(d)(3) of the Act, the Secretary will make
available to the Commission and to employees of the Commission directly
involved in the proceeding the information upon which the Secretary
based the preliminary determination and which the Commission may
consider relevant to its injury determination.
* * * * *
[FR Doc. 2011-24666 Filed 9-30-11; 8:45 am]
BILLING CODE 3510-DS-P